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TELEFONICA EUROPE B.V.

Annual Report

December 31, 2025

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Telefonica Europe B.V.	2025 Annual Report

Contents

Page

• Directors’ Report …………………..……………………………………………………………………………… 3

• Responsibility statement ………………………..……………………………………………………………..8

• Financial Statements:

• Balance Sheet (before appropriation of result) ….……….................................9

• Statement of Profit and Loss …………………...……………………………………………….. 10

• Notes to the Financial Statements……………....……………………………………………. 11

• Other Information……………...………………………………………………………………………………….. 26

• Independent Auditor’s report……………………………………………………………………. 26

• Statutory provision regarding appropriation of Result………………………………. 26

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Telefonica Europe B.V.	2025 Annual Report

DIRECTORS’ REPORT

The management herewith submits the Financial Statements of Telefonica Europe B.V. ("the Company") for the

financial year ended on December 31, 2025. Unless stated otherwise the amounts presented below should be

read in thousands of EURO.

General Information and Principal Activities

Telefónica Europe B.V. ("the Company"), having its statutory seat, place of operations and registered office in

Amsterdam, The Netherlands, and registered with the Dutch Chamber of Commerce under number 24263798 is

engaged in holding and financing activities for related companies. The home member state selected by the

Company is Ireland. The office of the Company is located in Zuidplein 112, 1077XV, Amsterdam (The

Netherlands). The Company was incorporated on October 31, 1996.

The Company’s main activity is the financing of group companies, through bond offerings on the international

capital markets. The repayment of the bonds to the investors is guaranteed by Telefonica S.A, the ultimate

shareholder of the Company, as disclosed in the notes to the financial statements.

Company’s main stakeholders

The Company is a wholly owned subsidiary of Telefónica, S.A., located in Madrid, Spain. Telefónica, S.A. is the

ultimate parent and controlling company. At December 31, 2025 the Company does not own, directly or

indirectly, any capital stock or other equity interests in any subsidiary.

Result

During the year under review, the Company recorded a profit after taxes of EUR 2,671 thousand (2024: EUR 2,662

thousand), which is set out in detail in the enclosed Statement of Profit and Loss.

The Financial Net Result has decreased, from EUR 4,830 thousand in 2024 to EUR 4,747 thousand in 2025 mainly

due to lower interest income accrual for subordinated obligations on-lent volumes in average terms.

Operational expenses, including personnel expenses, amounted to EUR 1,161 thousand in 2025 (2024:

EUR1,261). The decrease, when compared to 2024, was mainly due to lower personnel expenses as the number

of employees was reduced from 2 to 1 in 2025 and lower legal fees related to hybrid repurchases as no

repurchases took place in 2025.

Financing Activity

In regular course of business, the Company continued its financing activities by entering into several financing

agreements unconditionally and irrevocably guaranteed by its parent company. The most relevant financing

operations formalized during 2025 are the following:

i) In the short term, the Company continued with its issuing activity under the EUR 5,000,000 thousand

Euro Commercial Paper Programme (“ECP”) and, during 2025, placed among several international

investors 44 ECPs denominated in euro for a notional amount of EUR 3,099,000 thousand. The notional

outstanding at December 31, 2025 is EUR 1,187,500 thousand (December 31, 2024: EUR 1,165,000

thousand).

Research and development

The Company, due to its nature of business primarily being financing, does not engage in research and

development activities.

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Telefonica Europe B.V.	2025 Annual Report

Subsequent events

On January 22, 2026, the Company repurchased EUR 1,537,500 thousand across two Euro denominated hybrid

securities: EUR 885,000 thousand of its Hybrids issued on March 22, 2018, with an annual coupon of 3.875% and

EUR 652,500 thousand of its Hybrids issued on November 23, 2022, with an annual coupon of 7.125%. Following

the liquidation and cancellation of the repurchased hybrids, and in accordance with their terms and conditions,

the Company announced the option to exercise the clean-up call of both hybrid securities. Accordingly, on

February 3, 2026, the Company fully called and cancelled (following a substantial purchase event) the remaining

outstanding amount of EUR 97,500 thousand of its Undated Deeply Subordinated Guaranteed Fixed Rate Reset

Securities issued on November 23, 2022 (7.125% coupon), and on February 23, 2026, it fully called and cancelled

(following a substantial purchase event) the remaining outstanding amount of EUR 115,000 thousand of the

corresponding securities issued on March 22, 2018 (3.875% coupon). As these repurchases and subsequent call

actions occurred after the reporting date, they are treated as non‑adjusting subsequent events and therefore do

not affect the classification or measurement of the related instruments at year‑end.

On January 23, 2026, Telefónica Europe, B.V. submitted Form 15F to the U.S. Securities and Exchange

Commission (“SEC”) to immediately suspend its reporting obligations under the U.S. Securities Exchange Act of

1934.

Future developments

Subject to financial market conditions, the Company will continue to seek and prospect for new markets and

sources of finance for the Telefónica Group in order to extend its investor base.

Currently, there is no liquidity shortage within the Company in relation to the debts due for the coming 12

months. The Company will continue to monitor its solvency and liquidity position.

Risks and uncertainties

The main risk and uncertainties the Company will face are summarized as follows:

i) Liquidity and credit risk:

Liquidity and credit risks management is implemented according to the Telefonica Group policies. As of

December 31, 2025, the Company has lent the funds borrowed, to Telefónica, S.A. which guarantees most of the

external debt subscribed by the Company. However, from time to time the Company could invest funds in other

companies within the Group. In addition, the Company holds cash balances in several financial institutions.

In summary, any substantial credit or liquidity risk would be related to credit risk of Telefónica S.A. and its Group.

ii) Interest rate and Foreign Exchange risk:

Currently, the Company lends money to Telefónica S.A. denominated in the same currency although, from time

to time the Company may also lend money to other companies within the Group. At present, all loans granted

are denominated in the same currency as the funds it raises on the capital markets. Therefore, the Company is

implementing a natural hedge and foreign exchange fluctuation in exchange rates have very limited impact on its

financial result.

