RESPONSIBLE FISCAL MANAGEMENT

Some of the responsibilities the Tax Department is entrusted with include the following:

1. Verifying compliance with Ferrovial’s Tax Policy, Control and Management Policy for Fiscal Risks and the Code of Good Tax Practices.
2. Detecting, analyzing and monitoring tax risks and contingencies.
3. Tax planning with regard to the investments and divestments made by the Group, recommending the use of appropriate and optimal structures.
4. Providing training to employees on taxation issues, as well as on the Group’s Fiscal Risk Management and Control System functions.
5. Participating in relevant forums for discussing tax issues with the intention of strengthening a model of value creation and synergies with all of them, dialog and relations with nongovernmental organizations, such as SEOPAN and CEOE, through which the Group actively participates in legislative initiatives, as well as through its participation in working groups within the Large Companies Forum, within the framework of its commitment to promoting cooperative relations with the Tax Administration.
6. Adopting the relevant measures, implementing systems and automatisms that increase security and efficiency in meeting the objectives set.
7. Attending to and/or advising on complaints or comments received directly or through the channels for reporting noncompliance (Ethical channel) and resolving queries relating to the Group’s Tax Risk Management and Control System.

Since 2017, Ferrovial has voluntarily filed the Tax Transparency Report annually with the Spanish Tax Administration, thereby strengthening legal certainty, mutual understanding, and building confidence in the company’s relationship with the tax authorities.

PREVENTION AND MANAGEMENT OF FISCAL RISKS

Ferrovial has a Tax Risk Management and Control System that is intended to establish a governance framework in tax matters to ensure that the Group’s actions and operations are governed by clear principles, values and rules, aligned with the Group’s Code of Business Ethics and other corporate governance rules, which enable any employee, person or entity that has a relationship with the Group and the Board of Directors to adopt the appropriate decisions to comply with tax legislation, and to reinforce Ferrovial’s commitment to its stakeholders. (i.e. Public administrations, stockholders, stakeholders, employees, etc.) from a tax perspective.

Following the recommendations of the Code of Good Tax Practices, Ferrovial:

• Ensures timely compliance with its tax obligations, filing its taxes properly, with all the relevant information and in accordance with the applicable regulations.
• Promotes measures to prevent and reduce tax risks and establishes the necessary mechanisms to analyze the tax implications prior to any transaction.
• Ensures that the Group’s taxation bears an appropriate relationship to the structure and location of its activities, the human and material resources of the various entities and the business and financial risks assumed by each of them.
• Avoids conflicts arising from the interpretation of law and regulations by consulting regularly with the tax authorities and entering into preliminary valuation agreements.
• Values related-party transactions at market value and complies with transfer pricing documentation obligations under tax law.
• Avoids the use of opaque structures for tax purposes.
• Aligns its Tax Risk Management and Control Policy and System with the rest of the Group’s policies, rules and instructions that make up the Group’s corporate governance system.

This due diligence framework, which is undergoing a process of annual surveillance and control, embodies the company’s firm commitment to observing applicable law and to applying the highest ethical standards when undertaking its business activities. The Compliance and Risk Division is responsible for managing and analyzing how this System works. The independence and effectiveness of this division has been reinforced as it has been provided with new resources and it now reports directly to the Audit and Control Committee.

The programs that form part of Ferrovial’s tax risk management and control system include, among others, the following:

• Ferrovial Risk Management (FRM): Risk and Contingency Identification and Assessment Process, supported by the FRM IT tool in operation at Ferrovial and its group of companies. This process is managed by Ferrovial’s Risk Division. As an integral part of this process, and supported by the same IT tool, is the Risk Identification and Assessment Process and Self-Assessment of Compliance Controls, managed by Ferrovial’s Compliance Department. This process identifies and assesses compliance risks, including risks of criminal acts, and evaluates the monitoring and control measures in place to mitigate them. Likewise, through this process, all business areas report breaches of legislation and regulations with potential criminal consequences for Ferrovial.
• Internal Control over Financial Reporting System (ICFR): Process of identification and assessment of risks and controls associated with the preparation and reliability of financial information, supported by the Diana IT tool.
• SIGEFI and Link 360: Systems for the management and control of tax obligations, to be complied with in all jurisdictions in which Ferrovial operates.

It should also be noted that Ferrovial has at the disposal of its employees, and any other counterparty with a legitimate interest, an Ethics Channel that may be used to report any noncompliance related to the Group’s Tax Risk Management and Control System, as well as to report any illegal act or behavior of a tax nature. The Compliance Division is responsible for managing the operations of the Ethics Channel, in coordination with the appropriate management bodies in each case and, in particular, with the Internal Audit Division.