Tax and accounting uncertainties Sample Clauses

Tax and accounting uncertainties. From an accounting standpoint, an uncertainty remains as to the International financial reporting standards (IFRS16) standard, which may be applicable to PPAs depending on the terms of the agreement. Under this standard that is applicable to leases, lease agreements should be recognized by lessees as assets in their balance sheets. In exchange for this asset, the lessee will also recognize a liability on the liabilities side of its balance sheet. This liability may have significant consequences in terms of financing. However, while in a lease agreement, the lessee has control on the asset, this is prima facie not the case with PPAs, as it is the producer who has control on its installation and on the energy produced. To avoid that a PPA be requalified as a lease agreement on electricity, it is necessary to draft care- fully the clauses relating to the mutual obligations as regards information, liabilities, and penalties, so as there is no ambiguity about the fact that the RE installation is controlled by the operator/producer. From a tax standpoint, an uncertainty exists as to how the internal tax on the final consumption of electricity (‘TICFE’) will be treated in the context of a PPA. A narrow interpretation of Article 266 quinquies C 2 of the French Customs Code, may lead one to consider that the producer is liable for the payment of the TICFE to the extent this producer invoices the electricity directly to a final custo- mer, to whom he delivers the electricity in France. Under this interpretation, it could be conceived that the producer contractually entrusts a third party, who may be the sup- plier, with the collection and repayment of the tax. By the way, one will note here that a producer would more easily be qualified as a supplier within the meaning of the French Customs Code than within the meaning of the French Energy Code, because the definition in the French Customs Code also refers to the person who ‘produces’ electricity for resale to a final customer. A wider interpretation would infer that only the supplier (and not the producer) would be liable for the payment of the TICFE.