However, the Company may have a limited foreign exchange risk due to the financial margin earned in several

currencies different from Euro (mainly JPY and USD) and cash positions held in foreign currencies (USD, JPY and

GBP).

As of today, the Company policy is to hedge any interest rate exposure arising from funding raised, by investing

on the similar terms and conditions (tenors and type of interest, whether it may be floating or fixed interest

rates). Nevertheless, if that would not be eventually possible, or the management may not consider it

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Telefonica Europe B.V.	2025 Annual Report

appropriate, the Company may look to mitigate any interest rate risk in other ways (by using derivatives or any

other suitable instrument) or eventually decide not to hedge it.

iii) Existing or worsening conditions in the financial markets may limit the Telefónica’s Group ability to

finance, and consequently, the ability to carry out its business plan:

Telefónica’s international presence enables the diversification of its activities across countries and regions, but it

exposes Telefónica to diverse legislation, as well as to the political and economic environments of the countries in

which it operates. Any adverse developments in these countries, such as economic uncertainty, inflationary

pressures, rapid normalization of monetary policy, exchange rate or sovereign-risk fluctuations, as well as

growing geopolitical tensions, may adversely affect Telefónica’s business, financial position, debt management,

cash flows and results of operations and/or the performance of some or all of the Group’s financial indicators.

Over the past few years, the global economy has faced successive shocks that have created an environment of

extraordinary uncertainty, marked by overlapping disruptions. Inflationary pressures initially stemmed from

supply bottlenecks during the rapid post-pandemic recovery and surging commodity prices. These factors

prompted central banks to respond aggressively by raising interest rates and withdrawing liquidity, which in turn

caused a significant loss of purchasing power for households. Higher wage demands—driven by tight labor

markets in advanced economies and residual wage indexation practices—further fueled inflation.

Recently, inflationary pressures have eased across most regions where the Group operates, but the disinflation

process has been uneven, and core inflation remains still sticky in several economies. Geopolitical risks persist:

the Russia-Ukraine war, escalating tensions in the Middle East, and tariff disputes between major economies

continue to threaten global trade flows, energy security, and price stability.

Financial risks have also evolved. The extended phase of Central Bank prudence, couple with high government

indebtedness levels increases the likelihood of renewed market volatility and stress episodes, particularly if

inflation proves more persistent than expected. Conversely, aggressive monetary easing could reignite

inflationary pressures, increasing the risk of stagflation period akin to the 1970s.

Looking ahead, several factors could amplify current vulnerabilities. Intensification of armed conflicts and

disruptions to energy and commodity supply chains. Additional spikes in commodity prices, which could de-

anchor inflation expectations. Stronger-than-expected wage growth, prolonging inflation and constraining

monetary policy flexibility. Trade tensions, including potential new tariffs on U.S. imports, which would have both

economic (lower growth, higher inflation) and political repercussions. Or any other economic or political decision

that adversely affects the proper functioning of financial markets.

In this context, global growth has been more resilient than previously expected despite it is exposed to sudden

stops. Structural challenges—such as geopolitical fragmentation, supply chain reconfiguration, and the transition

to clean energy—will continue to shape the risk landscape for corporates.

So far, the main European countries where the Group operates have been affected by the ongoing geopolitical

conflicts mainly through the price channel (higher commodity prices, intermediate inputs, salary costs and

external tariffs, among others). However, there continues to be a concern in Europe about energy and security

dependence in the face of potential episodes of gas shortages and lengthening energy transition on one hand,

and economic or conflict amidst geopolitical shifts on the other. Latin America could be affected by lower

external demand associated with slower global growth, deteriorating terms of trade, tighter financial conditions,

doubts about debt sustainability and also by the consequences of global order changes.

In Europe, there are several economic and political risks. Firstly, the evolution of armed conflicts poses a threat to

growth and inflation prospects as well as the recent tariff imposition by U.S. that could hit the economy. Any

worsening in the supply of gas, oil, food, or other goods due to disruptions in the supply chain would negatively

impact their prices, with a consequent effect on the disposable income of both households and businesses. In the

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Telefonica Europe B.V.	2025 Annual Report

medium term, this could result in wage increases, a persistent rise in inflation, and tighter monetary policy. Any

of the above could have a negative impact on the cost of financing for the private sector, including Telefónica,

and could trigger episodes of financial stress.

In addition, there is also a risk of financial fragmentation in the eurozone amidst different debt-sustainability

positions, meaning that interest rates may react differently in different countries within the eurozone, leading to

differences in yields on bonds issued by more indebted countries (including Spain) and those issued by less

indebted countries, making it challenging for the former to access credit at low rates.

Lastly, Europe faces three significant long-term risks. First, Europe may fall behind in the global technological race

in particular because of both its dependence on several critical raw materials, indispensable for key sectors, that

must be imported from other regions, and its lag in technological innovation due to economic and financial

fragmentation. Second, a burdensome regulatory environment in the European Union poses a significant threat

to business, impeding growth and eroding competitiveness, with companies based in countries and regions

where regulations are relatively less complex, extensive or restrictive. Third, demographic factors such as

declining birth rates and population aging may have a negative impact on the region's labor force and long-term

growth prospects.

