Providing a clear explanation of our tax contribution is of the utmost importance

Inspections

Periods open for review by the Tax Authorities

In Spain, at the end of fiscal year 2025, the Tax Consolidation Group to which the Endesa Group belongs (no. 572/10) has the years 2006, 2019 and subsequent open for inspection for Corporation Tax.

Meanwhile, the Tax Consolidation Group No. 21/02, whose parent company is Empresa de Alumbrado Eléctrico de Ceuta, S.A., has fiscal years 2021 to 2023 open for inspection. The remaining subsidiaries of Endesa have fiscal years 2021 and onwards open for inspection regarding Corporate Tax.

Additionally, Endesa and most of its controlled subsidiaries have fiscal years 2021 and onwards open for review for other applicable taxes.

Beyond Spain, Endesa Group’s branches and controlled subsidiaries of generally have fiscal years 2022 and following open for review (in the case of Portugal), 2022 and following (in the case of France), 2022 and following (in the case of the Netherlands), and 2022 and following (in the case of Germany). 

Ongoing Inspections

In Spain, at the beginning of 2026, there are approximately 750 inspection processes open by the State, Regional, and Local Administrations; a large part corresponds to Indirect and Special Taxes, Corporate Income Tax (companies that pay tax individually), and Local Taxes such as the Tax on Economic Activities (IAE), the Tax on Constructions, Installations, and Works (ICIO), and the Public Highway Occupation Fee (TOVP).

 Additionally, after a review process lasting two years, the reports relating to the General Inspection process on Endesa and 11 of its main subsidiaries were initiated in 2025, affecting Corporate Income Tax, Value Added Tax, and Personal Income Tax Withholdings and, where applicable, Non-Resident Income Tax, generally regarding the 2019 to 2022 fiscal years.

We are currently, following the presentation of allegations to the Technical Office, awaiting their assessment and the receipt of the definitive Settlement Agreements, which we expect to receive in the first quarter of 2026.

There are no significant adjustments in either VAT or Withholdings. Regarding Corporate Income Tax, the most relevant adjustments are: on the one hand, a favourable adjustment for the recognition of Technological Innovation deductions accredited during the inspection process itself, and on the other, an unfavourable adjustment linked to the treatment of financial expenses in certain financing with related entities, in line with adjustments already made in previous fiscal years. The aforementioned adjustment will be the subject of discussion in Court.

Once the Settlement Agreements are received, we will have the definitive quantitative impacts, although we can anticipate that they do not imply a significant negative impact on Endesa's results.

Abroad, at the end of 2025, inspection processes were initiated in France, with a general scope for the 2022 to 2024 fiscal years (Corporate Income Tax, VAT, and Withholdings), and in Portugal for Special Taxes for the 2023 to 2025 fiscal years (Electricity Tax and Hydrocarbon Tax).

Closed Inspections during the year 2025

In Spain, during 2025, 369 inspection processes have been closed with the following outcomes:

• 257 processes ended without any adjustments, primarily relating to Local Tax processes.
• 97 processes concluded with conformity reports, which involved:
  • A refund of €2.5M regarding the Tax on the Value of Electricity Production and various VAT processes.
  • A payment of €1.5M, derived from certain minor adjustments in the ICIO, VAT, TPO, Environmental Taxes, and TOVP.
• 15 processes concluded with non-conformity reports, which involved:
  • Report without adjustment for the Temporary Energy Tax of 2024.
  • A refund of €0.04M for the Special Electricity Tax.
  • A payment of €0.15M derived from certain minor adjustments in the ICIO, Environmental Taxes, and TOVP.

Abroad, no inspection processes were closed during 2025.

Litigation

Most tax-related litigation processes within the Endesa Group arise from refund requests for undue payments, where the Endesa Group pays the relevant taxes in a timely manner but subsequently requests a refund of what has been paid. This refund is generally rejected by the Administration, leading the Endesa Group to challenge the denial, thus initiating a judicial process.

