Our approach to tax
At Elia Group SA/NV (“Elia Group”) - the listed company of the Elia group (“Elia group”), whose core activities involve those related to two regulated transmission system operators (TSOs) in different countries - we are aware of the need to responsibly manage the tax affairs of Elia group, in line with the interests of our stakeholders.
These guidelines outline the strategic tax goals and objectives of the business, which are designed to ensure that our tax risk standards and governance framework is observed at all times.
We constantly aim to comply with all applicable laws, regulations and tax reporting obligations and we ensure that any compliance requirement entrusted to us is fulfilled in due time. We also ensure that there is a business rationale in place ahead of any enforced tax decisions.
Elia group is committed to paying its fair share of tax in the countries in which it operates, as we believe that paying taxes forms an important part of our role in society. To this end, our tax decisions are made with a focus on our business model and business activities.
Finally, Elia group ensures it regularly and collaboratively engages with the tax authorities and discloses all the information required to provide full transparency about its tax position. We pursue a constructive relationship that is based on respect and trust with the tax authorities and always diligently engage in any initiative that involves them.
We therefore believe that it is essential to have a set of guiding tax principles in place and to clearly communicate about our approach to tax and our tax position.
These guidelines outline the strategic tax goals and objectives of the business, which are designed to ensure that our tax risk standards and governance framework is observed at all times.
How we manage our tax affairs
Elia group has built a well-developed governance framework, including a control and risk management process, which is designed to safeguard its overall tax strategy both internally and when engaging with external bodies. Our approach to tax is framed around three key principles: Compliance, Governance and Transparency.
I.Compliance
1. We are committed to compliance with tax laws and relevant regulations.
We are committed to promptly paying the correct amount of tax due, in accordance with the location where the value is created, and as per the location of risk and functions.
Elia group ensures that its tax obligations are fully met and complied with. In particular, this includes the timely fulfilment of all tax formalities and declaration obligations, timely tax payments, the minimisation of tax risks and raising awareness about tax obligations amongst employees.
Our application of tax laws and regulations is guided by relevant international standards such as the Organisation for Economic Co-operation and Development (OECD) guidelines, including the OECD arm’s length standards used in the framework of our transfer pricing methodology.
We seek to dispel any uncertainty arising from the application of complex tax laws via proactive assessment pro- cesses. To that end, should tax uncertainty arise, Elia group will engage with the tax authorities and seek comprehensive advice from external tax advisors in order to prevent the risk of litigation from emerging in the future.
Situations may yet arise where the tax position of Elia group is challenged by the relevant authorities. Administrative or judicial proceedings may arise from diverging interpretations of local or international laws and regulations. Should these situations emerge, Elia group will safeguard its interests by providing all necessary supporting information to the competent authorities in a timely manner.
2. Elia group takes the view that tax consequences and economic effects should always correlate.
We want to carry out our activities in a tax effective manner, as we believe that tax consequences should correlate with economic effects for our stakeholders. Elia group therefore seeks to take advantage of available tax incentives, reductions and exemptions which are applicable to its core business and/or innovative undertakings.
However, we also believe that the implementation of tax solutions should be assessed within clear tax risk parameters and should always meet legitimate interests and our business strategy.
We are committed to refraining from aggressive tax planning or improper tax schemes, as we ensure that our tax position is aligned with our Code of Conduct. As a group of TSOs, we characterise ourselves as being generally risk-averse. We assess matters by evaluating levels of risk and exposure and make appropriate decisions based on our guidelines. By doing so, we are furthering our engagement with corporate social responsibility and sustainability in the field of tax.
Governance and risk management II.
1. Our tax governance framework is embedded across the organisation through a clear set of documented standards and procedures.
Elia group has secured a set of detailed policies and guiding tax principles which govern the decisions and tax positions we adopt across all our business operations. Our local tax governance proceduresincluding how tax accountabilities, responsibilities and delegations of authority are defined - outline the principles as well as the process on the basis of which we make tax choices. These tax governance procedures are locally defined and are fully aligned with Elia group’s Tax Guidelines.