Regarding political risk, it remains to be seen whether parliament fragmentation hinders governance and the

continuity of the ongoing agenda in fiscal and economic matters, climate and energy policy as well as other

aspects of regional governance.

iv) Fraud/Bribery/Anticorruption:

Telefónica Europe, B.V as a company belonging to Telefónica, S.A. falls within the control environment of the

Telefónica S.A. group. In ethics and compliance management, we follow several lines of action to ensure ethical

behavior throughout our Company, based on zero tolerance of corruption and bribery. The system is based on

legal compliance, employee training, and the establishment of internal mechanisms for reporting potential non-

compliance. It is accompanied by principles of fair competition, political neutrality, fiscal transparency and

responsible communication, and is monitored by the Company’s internal control processes including processes

such as the authorization of payments. Telefónica Europe, B.V has accessibility to the same whistleblower

channel as Telefónica S.A. that allows employees and stakeholders to make a complaint anonymously or

personally to report any alleged irregularity or act contrary to the law or internal regulations. Since the end of

2020, it has been accessible through a form on the website to give access to all stakeholders and thus comply

with the European Directive on the Protection of Persons Reporting Breaches of EU Law and with the update of

the Good Governance Code for listed companies. Management of the Complaints Channel is governed by the

principles of confidentiality of the data provided, i.e. respect, substantiation and completeness. In cases where

irregularities are Identified, the Audit and Control Committee of Telefónica S.A. and the board of directors of

Telefónica Europe B.V. are informed. In 2025, no instances have been reported with respect to Telefónica Europe

B.V.

v) Climate Change:

Telefónica Europe B.V.’s exposure to climate change is mainly through potential impacts on climate change from

the Telefónica group. The Telefónica Group is committed to deploying the most efficient telecommunications

networks (fibre and 5G) powered by renewable energy. The Telefónica Group is working to become a leading

supplier of solutions that help our customers to reduce their CO2 emissions and promotes the circular economy

in the use of electronic devices through eco-design, reuse and recycling. No significant direct impacts are

expected for Telefonica Europe B.V.’s financial position.

ESG reporting regulation, Corporate Sustainability Reporting Directive (short: CSRD), is being implemented in

Europe. The broader group implemented CSRD at a group level to report over financial year 2024 onwards.

Telefónica Europe B.V. is monitoring the standalone reporting requirements and noted that with the stop-the-

clock directive reporting requirements for the company are delayed until reporting over financial year 2027. At

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Telefonica Europe B.V.	2025 Annual Report

the same time if current Omnibus proposals would become law all standalone ESG reporting requirements for

the company would likely not come into effect anymore.

No significant impact regarding risks and uncertainties occurred during past financial year.

Solvency of the Company

The solvency of the Company is linked to the liquidity and credit risk described below in the financial risk note.

Dutch Act on Management and Supervision

The Dutch Act on Management and Supervision indicated target figures for a balanced gender distribution when,

of the seats occupied by individuals, at least 30% are occupied by women and at least 30% by men.

Given the law enactment the Company did not meet the above-mentioned gender balance in 2025 (25%) neither

in 2024 (25%). The Company will pursue a policy to comply with the guidelines of the act and continue to strive

for an adequate and balanced composition of its board of directors in future appointments, by considering all

relevant selection criteria, including but not limited to gender balance and executive experience.

On an annual basis and since 2023 the Company is reporting to the Diversity Portal as an initiative of the Sociaal

Economische Raad (SER) and established a plan of action to set an appropriate and ambitious target to comply

with the guidelines of the act and continue to strive for an adequate and balanced composition of its board of

directors in future appointments (The Diversity Portal is an initiative to motivate and facilitate companies in the

Netherlands to work on gender diversity in the boardrooms). The target for the board of directors is set at

33.33% for 2026.

Audit Committee

The Company has not established an audit committee, as it is delegated to the audit committee of the parent

company by using the exemption for subsidiaries as mentioned under article 3 of the legislation as announced on

July 26, 2008 (“Koninklijk Besluit 323”).

Average number of employees

During the period under review the Company employed 1 person working in The Netherlands.

Amsterdam, February 23, 2026

/s/ /s/

Mr. Carlos David Maroto Sobrado Mr. François V. N. Declève

/s/ /s/

Mr. Lennart Pieter Schoenmaker Mrs. Priscilla Schraal

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Telefonica Europe B.V.	2025 Annual Report

Responsibility Statement

The board of directors have signed these financial statements pursuant to their statutory obligations under art.

5:25c(2)(c) Financial Markets Supervision Act. to the best of their knowledge, the financial statements give a true

and fair value of the assets, liabilities, financial position and profit or loss of the company in accordance with Title

9 Book 2 of the Dutch Civil Code, and the board of director’s report gives a true and fair view of the position and

performance of the business of the company, and reflects the significant risks related to the business.

The Directors of the Company wish to state:

-That the financial statements give a true and fair view of the assets, liabilities, financial position and

result of the Company;

-That the annual report gives a true and fair view of the position as per the balance sheet date, the

development during the financial year of the Company, together with a description of principal risks it faces;

-That the director’s report gives a true and fair review of the development and the performance of the

business of the Company during the financial year to which the report relates.

Amsterdam, February 23, 2026

/s/ /s/

Mr. Carlos David Maroto Sobrado Mr. François V. N. Declève

/s/ /s/

Mr. Lennart Pieter Schoenmaker Mrs. Priscilla Schraal

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Telefonica Europe B.V.	2025 Annual Report

FINANCIAL STATEMENTS

BALANCE SHEET

AS AT DECEMBER 31, 2025

(before appropriation of result)


				Euros in thousands
ASSETS		Note	2025		2024
Fixed Assets
Tangible fixed assets		1	-		1
Financial fixed assets		2	9,179,942		9,324,751
Total Fixed Assets			9,179,942		9,324,752

Current Assets
Loans receivable		3	1,169,118		1,143,746
Interest receivable			234,510		245,328
Other current assets			781		763
Cash at bank		4	3,160		3,135
Total Current Assets			1,407,569		1,392,972
TOTAL ASSETS			10,587,511		10,717,724

SHAREHOLDER'S EQUITY AND LIABILITIES	Note		2025		2024
Shareholder's Equity		5
Issued share capital			46		46
Retained earnings			4,701		4,701
Undivided result			382		435
Result for the year			2,671		2,662
Interim dividend			(2,289)		(2,227)
Total Shareholder´s Equity			5,129		5,182

Long Term Liabilities
Bonds and loans		6	9,180,143		9,325,004
Total Long Term Liabilities			9,180,143		9,325,004

