PUIG UK TAX STRATEGY

1. Introduction to Puig

Puig (1) is a family company with more than a century of history, and the family behind it all provides the backbone of the company’s values which have been passed down over the last three generations, as well as its vision, which defines the pillars of business strategy. It is this vision that enables Puig to set long-term goals for the company, its brands, and the community. Since 1914, the company’s entrepreneurial spirit, creativity, and passion for innovation have made Puig a benchmark in the field of beauty and fashion, with a presence in the fragrance and fashion, makeup, and skincare business segments. These business activities generate a substantial amount and variety of taxes (paid and collected) which form a significant part of Puig’s economic contribution in the United Kingdom (hereinafter “UK), where distributes its products. In 2015 Puig acquired Penhaligon’s London, one of the most prestigious British fragrance houses. Also, in 2020 Puig acquired a majority stake of Charlotte Tilbury, an iconic British makeup and skincare brand founded in 2013.

1 “Puig” refers to the Puig Brands, S.A. company and its subsidiaries and other entities that may be incorporated in the future in which Puig Brands, S.A. holds or may hold direct or indirect control, according to article 42 of the Spanish Commercial Code.

2. Puig’s UK Tax Strategy

2.1. Foundation and Purpose

Puig is committed to respecting the territories in which it operates. In the context of taxation, this implies promoting tax behaviour which takes into consideration the interests and sustainable economic development of the UK, given that the taxes paid are the main contribution to the maintenance of its public sector and, therefore, one of Puig’s significant contributions to society.

Within this framework of corporate social responsibility, the Puig UK Tax Strategy (hereinafter the “Tax Strategy") aims to guide and promote responsible tax behaviour and decision-making in order to ensure the satisfactory implementation of good tax practices, complying with the applicable tax regulations in the UK and avoiding tax risks.

In this regard, the policies and values which underlie this Tax Strategy are supported by and aligned with the corporate principles on which Puig is built. Consequently, Puig adopts the values contained in the Ethical Code as a frame of reference to guide the behaviour of all its entities in tax matters within the specific context of the UK.

 2.2. Scope, Approval & Review

This Tax Strategy applies to all legal entities resident in the UK territory in which Puig Brands, S.A. holds direct or indirect control (except for Charlotte Tilbury entities that have an own tax strategy) following its approval and adoption by the entities’ governing bodies in accordance with the provisions established by applicable legal system.

As defined in paragraph 15 (1) of Schedule 19 of the Finance Act 2016, this Tax Strategy will have its effects on all direct taxes, indirect taxes and taxes on employment income, capital gains and real estate income, local taxes and other tax obligations that apply to Puig in general in accordance with the fiscal regulations applicable in the UK, as well as to all information disclosure obligations that exist with the Tax Authorities in the UK, Her Majesty’s Revenue and Customs, (“HMRC”).

The first Puig UK Tax Strategy was approved by the Board of Directors of all the legal entities belonging to Puig to which it was applicable, being since then published in accordance with section 161 and paragraph 19 (4) of the Finance Act 2016. This version of the Puig UK Tax Strategy has been approved by the Board of Directors of all legal entities to which it is applicable and will be in force until a new version is approved.

In order to achieve permanent improvement, the principles and good practices contained in this Tax Strategy will be reviewed periodically and modified as required to be in compliance with applicable fiscal and other regulations.

2.3. Tax Risk Management and Governance

We take a conservative approach to risk as it relates to UK taxation, and we seek to manage our risk through principles and good fiscal practices established in the Puig Corporate Tax Policy.

In order to promote responsible fiscal behaviour, Puig evaluates exposure to both long-term and short-term fiscal risk in terms of potential economic and reputational impact, taking into consideration shareholders, customers, employees, and other areas of the organization.

The Board of Directors through its Chairman and Chief Executive Officer and senior management promotes the monitoring of the principles and good fiscal practices as well as of those activities that may have a significant fiscal impact. As part of the commercial decision-making process, the Board decides the level of tax risk that is acceptable insofar as UK tax is concerned. Where there is any uncertainty, external advice may be sought, or the business will raise this with HMRC.

Under the supervision of the Audit Committee, Puig adopts the necessary mechanisms to monitor all Puig entities’ compliance with tax regulations and the principles described in the Puig Corporate Tax Policy, in order to identify risk and define and develop prevention and correction measures, as well as internal control procedures.

Puig has a dedicated and qualified Tax function that manages all taxes (with the exception of taxes related to employees that are managed and controlled by Human Resources) and that is organised as follows:

•  A Corporate Tax department that reports hierarchically to the Puig Corporate Chief Financial Officer (“CFO”). In general terms, this department sets out, formalises and communicates to the organisation the relevant tax criteria to be adopted by the Group; promotes the implementation of a tax risk management system; reports to the senior management and governing bodies on all relevant tax matters; establishes the criteria to manage the relation with Tax Authorities and provides tax guidance and advice to the entire organisation.
•  An Operational Tax structure composed of various Operational Tax departments / positions, managing the tax-related matters in the different business divisions / companies / territories in which Puig is present (and thus also the UK) and include all Puig activities. Those departments / positions report hierarchically to the Puig Corporate Chief Financial Officer (“CFO”) via the Finance area. In general terms, this Operational Tax structure applies the Group´s tax criteria when fulfilling and executing tax compliance obligations; deploys the Group’s tax risk management practices; and gives support to the Corporate Tax department in the following matters: obtaining tax-related information, managing the relationship with Tax Authorities and providing and deploying tax guidance and advice throughout the organisation.

All other areas, departments or individuals of Puig, coordinate with the Puig Tax Function to inform and consult about those actions or operations which have particular fiscal significance.

2.4 Tax Planning

With this Tax Strategy, Puig aims to create value for its shareholders, customers, employees and for other stakeholders in a sustainable manner. For this reason, transactions will always be carried out for business reasons in accordance with applicable regulations and take account of the possible impact of fiscal decisions in the UK.

In respect of tax planning, we have a low-risk appetite in general terms and specifically with regards to UK taxation, and we aim to ensure that tax decisions are aligned with commercial strategy and business reasons. Like any other business expense however, we seek to create value for our shareholders. As such, we may respond to tax incentives and exemptions where appropriate and in a way that is consistent with legislative provisions and HMRC guidance.

When any doubt in respect of our tax planning activities, we shall seek external tax advice.

2.5. Relationship with Tax Authorities

Puig will promote a proper relationship with Tax Administrations or competent Tax Authorities in the UK, including HMRC, based on the principles of integrity, respect, excellence, trust and flexibility, adopting the following good practices:

• a) Tax regulations and the provisions of International Treaties will be reasonably interpreted; where contradictory interpretations of fiscal criteria exist, potential conflicts with the Tax Authorities will be limited wherever possible by confirming the appropriate fiscal treatment using the instruments offered by the jurisdiction in question (binding consultations, advance pricing agreements, etc.).
• b) Tax returns will be filed in a proper and timely manner as per the applicable fiscal regulations of the UK country and territory; taxes payable will be duly paid and tax incentives provided by local regulations will be applied in line with the activities carried out by Puig.
• c) Requests for fiscal information and documentation and the requirements of tax audits or inspections carried out by the UK Tax Administrations will be complied with in a clear, precise and complete manner.

In addition, Puig will keep HMRC up to date about any relevant change and event in the business.