The local tax governance procedures approved by the local decision-making bodies are to be reported to the Accounting - Tax Manager and to the Elia Group Chief Financial Officer.
2. We have strong tax risk management procedures in place
We have clear procedures in relation to tax risk management in place and carry out risk assessments linked to compliance and reporting, operations, transactions, reputation, technical judgements and changes to the tax landscape.
Risk assessments and their outcomes are managed by the Chief Financial Officer. The Audit Committee is regularly informed about specific tax matters, important tax risks factors and future developments relating to corporate income tax and any other relevant tax regulations. Uncertain tax positions or major changes to tax-related legislation that have an impact on our general conduct of business are reported to the Audit Committee.
3. Our Tax Guidelines are reviewed by our Audit Committee and reported to the Board of Directors
As set out below (under “Our Tax Organisation”), the Elia Group tax team reports to the Elia Group Audit Committee, thus allowing the Audit Committee to follow up on Elia group’s tax position, in line with our corporate responsibility and governance procedures. Since our tax governance framework is constantly reviewed by the Elia Group tax team, the Elia group Tax Guidelines may be subject to revision in light of material factors such as regulatory or business changes.
The revised Tax Guidelines are then submitted for review to the Audit Committee, that then subsequently reports to the Board of Directors.
In this way, Elia group ensures that its tax standards always align with its general conduct of business.
Transparency III.
1. Elia group stands for openness and transparency when interacting with the tax authorities.
Elia group continuously seeks transparent and open communication with the relevant tax authorities. In this respect, Elia group pledges to diligently providing the tax authorities with the information they need to carry out their review. Elia group ensures it works efficiently with the tax authorities to provide clarity on its tax position and achieve early agreement with the authorities to the fullest extent possible.
2. We provide full disclosure of our tax position.
We stand for full transparency with regard to our tax reporting. Our tax positions are made available in accordance with both local regulations and global financial reporting standards, such as the International Financial Reporting Standards (IFRS). On an annual basis, we also provide a balanced overview of our total tax contribution in our Sustainability Report, in which we disclose the total taxes we have paid and collected on a country-by-country basis.
Our Tax organisation
The tax functions are organised within Elia group to ensure compliance with tax laws and regulations in every jurisdiction in which we operate.
The tax organisation is designed to operate at both group and local level.
The Elia Group tax team, under the supervision of the Accounting - Tax Manager (who reports to the Elia Group Chief Financial Officer), is in charge of the general implementation of the Elia group Tax Guidelines within the organisation and provides updates when the need arises. The Elia Group team reports to the Audit Committee of Elia Group and interacts on a regular basis with the local tax teams. In matters of international tax law, the Elia Group tax team provides guidelines which are applied by the local tax teams. The Elia Group tax team further organises and oversees the day-to-day management of the tax affairs of Elia Group, under the supervision of the Elia Group Executive Management Board and the Elia Group Board of Directors.
The day-to-day management of the tax affairs of the affiliate companies is organised and managed by the local tax teams. The heads of the local tax teams act under the supervision of the local Accounting - Tax managers who report to the local Chief Financial Officers. The local Boards of Directors or Supervisory
Boards and the local Executive Management Boards supervise all local tax affairs, taking into account the Elia group Tax Guidelines.
The tax teams of Elia group (on an Elia Group and local level) closely monitor changes to the tax landscape and/or accounting standards and regularly provide impact assessments on the Elia group’s position to ensure that the appropriate measures are taken to safeguard our tax strategy.
These tax teams also interact on a regular basis with the business, project leaders and management in order to increase Elia group’s awareness of our engagement and involvement in all relevant tax matters.
The tax teams are staffed with in-house professionals, who hold a range of accounting, tax, legal and business economics qualifications. When expertise and skills related to specific topics are required, technical support is provided by external accounting, tax and legal firms. The use of advisory firms as well as the scope of their support is consistently reviewed and monitored by our governing mission statement framework, to ensure the outputs are aligned with our standards and policies.
1. International tax remains the responsibility of the Elia group tax teams.