"Iberdrola Retribución Flexible" Tax Treatment

The main tax implications of the "Iberdrola Retribución Flexible" remuneration system are set out below, based on the tax legislation in force in the common territory and on the interpretation given by the Spanish General Tax Authority (Dirección General de Tributos) in response to various binding consultations.

Within the framework of the implementation of the new "Iberdrola Retribución Flexible" system, the Company submitted a binding consultation to the Spanish General Tax Authority (Dirección General de Tributos) regarding the tax treatment applicable to its shareholders in Spain subject to the Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas) ("IRPF"), which was answered by the Dirección General de Tributos on 16 January 2018 with reference number V0042-18.

The treatment described below is taken from the answer to such binding consultation, as well as from the answers to the binding consultations obtained by the Company from the Dirección General de Tributos on 27 April 2010 and 1 October 2010 in connection with the former "Iberdrola Dividendo Flexible" remuneration system and the answer to another binding consultation obtained on 12 May 2020 in connection with the "Iberdrola Retribución Flexible" system.

Non-resident shareholders in Spain, holders of CDIs (CREST Depository Interests) or ADRs (American Depositary Receipts) representing shares of the Company should verify with their tax advisors the effects derived from the different options related to the execution of the Capital Increase, including the right to the application of the provisions of the treaties for the avoidance of double taxation signed by Spain.

It should be considered that the tax treatment of the different options related to the execution of the new "Iberdrola Retribución Flexible" system as described herein does not cover all the possible tax consequences nor the potential future regulatory changes that may affect the applicable tax regime.

Therefore, it is recommended that shareholders consult their tax advisors on the specific tax impact of the proposed system and that they pay attention to any amendments that may be made, both to the legislation in force as of the date of this transaction and to the interpretation criteria thereof, as well as to the particular circumstances of each shareholder or holder of free allocation rights.

The shareholders that choose to receive shares as a consequence of the Capital Increase, pursuant to Spanish tax regulations, the delivery of the new shares will be treated for tax purposes as a delivery of fully paid-up shares and, therefore, does not constitute income for purposes of the Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas) ("IRPF") or of the Non-Resident Income Tax (Impuesto sobre la Renta de no Residentes) ("IRNR"), when they do not act through a permanent establishment in Spain. The acquisition value for these shareholders of both the new shares received as a consequence of each Capital Increase and the shares from which they derive, will result from distributing the total cost of acquisition among the applicable number of securities, including both existing securities and those issued as paid-up shares. The date of acquisition of the fully paid-up shares to be delivered shall be the date corresponding to the shares from which they originate. Consequently, in the event of a subsequent transfer, the income subject to taxation that is obtained will be calculated by reference to such new acquisition value.

Shareholders subject to Corporate Income Tax ("IS") or Non-Resident Income Tax ("IRNR"), with a permanent establishment in Spain, will be taxed in accordance with Law 27/2014, of 27 December, on Corporate Income Tax (LIS); in particular, the potential application, where applicable, of the exemption under article 21 of the LIS or the rule set out in article 17.6 of the LIS for the cases in which the reserve used for the issuance of the paid-up shares in the Capital Increase is the share premium reserve. It is recommended that shareholders who are IS or IRNR taxpayers acting through a permanent establishment in Spain consult their tax and accounting advisors on the accounting treatment of the delivery of fully paid-up shares, and the referred administrative rulings, before making any decision regarding the Capital Increase.

In order to clarify the treatment for withholding purposes of the delivery of fully paid-up shares for IS or IRNR taxpayers acting through a permanent establishment in Spain, the Company submitted a consultation to the Spanish General Tax Authority (DGT) which was answered on 12 May 2020 (with reference number CV1357-20), and in such answer the DGT expressly confirms that the delivery of fully paid-up shares is not deemed to be income subject to withholding or payment on account of IS or IRNR by the Company for this type of shareholders.

In the event that the shareholders sell their free allocation rights on the market, and in the specific case of this system, the amount obtained for the transfer of such rights on the market will be subject to the following tax treatment:

a) In the IRPF and in the IRNR for non-residents without a permanent establishment in Spain, the amount obtained in the transfer on the market of the free allocation rights follows the same regime established by tax regulations for pre-emptive subscription rights. Consequently, the amount obtained in the transfer on the market of such rights will be deemed to be a capital gain for the transferor in the tax period in which such transfer takes place. Such capital gain will be subject to withholding on account of IRPF at the rate applicable at that time. This withholding on account of IRPF will be applied by the corresponding depositary entity (and, in the absence thereof, by the financial intermediary or the notary public that has participated in the transfer of such rights).

In the case of IRNR taxpayers without a permanent establishment, the exemptions or reduced rates under the treaties for the avoidance of double taxation signed by Spain and to which they may be entitled, as well as the exemptions established by the IRNR regulations, may be applicable to such capital gain.

b) For purposes of the IS and the IRNR on non-residents with a permanent establishment in Spain, and to the extent that a complete commercial cycle is closed, the tax will be paid pursuant to the LIS and, if applicable, pursuant to the special regimes applicable to the shareholders subject to the aforementioned taxes. All of the foregoing is without prejudice to the application, in particular, of the exemption under article 21 of the LIS or the rule set out in article 17.6 of the LIS for the cases in which the reserve used for the issuance of the paid-up shares in the Capital Increase is the share premium reserve.

If the shareholders choose to receive the cash dividend (in this edition, the Supplementary Dividend for 2025), and/or the cash adjustment dividend becomes applicable in this edition, the applicable regime will be equivalent to that of any ordinary dividend of Iberdrola and, therefore, the amounts received will be classified as income from movable capital. This classification entails the subjection to withholding of the amounts paid. In the case of IRNR taxpayers without a permanent establishment, the exemptions or reduced rates under the treaties for the avoidance of double taxation signed by Spain and to which they may be entitled, as well as the exemptions established by the IRNR regulations, may be applicable to this income.

Finally, on 16 January 2021, the Financial Transaction Tax Law (the "FTTL" and the "FTT", respectively) entered into force.

Pursuant to the terms of the FTTL, the FTT levies a fixed rate of 0.2% on the onerous acquisitions of shares of Spanish companies that are admitted to trading on a Spanish market, a regulated market of the European Union or a market considered equivalent in a third country, provided that the market capitalisation value of the company as of 1 December of the year prior to the acquisition exceeds EUR 1,000 million.

In accordance with the FTTL, the Spanish Tax Agency (Agencia Estatal de Administración Tributaria) has published the list of Spanish companies whose shares, as of 1 December 2025, have a market capitalisation value exceeding EUR 1,000 million. The Company is included in such list and, therefore, in principle, the onerous acquisitions of its shares (or of the depositary certificates representing such shares, such as ADRs or CDIs) throughout 2026 would fall within the scope of the FTT (without prejudice to the corresponding exemptions that may be applicable).

The foregoing notwithstanding, the Spanish Tax Agency has published a document of "Frequently Asked Questions on the Financial Transaction Tax" (which is periodically updated), according to which the acquisitions of shares within the framework of shareholder remuneration programmes known as "scrip dividend" (to the extent that the shares delivered are new shares resulting from a fully paid-up capital increase) are not subject to the FTT.

However, the FTT may subject to taxation (at the fixed rate of 0.2%) other transactions involving shares of the Company (or ADRs or CDIs), regardless of the residence of the parties involved.

In any event, shareholders and holders of free allocation rights are recommended to consult their tax advisors on the impact of the FTT and of any other tax measure, taking into account the particular circumstances of each shareholder or holder of free allocation rights.