On June 21, 2020, the first-instance judicial courts rejected the company’s application. The company appealed the decision before the Federal Regional Court on October 19, 2020.
Based on the opinion of its tax advisers, the Company believes that there is a probable chance of a favorable outcome. Therefore, the Company has not set aside a related provision.
Tax litigation in Italy
In 2019, a tax audit was carried out at Edenred Italy, covering the period from 2014 to 2016.
In June 2019, the Italian tax authorities informed the Company that the tax audit for the period from 2014 to 2016 had been completed. The tax authorities have challenged the brand royalties billed to Edenred Italia by Edenred SE, as well as the timing of revenue recognition.
In November 2019, the authorities issued a proposed reassessment with the effect of suspending the statute of limitations, contesting the amount of brand royalties billed to Edenred Italia by Edenred SE in 2014. As no consensus was reached further to the discussions with the tax authorities in the first half of 2020, Edenred initiated a mutual agreement procedure (MAP) between the Italian and French tax authorities on May 28, 2020 in respect of the reassessment.
In April 2021 and July 2021, the authorities issued additional proposed reassessments in respect of the amount of brand royalties billed by Edenred SE in 2015 and 2016. The mutual agreement procedure has been extended to these reassessments.
Based on the opinion of its tax advisers, the Company believes that it has solid arguments in its defense.
A provision of €1 million has been set aside under current tax liabilities for this matter, corresponding to the Company’s estimate of the reassessment risk, which is viewed as limited.
Note 11 Additional information
11.1 Additional information about jointly controlled entities
11.2 Related parties
For the purpose of applying IAS 24, the Group has identified the following related parties:
- all members of the Executive Committee and of the Board of Directors, and the members of their direct families;
- all companies in which a member of the Executive Committee holds material voting rights;
Companies accounted for by the equity method
Relations between the parent company and its associates are presented on a dedicated line in the consolidated income statement and statement of financial position.
Members of the Executive Committee
Transactions with members of the Executive Committee are disclosed in full in Note 11.3.
Members of the Board of Directors
The members of the Board of Directors receive annual compensation, which is determined by the Board of Directors and approved by the General Meeting. For the 2021 financial year, this compensation amounted to an aggregate €0.7 million. The Chairman and Chief Executive Officer does not receive any compensation for his duties as member of the Board of Directors. His compensation is disclosed in Note 11.3 “Compensation paid to key management staff”.