This typically affects cases where the Endesa Group believes that the applicable regulation does not conform to the Spanish Constitution or European regulations, as well as cases where they do not agree with the interpretative criteria followed by the Administration. By following this legal strategy, the Endesa Group avoids generating contingencies in its accounts while still maintaining its legitimate interest in defending its position in court.

Among the most relevant processes are the following:

A) Active litigation

• Temporary Energy Tax (GTE): Following the approval of this tax under Law 7/2024, of 20 December, Endesa filed a contentious-administrative appeal before the National Court against Order HFP/94/2023, of 2 February, which approved the tax models. Having been accepted for processing, the procedure is currently ongoing. The GTE raises many doubts regarding its compatibility with European Union law, the Spanish Constitution, and certain principles of legality. Dissatisfied with the self-assessments submitted for the fiscal years 2023 and 2024, they have also been self-challenged for the same reason.
• Tax on the Value of Electricity Production: In 2023, the Supreme Court concluded that certain compensation items must be included in the taxable base, which the electricity companies had claimed should be included. However, this Judgement did not pronounce on some concepts, such as the impact of the tax on pumped-storage hydroelectric plants. Nevertheless, in July 2025, the Supreme Court ruled Endesa's preparation of the appeal for cassation in the process inadmissible, thus ending our challenge here. 
• Tax on the production and storage of nuclear fuel and radioactive waste: Endesa requested the Tax Administration to modify the taxable base of the Tax, considering that, for the purpose of calculating the retroactivity coefficient established in the Third Transitional Provision of the regulation, the criterion established in the Resolution of the Central Economic-Administrative Court (TEAC) of 22 February 2022 applies. This request covered the fiscal years prior to the aforementioned Resolution. However, after a two-year inspection process, the Administration concluded that it was not appropriate to refund the requested amounts – in one case due to the preclusive effect of previous settlements, and in other cases because the right to request the refund was deemed to have prescribed. Endesa disagrees with this conclusion and has had to challenge it in Court.   It is currently under discussion in the Central Economic-Administrative Court.

• Regional Environmental Taxes:
  • Tax on Installations that Impact the Environment in Catalonia: This tax was challenged, not only for its purported environmental nature (a process that was closed in the Supreme Court), but also because the 33% increase in the tax rate made from 6 April 2022 was implemented through a Decree-Law, which was not the appropriate regulatory instrument. However, after raising the question of unconstitutionality, the Constitutional Court has ruled that it is an appropriate instrument for this tax. Therefore, after the High Court of Justice of Catalonia assumed this doctrine, the discussion regarding this tax ends here.
  • Air Pollution Tax in Galicia: The Supreme Court determined that there were grounds for cassation regarding the appeals filed by Endesa against the dismissive rulings of the High Court of Justice of Galicia, which dismissed claims challenging the environmental nature of the tax. Following its resolution, the Supreme Court considers that the tax does respect European Law, and is therefore consistent with the Law. Therefore, the discussion ends here. 
  • Other processes against regional taxes of alleged environmental nature (taxes on emissions, taxes on waste, certain hydraulic levies, etc.), where appeals are pending resolution at various levels.
• Special Taxes that levy consumption of fuels for electricity production, such as the Special Hydrocarbon Tax and the Special Coal Tax.
  • Special Hydrocarbon Tax (IEH): Endesa is involved in litigation before the National Court regarding the compliance with European Union law of the IEH paid on natural gas used to produce electricity or for the cogeneration of electricity and heat during the years 2013-2018.  Endesa believes that there is no environmental purpose that allows Spain to depart from the exemption established by European regulation for these cases. In September 2025, we learned that, following the finality of certain Supreme Court Judgements on this matter relating to other taxpayers, the State Attorney's Office had proceeded to settle several proceedings pending resolution in the National Court. Endesa is still awaiting a Judgement in its processes. 
  • Special Coal Tax (IEC): Endesa maintains litigation where it disputes the compatibility of the IEC with European law. In 2024, it received an unfavourable ruling from the National Court following a judgement from the Court of Justice of the European Union. Endesa has appealed to the Supreme Court, arguing that the Supreme Court judgements mentioned above regarding the IEH should be taken into account in this litigation, with the preparation of the appeal for cassation having been admitted in November 2025.