Current Liabilities
Short term loans and bonds		7	1,169,118		1,143,746
Interest payable			232,268		243,096
Taxes payable			292		166
Other debts and accrued liabilities			561		530
Total Current Liabilities			1,402,239		1,387,538
TOTAL EQUITY & LIABILITIES			10,587,511		10,717,724

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Telefonica Europe B.V.	2025 Annual Report

STATEMENT OF PROFIT AND LOSS

FOR THE YEAR ENDED

DECEMBER 31, 2025


		Euros in thousands
	Note			2025	2024
Financial Income and Expenses
Interest Income				518,606	541,579
Interest Expense				(513,858)	(536,736)
Currency Exchange result				(1)	(13)
Net financial result			8	4,747	4,830
Operational Expenses
Personnel expenses				(106)	(174)
Administrative expenses			9	(1,055)	(1,087)
Result from ordinary activities before taxation				3,586	3,569
Taxation			10	(915)	(907)
RESULT AFTER TAXATION				2,671	2,662

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Telefonica Europe B.V.	2025 Annual Report

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED

DECEMBER 31, 2025

General Information and Principal Activities

Telefónica Europe B.V. ("the Company"), having its statutory seat, place of operations and registered office in

Amsterdam, The Netherlands, and registered with the Dutch Chamber of Commerce under number 24263798 is

engaged in holding and financing activities for related companies. The home member state selected by the

Company is Ireland. The office of the Company is located in Zuidplein 112, 1077XV, Amsterdam (The

Netherlands). The Company was incorporated on October 31, 1996.

The Company’s main activity is the financing of group companies, through bond offerings on the international

capital markets. The repayment of the bonds to the investors is guaranteed by Telefonica S.A, the ultimate

shareholder of the Company, as disclosed in the notes to the financial statements. We paid specific attention to

the areas of focus driven by the operations of the Company, as set out below.

The authorized share capital of the Company consists of 100 ordinary shares with a par value of EUR 460 each

(EUR 46,000). On December 31, 2025, and December 31, 2024, the issued capital of the Company consists of 100

ordinary shares, which have been fully paid and which represent a total paid up capital in the amount of EUR

46,000.

Group Affiliation

The Company is a wholly-owned subsidiary of Telefónica, S.A., located in Madrid, Spain. Direct or indirect

subsidiaries of Telefónica, S.A. are referred to as related companies.

At December 31, 2025 and December 31, 2024, the Company does not own, directly or indirectly, any capital

stock or other equity interests in any subsidiary.

Basis of Presentation

The financial statements are drawn up in accordance with the provisions of Title 9, Book 2 of the Dutch Civil Code

and the firm pronouncements in the Dutch Accounting Standards, as published by the Dutch Accounting

Standards Board (‘Raad voor de Jaarverslaggeving’).

As most of its activities are carried out in the Eurozone and the Company is domiciled in the Netherlands, the

functional currency is the Euro. Therefore, these financial statements are presented in Euro.

Euro Medium Term Note Debt Programme

In 1996, the Company entered into a USD 1,500,000 thousand EMTN Debt Issuance Programme, arranged by

Morgan Stanley & Co. International Limited, unconditionally and irrevocably guaranteed by Telefónica, S.A. Under

the Programme, the Company may from time to time issue instruments in different currencies up to a maximum

aggregate principal amount of USD 1,500,000 thousand. The total maximum aggregate principal amount was

increased in 1998 to USD 2,000,000 thousand. In 2000, the total maximum aggregate principal amount was

increased to EUR 8,000,000 thousand and finally, in July 2003, the maximum aggregate principal amount was

increased again to EUR 10,000,000 thousand. The notes are listed on the Irish Stock Exchange. The Company has

not issued any notes under this Programme since 2003. The proceeds of the notes issued are lent to the parent

company or to other related companies within the group of the parent company (Telefónica, S.A.).

As at December 31, 2025, the EMTN Debt Issuance Programme includes:

Euro Notes due 2033EUR500,000,000 (EUR 500,000 thousand on December 31, 2024)

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Telefonica Europe B.V.	2025 Annual Report

Global bonds

As at December 31, 2025, there is only one outstanding note USD 1,250,000 thousand (USD 1,250,000 thousand

on December 31, 2024) carrying a semi-annual coupon of 8.25% and maturing on September 2030 and is quoted

in Frankfurt.

Euro Commercial Paper Programme (ECP Programme)

On June 29, 2000, the Company entered into a Euro Commercial Paper Programme with a maximum aggregate

principal amount of EUR 2,000,000 thousand or its equivalent in alternative currencies. The Programme was

updated in May 2005 and in May 2012, when its maximum aggregate principal amount outstanding (limit of the

Programme) was raised from EUR 2,000,000 thousand to EUR 3,000,000 thousand or its equivalent in alternative

currencies. On April 22, 2016, the limit of the Programme was increased again by fixing this maximum

outstanding principal amount into EUR 5,000,000 thousand or its equivalent in the alternative currencies. On

December 17, 2019, the Company entered into an amended and restated agreement with no impact on the limit

of the Programme fixed on April 22, 2016.

The parent company guarantees in an unconditional and irrevocable basis all issues made under the ECP

Programme. Notes may have any denomination, subject to compliance with any applicable legal and regulatory

requirements. The minimum denominations are EUR 500,000, USD 500,000, JPY 100,000,000, and GBP 100,000.

The tenor of the notes shall be not less than one or more than 365 days.

The notional outstanding amount as at December 31, 2025 is EUR 1,187,500 thousand (EUR 1,165,000 thousand

on December 31, 2024). In the balance sheet the outstanding ECP issues are stated at their discounted notional

amounts and were accounted for EUR 1,169,118 thousand at December 31, 2025 (EUR 1,143,746 thousand on

December 31, 2024).

