Sanofi Group's Tax Strategy

Sanofi UK Group Tax Strategy

The publication of this strategy statement is regarded as satisfying the statutory obligation under Para 16(2), Schedule 19, Finance Act 2016 for all companies within the Sanofi group.

Our Approach to Risk Management and Governance Arrangements

As part of a multinational group, we are aligned with and follow the wider Sanofi guiding principles, code of conduct and tax policy for the Sanofi group.

Teamwork, respect, courage and integrity are the foundation through which we work to bring our innovative medicines to patients around the world. Those values, incorporated in our Code of Ethics, are embedded in our tax policy.

Our main objective is to ensure that tax is paid, and tax returns are filed on time in each jurisdiction in compliance with the governing laws and rules. Oversight and governance of tax matters is primarily ensured by the corporate Tax Department who establishes and maintains clear and robust policies and procedures that are endorsed by the Sanofi Board and Audit Committee. A set of internal controls has also been implemented to support the operational effectiveness of the tax policy. As a multinational corporation, Sanofi has a responsibility to pay an appropriate amount of tax and comply with the laws and regulations in force in all countries where we do business.

Today’s international multi-jurisdictional dynamic tax environment increases the complexity of managing the Sanofi group’s tax affairs. Changes to international tax law and regulatory changes such as OECD BEPS (Organisation for Economic Cooperation and Development Base Erosion and Profit Shifting) initiatives and EU directives adopted and in the process of being adopted, changes in tax frameworks, tax reforms and other changes to the way existing tax laws are applied in jurisdictions and major countries where Sanofi operate could affect our income, our effective tax rate, and consequently our future net income. These changes may cover matters such as taxable income, tax rates, indirect taxation, transfer pricing, dividend taxation, controlled companies or a restriction in certain forms of tax relief. Any of these changes could have a material adverse effect on our business and future results. Additionally, due to the complexity of the fiscal environment, the ultimate resolution of any tax matters may result in payments greater or lesser than the amounts accrued.

In addition to the above, we also have a responsibility to our stakeholders to facilitate growth and sustain future competitiveness. Changes to our business model may result in changes in the value model and as such increase or decrease the total tax paid in the jurisdiction where a given affiliate of the Group operates. Such business decisions enable us to sustain our results and consequently continue to contribute our appropriate share of taxes to governments.

The Group have established clear income tax policies and procedures. Our robust tax reporting processes include quarterly reporting by the affiliates, reviewed by the Corporate Tax Team. The Group continues to review and invest where appropriate in new technology and tax reporting tools with the aim of further improving the integrity of our reporting processes and timely compliance with all tax reporting obligations.

In addition, we have appropriate governance arrangements in place to ensure adherence to policies and controls specifically relating to tax.

Within the UK responsibility for compliance with the tax policies and procedures lies with the Head of Tax, directly under the control of the UK CFO acting in their capacity as Senior Accounting Officer.

Sanofi’s tax policy is applied consistently to all companies within the UK and is widely understood. The UK group comprises all companies which are incorporated in the UK and whose results are consolidated in the Group’s financial statements.

Our Approach to Tax Planning and Tax Risk

Within the context of the above Group position, tax risk is one of the commercial risks that the UK group is exposed to. Management of tax risk aims to ensure that the Group pays and collects the correct amount of tax and meets local reporting and disclosure requirements whilst meeting its business objectives.

Our UK tax team seeks to deliver clear, timely and relevant business advice around tax. The business understands that tax needs to be involved at an early stage in the decision-making process in order to deliver the most value from the tax advice provided.

We carefully manage the tax risks and costs inherent in every commercial transaction, in the same way as any other cost. Therefore, tax will follow the commercial outcomes, taking account of the need for tax efficiency and our understanding of the currently applicable laws and practices.

Before the Group undertakes any project, which could have a material tax impact, we consider the need for appropriate tax planning and what level of risk is suitable on a project by project basis. When appropriate, Sanofi seeks external tax advice to support its positions.

How Much Tax Risk is the Group Prepared to Accept?

The positions adopted by the Group on tax matters are based on our interpretation of tax laws and regulations. Some of those positions may be subject to uncertainty. In such cases, the Group assesses the amount of the tax liability on the basis of the following assumptions: that our position will be examined by one or more tax authorities on the basis of all relevant information; that a technical assessment is carried out with reference to legislation, case law, regulations, and established practice; and that each position is assessed individually, with no offset or aggregation between positions. Those assumptions are assessed on the basis of facts and circumstances existing at the end of the reporting period. When an uncertain tax position is considered probable, a tax liability is recognised (or a deferred tax asset is not recognised) measured using the Group’s best estimate.

We take a responsible approach to manage our tax affairs and will always comply with applicable tax laws and regulations. However, given the scale of our business and volume of tax obligations, risks may arise from time to time in relation to the interpretation of tax law and the nature of our compliance arrangements.

Our approach to tax risks follows the same principles that apply to all other business risks. We consider the reputation and corporate social responsibility as well as purely financial impacts.

When making decisions on tax we take into account the materiality of any item, as well as the costs of effective risk mitigation actions. By being tax compliant we aim to minimise tax risk wherever possible.

Our Approach to Dealings with HMRC

We are committed to maintaining a transparent and constructive relationship with HMRC in the UK. This includes where appropriate, regular and open dialogue on significant tax issues and developments in the Group’s business.

We see value in working with tax authorities to agree on tax positions and therefore we seek to work collaboratively with HMRC on a real-time basis, as required. This involves us disclosing and seeking clearance on material or significant matters in order to gain agreement on the tax implications.

We recognise that there may at times be areas of differing legal interpretation between the Group and HMRC and where this occurs, we will engage in proactive discussion to bring matters to as rapid a conclusion as possible. Any inadvertent errors in the submission of tax returns and tax computations to HMRC are fully disclosed as soon as reasonably practicable after they have been identified.

In addition, Sanofi supports and participates, directly or through industry, in initiatives with policymakers or national and international governing bodies that provide legal certainty and encourage sustainable growth.

This tax strategy relates to the financial year ending on 31 December 2023.

March 2024 │ Asad Bukhari, Head of Tax, Sanofi UK

MAT-XU-2401297 (v1.0)

April 2024