Good governance, transparency and integrity

Values

Endesa maintains an ongoing commitment to good governance, transparency, and integrity which, together with the creation of value for shareholders and investors, form part of its behaviour in the management of business and corporate activities.

In this context, compliance with the tax legislation in force at all times forms part of the principles that guide its corporate responsibility, with the taxes paid constituting one of its contributions to the economic and social development of the society in which it operates. Proof of this is that respect for the rules to protect and safeguard security, health, the environment, and human rights has been included among the company's values.

Likewise, the Sustainability Policy states that compliance with current tax legislation is one of the driving principles of sustainability, with the company's tax contribution being one of its main contributions to the economic and social development of the environment in which it operates.

Tax Strategy

Endesa's Tax Strategy is governed by the following guidelines:

• Compliance with current tax regulations, adopting a reasonable interpretation thereof at all times and striving to avoid, based on such interpretation, inefficiencies and undue tax costs for Endesa.
• The rejection of certain actions, such as: carrying out operations that solely seek a tax advantage, structuring artificial operations or those unrelated to the company's own activity, using opaque structures whose sole purpose is to reduce the tax burden, or making investments in or through tax havens with the sole purpose of reducing the tax burden.
• Taking into consideration the principles of the OECD's BEPS (Base Erosion and Profit Shifting) Action Plan to combat base erosion and profit shifting, both within Endesa and its controlled subsidiaries in each of the jurisdictions where it operates.

• Full collaboration with the Tax Administration in its compliance checks.
• One of the company's core values is tax transparency towards external stakeholders (shareholders, customers, suppliers, employees, regulators, tax administrations, etc.) concerning the principles of action in tax matters, the bodies involved in Endesa's tax governance, and the details of its tax contributions in the countries where it operates.

• The promotion of cooperative relationships with the Tax Administration.

The Tax Strategy was approved by the Board of Directors of Endesa on 15 June 2015 and updated on 19 June 2017.

Fiscal Risk Control and Management System

The Audit and Compliance Committee (ACC) is responsible for supervising the functioning and effectiveness of the Group's risk management and control system, including tax risks. In accordance with the provisions of the ACC Regulations, it will directly supervise the Risk Committee, which is the internal body responsible for ensuring the proper functioning of the company's risk control and management systems, ensuring the participation of Senior Management in strategic risk control and management decisions, and fostering a culture where risk is a factor taken into account in all decisions and at all levels within the entity.

For its part, the Risk Committee acts as the Tax Compliance Body, in charge of the supervision functions regarding the functioning and effectiveness of the Group's Fiscal Risk Control and Management System, reporting for these purposes to the Audit and Compliance Committee, all in accordance with the provisions of the UNE 19602 Standard.

The scope of the Risk Committee covers all risks, specifically including tax risks, and excluding those already included in the Criminal Risk Prevention and Anti-Bribery Model and those relating to the Internal Control System for Financial and Non-Financial Reporting, which are reported to the ACC through other channels (Supervisory Committee and Transparency Committee).

The Tax Risk Control and Management model consists of five elements that combine to guarantee a suitable control system for risk prevention:

• Control Environment: A set of rules, processes and structures that form the basis on which the organisation's internal control is developed.
• Risk assessment and control activities: It is carried out jointly by the Risk Committee and those responsible for the processes. Each identified tax risk scenario has at least one control activity whose objective is to prevent the risk from materialising and to prevent the risks analysed from occurring.
• Supervisory activities: The Model is continually monitored to ensure the design and functioning thereof comply with the provisions of applicable law, analysing and resolving any incidents identified.
• Information and Communication: The necessary initiatives are promoted for the suitable dissemination and training of personnel, so the members of the company are able to comply suitably with the provisions of the regulations.
• Disciplinary system: Non-compliance with the measures provided in the model and with the company's rules of conduct are sanctioned by applying Endesa's sanctioning regime contained in the company's Collective Agreement.

Risk management and supervision are carried out by different Units that coordinate through the quarterly meetings of the Risk Coordination Working Group, in which the Tax Affairs Area is integrated through its manager.

Endesa's Fiscal Risk Control and Management Policy is the basic document of Endesa's Fiscal Control Framework. It aims to regulate the principles that should guide Endesa's Tax Function in order to identify tax-related risks and carry out their correct management and control, building:

• The principles that must guide the management of tax risks, establishing obligations and responsibilities within the organisation in this regard and including a description of the measures that must exist to mitigate any tax risks identified.
• The policy also establishes the principles that should guide the correct control of tax risks, which include a series of ex-ante preventive and ex-post checks involving the identification, measurement, analysis, monitoring and reporting thereof in line with the provisions of Endesa's Risk Management and Control Policy and the operating procedure of Endesa's Risk Map.

For Endesa, due diligence is a relevant factor in the development of its business, both in relation to controlling the selection of members of the organisation (internal due diligence) and the third parties with whom it interacts (external due diligence).

Since 2020, the Tax Compliance Management System has been certified by AENOR in accordance with the provisions of the UNE 19602 Standard. This Certification accredits the following:

• The existence of a tax control system to identify, prevent and detect tax risks in order to avoid additional tax demands, fines from and even criminal liability vis-à-vis the Tax Authority.
• The existence of control and mitigation mechanisms in the event that a possible fiscal risk is finally identified.

The Certification serves as an additional element of proof of the organisation's willingness to comply with all its tax obligations before the Tax Administration or the Courts. Additionally, this Certification is in line with Endesa's Fiscal Responsibility Policy and its Tax Transparency and Ethical Compliance Policy regarding its relations with the Public Administration at state, regional, and local levels.