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Tax Strategy

FCC ENVIRONMENT (UK) LIMITED TAX STRATEGY
December 2017

This document sets out the FCC Environment (UK) subgroup Tax Strategy, in order to comply with the requirement of paragraph 16 (2) and paragraph 25 (1), Schedule 19 Finance Act 2016.

The following companies are members of the FCC Environment (UK) subgroup:

1. Azincourt Investment, S.L., 100% held by the Spanish company Fomento de Construcciones y Contratas, S.A.
2. FCC Environment (UK) Limited, 100% held by the Spanish company Azincourt Investment, S.L.
3. FCC PFI Holdings Limited, 100% held by the Spanish company Fomento de Construcciones y Contratas, S.A.
4. Enviropower Investments Limited, 100% held by the Spanish company Fomento de Construcciones y Contratas, S.A.
5. FCC Environment Services (UK) Limited, 100% held by the Spanish company FCC Medio Ambiente, S.A.
6. FCC Environment Developments Limited, 100% held by the Spanish company FCC Medio Ambiente, S.A.

This Tax Strategy applies to all UK taxes as set out in s15 of Schedule 19 Finance Act 2016 and any reference to ‘tax’, ‘taxes’, or ‘taxation’ are to all taxes as defined within. 

1. Background

FCC Environment (UK) subgroup belongs to Fomento de Construcciones y Contratas, S.A.  Group (“FCC Group” or “FCC, S.A.”), which is a leading group in the infrastructure, environmental services and water treatment sectors, with presence in more than 40 countries.

As a part of the FCC Group, the tax policy of the FCC Environment (UK) subgroup derives from the FCC Group Tax Code of Conduct and the Tax Control Framework approved by the Board of Directors of FCC, S.A., parent company of the whole FCC Group.

In accordance with the FCC Tax Code of Conduct, the FCC Group aims to add value for its stakeholders on a sustainable basis which is aligned with the FCC Group Ethical Code. Consequently, the FCC Group will always carry out its operations for commercial reasons, according to the applicable regulations, and considering the possible impact of its tax decisions in the different communities in which it operates.

On that basis, employees of the FCC Group with responsibility for the tax function are obliged to comply with the following obligations:

1. Meet the tax legislation and regulations applicable in each jurisdiction, by virtue of interpretations sufficiently reasonable and reasoned, and on the basis of facts sufficiently checked.
2. Respect the FCC “Tax Control Framework Rule”, as well as all the specific procedures defined for the tax area.
3. Make sure that all the relevant tax decisions are supervised by the Senior Managers of the FCC Group and are duly supported, on the basis of a global and holistic approach which takes into account all the different business drivers and the possible risks assumed.
4. Develop and foster a co-operative and transparent relationship with the tax authorities of every country.
5. Participate actively in relevant business associations and international organisations oriented to achieve a fairer and more harmonised tax system, in the interests of the Group, and for society as a whole.

2. Risk management and governance

The FCC Environment (UK) subgroup assumes the principles outlined in the FCC Group tax risk management policy.  This policy is construed on

? an adequate tax control environment
? a system to identify and control tax risks, and
? a “continuous improvement” monitoring process of controls established

When taking tax decisions, the following factors will be taken into account:

? the technical risks assumed, considering the likelihood of acceptance of the relevant criteria adopted, by the tax Administration or the courts and
? the associated reputational risk, according to the standards defined by the FCC Group

To accomplish with these principles and values, the Directors of the FCC Environment (UK) subgroup assign compliance tax tasks to employees with the appropriate experience and request on-going external support in tax matters.  Also, relevant tax matters are reported to the Tax Department of the FCC Group, for their review and consideration.

3. Tax planning

According to the FCC Group Tax Control Framework Rule, tax planning strategies designed exclusively for tax reasons are unacceptable.  Agreements that might be considered “artificial” from a tax viewpoint are also unacceptable.  FCC Group is committed to only implement policies which are justifiable from a commercial standpoint, and whose design might be made public.

4. Attitude towards risk

When taking tax decisions, the following factors will be considered;

? the technical risks assumed, considering the likelihood of acceptance of the approach taken by the tax Administration or the courts; and
? the associated reputational risk, according to the standards defined by the FCC Group

The approach to technical tax risk is always conservative and based on reasonable and supportable interpretations, which aim to respect the spirit of Parliament when approving the applicable law.  Also, if a tax option were sufficiently justified on legal grounds but in any case might be deemed “illegitimate” by certain stakeholders, then reputational risk would be assessed, to evaluate the appropriateness of the tax option in accordance with the FCC Group Tax Code of Conduct.

5. Relationship with HMRC

The FCC Environment (UK) subgroup maintains a co-operative and transparent relationship with HMRC, in accordance with the Tax Code of Conduct of FCC Group.
 
A proactive approach is taken to discussing any significant tax issues with HMRC in advance if the tax treatment may be uncertain; either as part of the annual ‘Risk Review’ meeting or on a more timely basis.  If relevant, discussions and consultations are held with HMRC to assist in formulating future tax policies and legislation. 

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