Nissan UK Tax Strategy

• Nissan operates in the UK primarily through Nissan Motor Manufacturing (UK) Limited (“NMUK”) and, and Nissan Motor (GB) Limited (“NMGB”). Other companies include Nissan Trading Europe Limited, Nissan Holdings (UK) Limited and Aprite (GB) Limited, and the UK branch of Nissan Motor Parts Centre B.V.
• The principal activity of NMUK is the manufacture of Nissan motor vehicles and spare parts at the Sunderland plant. 
• NMUK also conducts contract R&D functions at Cranfield and contract design and development functions at Paddington under the direction of Nissan Motor Co., Ltd. in Japan. 
• NMUK employs approximately 7,000 people. Of these approximately 6,000 are based at Sunderland and most of the rest in Cranfield.
• The principal activity of NMGB is the distribution and marketing of Nissan motor vehicles and spare parts.
• NMGB employs approximately 200 people mainly based at Maple Cross in Rickmansworth.
• All companies are ultimately owned by Nissan Motor Co. Ltd., a company incorporated in Japan and so UK Tax strategy is governed by the wider global approach to tax by the Nissan Group.
• Nissan operations and business in Europe completed a restructuring to better meet the challenges facing the group and automotive businesses in general. In the UK, NMGB is now supplied directly with models by NMUK. Vehicles made within Europe for export outside of the region are now sold directly by NMUK. In Europe, with exceptions for certain markets, Nissan models are now sold through our regional distributor in Montigny, France, and then into the sales and distribution companies in individual markets. Market risks and rewards for the European market of European-made models, such as those arising from variations in sales volumes, commodity prices or currency fluctuations are now shared between NMUK and the regional distributor.

There are several levels of control to limit tax risk and provide governance:

• The Nissan Global Code of Conduct sets out the integrity expected from employees.
• The Senior Accounting Officer (SAO) regime and structure applies to the UK companies and controls are in place to ensure correct tax accounting. These are consistent with and enhanced by Japanese Sarbanes Oxley (JSOX) controls and strengthened through external review.
• Structured Delegation of Authority controls mean decisions on tax agreements (together with decisions on many areas) are subject to review and authorisation by local / regional / global senior management depending on the underlying value of the decision. This ensures both local and regional oversight of decision making. 
• The UK Boards of Directors are briefed on material tax issues and support this tax strategy.
• Tax risk is also managed through a conservative attitude to tax planning and open communication with tax authorities and maximising certainty through proactive discussions on pricing arrangements and attribution of profits to ensure that such attribution is in accordance with OECD guidelines.  

The inherent risk due to size, complexity and change is mitigated by:

• Tax and Customs functions involvement in key business decisions and general business awareness through the structured debrief cascade within Nissan. This is enhanced through local Finance Director overview of the functions.
• Tax and Customs function collaboration and support to other functions (including but not limited to Administration and Finance, Treasury, Legal, Sales and Marketing, Supply Chain Management and Purchasing).
• Tax function involvement in preparation of intercompany agreements and monitoring of existing agreements, to ensure compliance with transfer pricing and other tax rules.
• Customs function overview of risk areas such as origin, valuation and classification and broker selection.
• Tax and Customs functions personnel are supported by Nissan with appropriate training to maintain and enhance their proficiency in tax and customs matters, including monitoring appropriate legislation and court cases. Tax and Customs functions also receive professional support within the wider Nissan Regional and Global Tax and Customs teams. 
• Analytical review of tax returns prior to submission to ensure they are supported by movements in the underlying business data.
• Taking external advice in complex specialist areas. 
• Engaging with professional trade bodies to identify future risks and changes.

• The UK operates within the Nissan global framework that sets a transparent approach to tax planning strategy. There is an obligation to shareholders to optimise tax efficiencies but set within the overriding context of compliance and brand reputation. Therefore, Nissan therefore does not use contrived structures or enter into non-commercial arrangements to reduce tax.
• The UK Government wants to increase UK productivity and uses incentives as a tool to encourage business participation in R&D and patentable areas and to attract these activities to the UK. This is a positive incentive and Nissan engages in these areas and claims appropriate tax relief and R&D expenditure credits.  

• Nissan’s global brand reputation and the continuing success of the manufacturing and distribution operations are of paramount importance. Consequently, only a low level of tax risk is considered acceptable as demonstrated by proactive discussions with Tax Authorities on pricing arrangements and maintenance of our status as an Authorised Economic Operator.
  

• The trusted working relationship with HMRC is important to Nissan and the ongoing engagement with the HMRC Customer Compliance Manager is highly valued.
• Open and ongoing dialogue with HMRC ensures transparency and helps to prevent unexpected issues arising for both Nissan and HMRC.
• Discussions on uncertain or complex tax positions are conducted in a professional manner.

 19 March 2024