• Civil Guard Fee at Nuclear Power Plants: Since 2019, operators of Nuclear Power Plants have been required to pay a fee for services provided by the Civil Guard in monitoring these facilities due to their importance for national security. Endesa disputed this fee for the Ascó and Vandellós plants, arguing, among other reasons, that national security is an exclusive responsibility of the State, which should bear the associated costs. Following the dismissal of our appeal by the High Court of Justice of Madrid, the Supreme Court has admitted the appeal for cassation filed, pending Judgement since January 2025. 

Corporate Income Tax:

• Unconstitutionality of RDL 2/2016: The Constitutional Court has dismissed the two questions of unconstitutionality raised by the High Court of Justice of Valencia regarding the legality of RDL 2/16 (instalment payments of Corporate Income Tax) following the General State Budget Law of 2018. The Court considered that there is no violation of the principle of economic capacity since the questioned method does not tax “unreal” or “fictitious” income, but rather makes a reasonable measurement of income in real (not estimated), net (not gross) and current (of the current financial year) terms, and that it is therefore a reasonable form of quantification because the accounting result is a true reflection of the entity's profits. On the other hand, the Supreme Court has also admitted to cassation a similar appeal in this regard, pending its resolution. Endesa has contested its assessments while awaiting the outcome of the process.
• Unconstitutionality of RDL 3/2016: In 2024, the Constitutional Court declared the unconstitutionality of certain measures approved by RDL 3/2016 (affecting the reversal of impairments and the limitation on the use of tax credits). Consequently, the Tax Administration reassessed the Corporate Income Tax, in the first half of 2025, for the 2016 to 2018 fiscal years as if RDL 3/2016 had not been in force, refunding the amounts overpaid in those years (all following an estimating Resolution from the TEAC in this regard). Likewise, what was related to 2019 to 2022 was reassessed at the end of 2025 in the Inspection Reports for that period.

The favourable financial impact derived from this regularisation (due to the improper reversal of impairments and the bringing forward in the use of deductions) was recorded between 2024 (estimation) and 2025 (once the Settlement Agreements were known).

Likewise, a new question of unconstitutionality raised by the National Court is being monitored as it considers that the limitation imposed on the deductibility of losses could violate material limits of Corporate Income Tax, which, if admitted by the Constitutional Court, would oblige the Court to also rule on the substance of this measure with a possible favourable impact.

• Goodwill Aid: While the amounts involved for Endesa are not significant, in June 2019 inspection actions were initiated in relation to the recovery procedure for state aid affected by EU Decision 2015/314. This decision pertains to cases where the financial goodwill for the acquisition of 'indirect' foreign holdings was fiscally amortised.

Following the receipt of the Settlement Agreement in February 2021, it was challenged before the Central Economic-Administrative Court, and is pending resolution. During the appeal, the ruling of the General Court of the EU (TGUE) dated 27 September 2023 was highlighted. This ruling annulled Commission Decision (EU) 2015/314 of 15 October 2014, regarding state aid SA.35550 (13/C) (ex 13/NN) (ex 12/CP), which could mean that the regularisations carried out may be declared inappropriate.

The TEAC subsequently decided to uphold the claims, with the amounts paid being refunded along with their accrued default interest.

All these processes, in the event of loss, would not have a negative impact either in terms of cash flow or results for the Endesa Group, as the taxes have been settled and paid. In the event of success, they would result in a favourable outcome. 

B) Passive litigation

Regarding the rest of the processes, which are susceptible to generating a negative impact on Endesa, they mostly refer to tax assessments issued by the Inspection Bodies that have been signed in disagreement by the Endesa Group.

In any litigation process of this nature, the likelihood of loss in the final court instance is assessed. Processes where the probabilities of losing are considered greater than those of winning are accounted for by providing for the contingent amount in dispute.