JPY Dual Currency Loan

The Company borrowed JPY 15,000,000 thousand in three loans from a Japanese investor with a maturity on July

2037. Under this agreement interests are payable in USD on a semi-annual basis at a fix annual rate of 4.75%. The

notional outstanding amount as at December 31, 2025 and December 31, 2024 is JPY 15,000,000 thousand.

Undated Deeply Subordinated Guaranteed Fixed Rate Reset Securities in EUR

On March 22, 2018, the Company issued two additional tranches of Hybrids of EUR 1,250,000 thousand and EUR

1,000,000 thousand.

On September 24, 2019, the Company issued a new tranche of Non-Call 8 years Hybrids of EUR 500,000 thousand

and carrying an interest rate of 2.875%.

On February 5, 2020, the Company issued a new tranche of Non-Call 7.25 years Hybrids of EUR 500,000 thousand

and carrying an interest rate of 2.502%.

On February 12, 2021, the Company issued a new tranche of Non-Call 8.25 years Hybrids of EUR 1,000,000

thousand and carrying an interest rate of 2.376%.

On November 24, 2021, the Company issued a new tranche of Non-Call 6.5 years Hybrids of EUR 750,000

thousand and carrying an interest rate of 2.88%.

On November 23, 2022, the Company issued a new tranche of Non-Call 6 years Hybrids of EUR 750,000 thousand

and carrying an interest rate of 7.125%.

On February 2, 2023, the Company issued a new tranche of Hybrids Non-Call 7.25 years of EUR 1,000,000

thousand and carrying an interest rate of 6.135%.

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Telefonica Europe B.V.	2025 Annual Report

On September 7, 2023, the Company issued a new tranche of Hybrids Non-Call 8 years of EUR 750,000 thousand

and carrying an interest rate of 6.75%.

On March 15, 2024, the Company issued EUR 1,100,000 thousand Undated Deeply Subordinated Guaranteed

Fixed Rate Reset Securities (commonly known as hybrids) 8.1 years non-Call and carrying an interest rate of

5.7522%.

On September 18, 2024, the Company issued EUR 200,000 thousand Undated Deeply Subordinated Guaranteed

Fixed Rate Reset Securities (commonly known as hybrids) 8 years Non-Call (Tap of the NC31) and carrying an

interest rate of 6.75% (Yield of 5.15%).

The hybrid securities outstanding at December 31, 2025, amounted a total notional amount equivalent to EUR

7,550,000 thousand. At December 31, 2025 all hybrid securities issued by the Company are listed for trading on

the Irish Stock Exchange (through Euronext Dublin and the Global Exchange Market).

The main terms of the tranches currently outstanding at December 31, 2025 are the following:

i.EUR 1,000,000 thousand issued on March 22, 2018, and with a first reset date on September 22, 2026,

with an annual coupon of 3.875% (ISIN: XS1795406658);

ii.EUR 500,000 thousand issued on September 24, 2019, and with a first reset date on September 24, 2027,

with an annual coupon of 2.875% (ISIN: XS2056371334);

iii.EUR 500,000 thousand issued on February 5, 2020, and with a first reset date on May 5, 2027, with an

annual coupon of 2.502% (ISIN: XS2109819859);

iv.EUR 1,000,000 thousand issued on February 12, 2021, and with a first reset date on May 12, 2029, with

an annual coupon of 2.376% (ISIN: XS2293060658);

v.EUR 750,000 thousand issued on November 24, 2021, and with a first reset date on May 24, 2028, with

an annual coupon of 2.880% (ISIN: XS2410367747);

vi.EUR 750,000 thousand issued on November 23, 2022, and with a first reset date on Nov 23, 2028, with an

annual coupon of 7.125% (ISIN: XS2462605671);

vii.EUR 1,000,000 thousand issued on February 2, 2023, and with a first reset date on May 3, 2030, with an

annual coupon of 6.135% (ISIN: XS2582389156);

viii.EUR 950,000 thousand issued on September 7, 2023, and with a first reset date on Sep 7, 2031, with an

annual coupon of 6.75% (ISIN: XS2646608401) (includes the TAP of EUR 200,000 thousand issued on September

18, 2024);

ix.EUR 1,100,000 thousand issued on March 15, 2024, and with a first reset date on Apr 15, 2032, with an

annual coupon of 5.752% (ISIN: XS2755535577).

The annual coupon included for all the securities is until the first reset date. After that, they will be reset

depending on the swap rates as disclosed in each security listed documentation.

Investments of the Company

Substantially all the net proceeds from the principal or notional amounts obtained or borrowed by the Company

under its financing activities have been lent on to the parent company.

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Telefonica Europe B.V.	2025 Annual Report

Cash flow statement

A cash flow statement has not been included in this financial statement as the Company's cash flows are included

in the consolidated cash flow statement in the financial statements of the ultimate parent company Telefónica,

S.A., which can be obtained from its website. This exemption is provided in DAS 360.104.

ACCOUNTING POLICIES

General

The accounting principles of the Company are summarized below. These accounting principles have all been

applied consistently throughout the year and the preceding year unless otherwise indicated.

Going concern

Management believes that there is no going concern risk as there isn’t a material uncertainty for the Company

and concluded that there is not a risk of going concern for the next 12 months from the date of preparation of

the financial statements.

Inherent to the company’s activities, its going concern is dependent upon the financial performance of the

Telefonica Group companies to which it has issued loans. The Company’s Directors evaluated the financial

position of the counterparties of loans to group companies and their ability to repay the notional and interest to

the Company. The Company has not identified events or conditions that may cast significant doubt on the

Company’s ability to continue as a going concern.

The Company will continue to monitor its solvency and liquidity position and believes that neither the energy

crisis nor the inflation or the Russia-Ukraine and the Israel-Hamas armed conflicts would have material adverse

effect on the Company’s liquidity and solvency position.

Foreign currencies

Assets and liabilities denominated in foreign currencies are translated into the presentation currency at exchange

rates prevailing at the Balance Sheet date. Any resulting exchange differences are recorded in the Statement of

Profit and Loss.

