2020 Universal registration document and annual financial report - BNP PARIBAS556

7 a Committed Bank: information ConCerninG the eConomiC, soCial, CiviC and environmental resPonsiBility of BnP PariBas

7

Our economic responsibility: financing the economy in an ethical manner

The Group s tax principles

The decisions taken by the BNP Paribas Group are guided by the desire to meet the needs of the real economy, and not by tax considerations.

The choice of location results from the Group s desire to provide its customers with the best possible service. In addition, BNP Paribas avoids setting up in countries or territories considered as non- cooperative by France, the European Union or the OECD.

In all the jurisdictions in which it operates, the Group ensures compliance with tax rules pursuant to treaties, laws and regulations, as well as the payment of all corresponding taxes whatsoever.

The transfer pricing policy applicable to intra-group cross-border transactions excludes any search for tax optimisation. In accordance with the OECD recommendations, it promotes the so-called arm s length principle, under which transactions between entities of the same group are carried out under market conditions.

Around the world, the Group seeks to establish and maintain a cooperative relationship with tax authorities. As such, it pays particular attention to compliance with transparency requirements vis-à-vis the tax authorities, and in particular the obligations relating to transactions that must be the subject of a specific declaration to these authorities (disclosure rules resulting from national laws or European directives).

The Group takes the greatest care in ensuring the tax compliance of its clients:

■ the Group is prohibited from participating in transactions for the benefit of its clients that could lead to an undue tax advantage;

■ in the field of Private Banking, the Group:

■ requires from its non-resident customers a declaration of compliance with their tax obligations, corroborating the other data collected by the bank s teams; failing this, the relationship is terminated,

■ has as a rule not to enter into relations with companies registered in countries or territories considered as non- cooperative;

■ the Group ensures the proper application of all provisions governing withholding taxes as well as the transfer of these funds to the budgets of the countries or territories concerned;

■ the Group also ensures the quality and completeness of information it transmits automatically, on request, or spontaneously, to public authorities.

The Group s fiscally responsible behaviour is reflected in the fair contribution it makes to the revenues of the countries or territories in which it operates.

Each year, the Group is fully transparent by publishing a table presenting, country by country, the net banking income, headcount and income, as well as corporate income tax paid (See Information on locations and businesses, chapter 8, page 6, page 644).

Mandatory deductions payable by BNP Paribas

Globally, the amount of taxes owed by the Group reached EUR 5.9 billion in 2020.

In France, the Group paid taxes and duties of EUR 2.5 billion in 2020.

In addition, the Group plays, free of charge, an essential tax collector role on behalf of public authorities, by withholding taxes relating to both transactions carried out by its customers and the income paid to them.

All of these elements are included in the BNP Paribas Group s tax Code of conduct(1).

PROTECTING CLIENTS INTERESTS Protecting clients interests is a major concern for BNP Paribas. Therefore, the Group has chosen to place this issue at the heart of its Code of conduct and has set up a dedicated expert group within the Group Compliance teams. Protecting clients interests is based in particular on the Code of conduct and the Clients Interests Protection (CIP) policy which now also includes the management of client complaints.

A general Group-wide policy

The Clients' Interests Protection (CIP) defines the applicable rules of organisation and conduct within the Group in terms of protecting customers interests.

These rules must be observed throughout the relationship with the customer and at all stages of the life cycle of products and services, to mitigate the following major generic risks:

■ product and service suitability: risk of selling a product or service that does not meet clients needs or situation;

■ information provided: risk of misleading and/or unclear information being provided to clients, which prevents them from making an informed decision;

■ CIP-related conflicts of interests: risk of not acting in the client s best interests by prioritising the interests of the Group, its employees, its partners or other clients; note that the Conflicts of Interest Policy was updated in 2020;

■ managing client complaints: preventing them from risk of complaints being processed incorrectly.

Relevant employees (in particular Front Office and Management) are trained in the CIP. Verification of the correct application of the Code of conduct and the Clients' Interests Protection policy is the responsibility of all internal control players: permanent control, the control functions (Compliance and Legal), and the General Inspection.

(1) https://group.bnpparibas/uploads/file/the_bnp_paribas_group_s_code_of_tax_conduct.pdf.