The following are highlighted as the most relevant:

• Tax assessments issued in 2017 against ENEL Green Power España, S.L.U. (EGPE) in relation to the Corporate Income Tax for fiscal years 2010 to 2013: This litigation is pending a ruling from the National Court regarding the reports where the Inspection rejected the application of the tax neutrality regime for the EGPE-EUFER merger. The contingent amount associated with the potential loss from this merger litigation has been recalculated based on the criteria shared by the Tax Inspection during the ongoing inspection procedures concerning the Enel Iberia Group, S.L.U. This criterion considers the potential tax recoveries from the assessed amount in the report in dispute for the years following 2011, implying that the net potential contingency from these recoveries, as of 31 December 2025, amounts to €36 million. A guarantee is available to ensure debt suspension.
• Tax assessments issued in 2018 against Endesa concerning Corporate Income Tax for the 2011 to 2014 fiscal years: The points under discussion mainly arise from differences in criteria regarding the deductibility of expenses for the dismantling of power plants (timing difference), certain financial expenses in financing with related companies, and certain losses derived from the transfer of holdings during the inspected period. The process is pending a ruling from the National Court. The contingent amount is €41M and a guarantee is available to ensure debt suspension.
• Tax assessments issued in 2021 against Endesa concerning Corporate Income Tax for the 2015 to 2018 fiscal years: In 2024, the Central Economic-Administrative Court ruled partially in favour regarding certain issues such as the deductibility of remuneration expenses for directors, the criteria for which period to attribute income from refunds of unconstitutional taxes, and the unconstitutionality of certain measures approved by RDL 3/2016, with the enforcement notices having been received in 2025 adjusting these three issues. The Settlement Agreements have been paid.

However, there are several topics still under discussion in the National Court, mainly involving the difference in criteria regarding the deductibility of certain financial expenses in financing with related entities and the propriety of certain Technological Innovation deductions. The contingent amount is €12M and the amount whose refund is requested is €28M.

• Tax assessments issued by various municipalities regarding the Public Highway Occupation Fee: There are ongoing litigations pending resolution, originating from certain municipalities' demands for the fee in its general form (fee for elements), which Endesa believes is incompatible with the special form that taxes 1.5% of the revenue of marketing and distribution companies.

Regarding the demand for the fee in its general form (fee for elements), Endesa additionally appeals the assessments when the municipality does not distinguish between the use and occupation of public land and when reasonable criteria are not applied in valuing the utility of such use or occupation.

Lastly, concerning the inclusion, by municipalities, of Revenue from value-added services and fees with specific allocations for the determination of the taxable base, Endesa has contested these assessments. In February 2023, the Supreme Court resolved the appeals for cassation filed by Endesa, stating that value-added services should not be included in the taxable base for the Public Highway Occupation Fee. Consequently, the ongoing litigations continue in order to apply this jurisprudence.

The amounts in dispute total €1 million. Furthermore, refunds amounting to €8 million are being requested.

Transactions between Group Companies

The transactions between related parties conducted by ENDESA Group companies are aligned with the arm's length principle established in the OECD Guidelines, the EU Joint Transfer Pricing Forum, and the provisions set forth in the Corporate Tax Law.

In accordance with the applicable regulations and recommendations, the pricing methodology to verify compliance with the arm’s length principle must be based on the facts and circumstances of each transaction to ensure that it was conducted under terms that independent parties would have agreed under normal market conditions.

In this regard, if it is possible to identify transactions with comparable characteristics in the market (e.g., indices, public markets, contracts with third parties), the Comparable Uncontrolled Price (CUP) method is applied, as it is the most direct and reliable method to implement the arm's length principle. When market comparables are not available, indirect methods such as the Cost Plus Method (CPLM) are applied, which are validated by applying the Transactional Net Margin Method (TNMM).

When the circumstances of the transactions warrant it, the ENDESA Group promotes the signing of Advance Pricing Agreements (APAs) with tax authorities to define the methodology to be applied.

Throughout 2025, the tax impacts derived from significant related party transactions relevant for tax purposes in Spain have been analysed, along with those that, according to the Related Party Regulations, must be approved by Endesa's Board of Directors. This year, 19 reports on fairness and reasonableness (including their tax component) have been obtained from prestigious firms (EY, PwC, and Deloitte) to support transactions or actions submitted for approval by the Board of Directors regarding Related Party Transactions.