Revenues and expenses in the year under review, which are denominated in foreign currencies, are translated

into the reporting currency at the Exchange rate of the transaction date.

Accounting policies in respect of the Balance Sheet

Tangible fixed assets

Tangible fixed assets are stated at their historical cost net of accumulated depreciation and any accumulated

impairment. Depreciation is provided over the expected useful life of the related asset under the straight-line

depreciation method. The estimated useful lives are:

Furniture and office equipment: 3 to 5 years

Financial fixed assets

At its initial recognition in the Balance Sheet, long term receivables from related companies are measured at its

fair value, which is the transaction price plus the transaction costs that are directly attributable to the issue of the

financial asset.

Subsequently, long term receivables from related companies are carried at amortized cost using the effective

interest rate method, except where otherwise stated in these notes. Gains and losses are recognized in the Profit

and Loss statement when the loans are derecognized or impaired, as well as through the amortization process.

15


Telefonica Europe B.V.	2025 Annual Report

Transactions with related parties

Transactions with related parties are disclosed in the notes insofar as they are not transacted under normal

market conditions. The nature, extent and other information is disclosed if this is necessary in order to provide

the required insight.

Currently the Company doesn’t have any subsidiary. All legal entities that can be controlled, jointly controlled or

significantly influenced would be considered to be a related party. Also, entities which can control the Company

are considered to be a related party. In addition, statutory directors, other key management of the Company or

the ultimate parent company and close relatives are regarded as related parties.

Impairment of financial assets

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine

whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates

that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative

effect on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets are impaired can include default or delinquency by a debtor,

restructuring of an amount due to the Company on terms that the Company would not consider otherwise, or

indications that a debtor or issuer will enter bankruptcy.

The Company considers evidence of impairment for receivables at both a specific and collective level. All

individually significant receivables are assessed for specific impairment. All individually significant receivables

found not to be specifically impaired, together with receivables that are not individually significant are

collectively assessed for impairment by grouping together receivables with similar risk characteristics.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference

between its carrying amount and the present value of the estimated future cash flows discounted at the asset's

original effective interest rate. Losses are recognized in profit or loss and reflected in an allowance account

against receivables. When a subsequent event causes the amount of impairment loss to decrease, the decrease

in impairment loss is reversed through profit or loss.

Current loans receivables and other payables

Current loans are those with a maturity equal to or lower than 12 months. These are initially measured at fair

value. Subsequent to initial recognition, current loans receivables and payables are carried at amortized cost

using the effective interest rate method, except where otherwise stated in these notes.

Interest receivables and interest payables

The Company accrues interest income and expenses in the balance sheet current assets or current liabilities, as it

is applicable, when such interests are receivable/due according to the terms and conditions of the instruments

subscribed. Following an interest payment, the accrual of interest is derecognized (in the same amount) in

balance sheet.

Cash at banks

Cash at banks represent cash in bank balances and deposits with terms of less than twelve months. Overdrafts at

banks are recognized as part of debts to lending institutions under current liabilities. Cash at banks is carried at

nominal value.

Bonds and loans

At its initially recognition in the Balance Sheet, bonds and loans are measured at its fair value, which is the price

of the transaction minus the transaction costs that are directly attributable to the issue of the financial liability.

16


Telefonica Europe B.V.	2025 Annual Report

Subsequently, bonds and loans are carried at amortized cost using the effective interest rate method, except

where otherwise stated in these notes. Gains and losses are recognized in the Statement of Profit and Loss when

the liabilities are derecognized as well as through the amortization process.

Estimates

In applying the principles and policies for drawing up the financial statements, the directors of Telefonica Europe

B.V. make estimates and judgments that may be essential to the amounts disclosed in the financial statements. If

it is necessary in order to provide the true and fair view required under Book 2, article 362, paragraph 1, the

nature of these estimates and judgments, including related assumptions, is disclosed in the fair value note of the

to the relevant financial statement item.

Accounting policies in respect of result determination

Interest incomes and expenses

Interest income and expense are recognized in profit or loss using the effective interest rate method. The

effective interest rate includes all fees and basis points paid or received that are an integral part of the effective

interest rate. This includes transaction costs that are directly attributable to the acquisition or issue of financial

assets or liabilities.

Costs and revenues are recognized in the year to which they refer regardless of when paid or received, in

accordance with the accrual basis. Differences between cash flows and the corresponding interest income or

expense recognised under the effective interest method are reflected in the carrying amount of the related

financial asset or liability.

Operational income and expenses are based on the historical cost convention and attributed to the financial year

to which they pertain.

Taxation

Taxation is calculated on the reported pre tax result, at the prevailing tax rates, taking account of any losses

carried forward from previous financial years and tax exempt items and non-deductible expenses and using tax

facilities.

Temporary differences between taxation on the result as shown in the Statement of Profit and Loss and the

taxation on the fiscal result are added or deducted from the provision for deferred taxation.

As of FY2024, the Dutch Minimum Tax Act 2024 was enacted, implementing the OECD Global Model Rules, which

established a global minimum tax of 15% for multinational corporations. This legislation includes transitional safe

harbour rules designed to lower the administrative burden and facilitate compliance for the first three years,

provided that certain criteria are met.

Telefónica S.A., the Spanish parent entity, has analysed the applicability of the Pillar Two requirements. Based on

this assessment, the transitional safe harbour applies and no top‑up tax is expected to arise in the Netherlands

for 2025. In accordance with the temporary relief permitted under the Pillar Two framework, the Company does

not recognise deferred tax assets or liabilities arising from the application of the global minimum tax.

17


Telefonica Europe B.V.	2025 Annual Report

FINANCIAL RISKS

General

The risk appetite defines appetite bandwidths, alert and tolerance levels for the main risk domain the Company is

exposed to. The risk appetite, governance, and monitoring metrics for each risk domain are described in more

detail in the sections below. The risk appetite in respect to below-mentioned risk are considered low as all

financing activities are guaranteed by the Parent company (Telefónica, S.A.).

The information included in the notes for financial instruments is useful to estimate the extent of risks relating to

on-balance sheet financial instruments. The Company’s primary financial instruments, not being derivatives,

serve to finance the Telefonica’s Group operating activities. The principal risks, arising from the Company’s

financing operations are, liquidity, credit, interest and foreign exchange risks. These risks are set out in detail

below:

i.Liquidity and credit risk

Liquidity and credit risk management is implemented according to the Telefonica Group policies. As of December

31, 2025, the Company has invested the funds borrowed in Telefónica, S.A. which guarantees most of the

external debt subscribed by the Company. However, from time to time the Company could also invest the funds

in other companies within the Group. In addition, the Company holds cash balances in several financial

institutions. In summary, any substantial credit or liquidity risk would be related to credit risk and liquidity of

Telefónica, S.A. and its Group.

As of December 31, 2025, Telefónica, S.A. and Telefónica Europe B.V. have been granted the same company

credit ratings. These ratings are the following:

-Moody’s Investors Services: Baa3 for the long term rating and P-3 for the short term rating. Outlook

stable and last changed November 7, 2016.

-Fitch Ratings: BBB for the long term rating and F-2 for the short term rating. Outlook stable and last

changed September 5, 2016.

-Standard and Poor’s: BBB- for the long term rating and A-3 for the short term rating. Outlook stable and

last changed November 20, 2020.

ii.Interest rate and Foreign Exchange risk

Currently, the Company lends money to Telefónica S.A. although, from time to time, the Company may also lend

money to other companies within the Telefonica Group. At present, all loans granted are denominated in the

same currency as the funds it raises on the capital markets. Therefore, the Company is implementing a natural

hedge. Consequently, foreign exchange fluctuations have a limited impact on its financial result.

However, the Company may have a limited foreign exchange risk due to the financial margin earned in several

currencies different from Euro (mainly US Dollar) and also due to some cash positions held in foreign currencies

(US Dollar and British Pound).

Currently, the Company’s policy is to hedge any interest rate exposure coming from funding raised by investing

on similar terms and conditions (tenors and type of interest, whether it may be floating or fixed interest rates).

Nevertheless, if that would not eventually be possible, or the management may not consider it appropriate, the

Company may look to mitigate any interest rate risk in other ways (by using derivatives or any other suitable

instrument) or eventually may decide not to hedge it.

18


Telefonica Europe B.V.	2025 Annual Report

1.Tangible Fixed Assets

The tangible fixed assets are comprised as follows:


Euros in thousands
	2025	2024
Tangible fixed assets	-	1

The movement in the tangible fixed assets is as follows:


Euros in thousands
	2025	2024
Carrying value
Balance January 1	97	97
Additions	-	-
Balance	97	97
Accumulated depreciation
Balance January 1	(96)	(96)
Change for the period	(1)	0
Balance	(97)	(96)
Net book value	-	1

2.Financial fixed assets


Euros in thousands
	2025	2024
Long term receivables from related companies	9,179,942	9,324,751
Financial Fixed assets	9,179,942	9,324,751

The movement in the financial fixed assets is as follows:


Euros in thousands
	2025	2024
Balance January 1	9,324,751	9,238,280
Deferred Commissions amortization	4,590	7,835
Repayments	-	(1,300,000)
New Loans	-	1,311,345
Foreign Exchange result	(149,399)	67,291
Balance as at December 31	9,179,942	9,324,751

19


Telefonica Europe B.V.	2025 Annual Report

Long-term receivables from related companies

The long-term receivables from related companies represent loans to Telefónica, S.A. and total a book value of

EUR 9,179,942 thousand on December 31, 2025 (EUR 9,324,751 thousand at December 31, 2024). The average

interest rate for the long-term receivables is 5.21% for financial year 2025 and 5.18% for financial year 2024.


		Euros in thousands
Description	2025	2024
USD 1,250,000,000, maturity September 15, 2030	1,059,962	1,198,346
EUR 500,000,000, maturity February 14, 2033	496,172	495,757
JPY 5,000,000,000/USD 42,640,287, maturity July 27, 2037	27,069	30,561
JPY 5,000,000,000/USD 42,640,287, maturity July 27, 2037	27,069	30,561
JPY 5,000,000,000/USD 42,640,287, maturity July 27, 2037	27.069	30,561
EUR 1,000,000,000 maturity September 22, 2058	999,384	998,562
EUR 500,000,000 maturity September 24, 2060	499,289	498,895
EUR 500,000,000 maturity February 05, 2060	499,391	498,950
EUR 1,000,000,000 maturity May 12, 2061	997,493	996,784
EUR 750,000,000 maturity May 24, 2062	748,279	747,595
EUR 750,000,000 maturity Nov 23, 2062	746,419	745,347
EUR 1,000,000,000 maturity May 3, 2063	996,221	995,486
EUR 950,000,000 maturity Sep 7, 2063	961,162	963,084
EUR 1,100,000,000 maturity Apr 15, 2064	1,094,963	1,094,262
Total Long-term receivable from related companies	9,179,942	9,324,751

The fair value for the long term receivables from the related companies are not substantially different (less than

0.005%) to the fair value of the long term bonds and loans (disclosed at in note 6), since the terms and conditions

of these long term receivables are almost equal to the terms and conditions of the bonds and loans issued. These

issuances have all been guaranteed by Telefonica SA and subsequently the loans are also issued to Telefonica SA.

The calculation of the fair value for the long term receivables from the related companies has been calculated by

applying level 2 (of the hierarchy disclosed in note 6) after discounting the cash flows of the loans using an

estimated credit spread curve for each applicable currency.

The Company has not and has not been asked to grant any payment holidays on their loans to group companies.

3.Loans receivable

The loans receivable comprises short-term loans due by the shareholder (granted by means of loan agreement

dated May 10, 2012) and other related companies (if any) and amounted EUR 1,169,118 thousand on December

31, 2025 (EUR 1,143,746 thousand on December 31, 2024). The average interest rate is 2.51% for financial year

2025 and 3.81% for financial year 2024.


Euros in thousands
	2025	2024
Loans Receivable	1,169,118	1,143,746
Total loans receivable	1,169,118	1,143,746

The fair value of the short term loans to Telefónica does not substantially differ from the book value. Given the

short term nature, the impact of the discount is not significant.

20


Telefonica Europe B.V.	2025 Annual Report

4.Cash at bank

The cash at bank is freely disposable and is generating interests obtained from the bank accounts. All the external

banks we work with, have BBB+ credit rating or higher. The balances on December 31, 2025, and December 31,

2024 are comprised as follows:


Euros in thousands
	2025	2024
Current bank account balances	3,160	3,135

5.Shareholder’s equity

The movements in the Shareholder's Equity are comprised as follows:


	Euros in thousands
		Issued share capital	Retained earnings	Result for the period	Interim dividend	Total Shareholder’s Equity
Balance as at January 1, 2024		46	4,701	1,562	(1,206)	5,103
Allocation of result		-	356	(1,562)	1,206	-
Result for the period		-	-	2,662	-	2,662
Dividend payment		-	(356)	-	(2,227)	(2,583)
Result for the period Nov-Dec 2023		-	(356)	-	-	(356)
Result for the period Jan-Oct 2024		-	-	-	(2,227)	(2,227)
Balance as at December 31, 2024		46	4,701	2,662	(2,227)	5,182
Balance as at January 1, 2025		46	4,701	2,662	(2,227)	5,182
Allocation of result		-	435	(2,662)	2,227	-
Result for the period		-	-	2,671	-	2,671
Dividend payment:		-	(435)	-	(2,289)	(2,724)
Result for the period Nov-Dec 2024		-	(435)	-	-	(435)
Result for the period Jan-Oct 2025		-	-	-	(2,289)	(2,289)
Balance as at December 31, 2025		46	4,701	2,671	(2,289)	5,129

The distribution of dividend for the year 2025 corresponds to the result of the period November 2024 to October

2025. The profit from November and December 2025 will be accumulated to retained earnings. The result for the

period and interim dividend together forms the Undivided result of 382.

6.Bonds and loans

The long term bonds and loans balance is the following:


Euros in thousands
	2025	2024
Long term bonds and loans	9,180,143	9,325,004

21


Telefonica Europe B.V.	2025 Annual Report

The movement in long term liabilities is as follows:


Euros in thousands
	2025	2024
Balance January 1	9,325,004	9,238,562
Prepaid Commissions amortization	4,538	7,360
Repayments	-	(1,300,000)
New Issuances	-	1,311,790
Foreign Exchange result	(149,399)	67,292
Balance as at December 31	9,180,143	9,325,004

The average interest rate for the long-term liabilities is 5.16% for financial year 2025 and 5.14% for financial year

2024.

Long-term bonds and loans are comprised as follows:

The book value of the long term loans and bonds subscribed by the Company at December 31, 2025 totals EUR

9,180,143 thousand (EUR 9,325,004 thousand at 31 December, 2024).


		Euros in thousands
Description	2025	2024
Global USD 1,250,000,000, 8.250%, maturity September 15, 2030 (ISIN: US879385AD49)	1,059,965	1,198,351
EMTN EUR 500,000,000, 5.875%, maturity February 14, 2033 (ISIN: XS0162869076)	496,181	495,766
JPY/USD Dual Currency Loan A JPY 5,000,000,000/USD 42,640,287, 4.750% on USD basis, maturity July 27, 2037	27,069	30,561
JPY/USD Dual Currency Loan B JPY 5,000,000,000/USD 42,640,287, 4.750% on USD basis, maturity July 27, 2037	27,069	30,561
JPY/USD Dual Currency Loan C JPY 5,000,000,000/USD 42,640,287, 4.750% on USD basis, maturity July 27, 2037	27,069	30,561
EUR 1,000,000,000 3.875% perpetual (non-call 8.5 years) Hybrid Securities (ISIN: XS1795406658) Issue date: March 22, 2018	999,387	998,567
EUR 500,000,000 2.875% perpetual (non-call 8 years) Hybrid Securities (ISIN: XS2056371334) Issue date: September 24, 2019	499,297	498,906
EUR 500,000,000 2.502% perpetual (non-call 7.25 years) Hybrid Securities (ISIN: XS2109819859) Issue date: February 5, 2020	499,410	498,983
EUR 1000,000,000 2.376% perpetual (non-call 8.25 years) Hybrid Securities (ISIN: XS2293060658) Issue date: February 12, 2021	997,517	996,815
EUR 750,000,000 2.88% perpetual (non-call 6.5 years) Hybrid Securities (ISIN: XS2410367747) Issue date: November 24, 2021	748,291	747,612
EUR 750,000,000 7.125% perpetual (non-call 6 years) Hybrid Securities (ISIN: XS2462605671) Issue date: November 23, 2022	746,436	745,368
EUR 1,000,000,000 6.135% perpetual (non-call 7.25years) Hybrid Securities (ISIN: XS2582389156) Issue date: February 2, 2023	996,257	995,528
EUR 950,000,000 6.75% perpetual (non-call 8 years) Hybrid Securities	961,213	963,142
(ISIN: XS2646608401) Issue date: September 7, 2023	961,213	963,142
EUR 1,100,000,000 5.7522% perpetual (non-call 8.1years) Hybrid Securities (ISIN: XS2755535577) Issue date: March 15, 2024	1,094,982	1,094,283

Total long-term bond and loans	9,180,143	9,325,004

22


Telefonica Europe B.V.	2025 Annual Report

The fair value of the long term loans and bonds subscribed by the Company at December 31, 2025 totals EUR

9,653,867 thousand (EUR 9,844,052 thousand at 31 December, 2024). The difference between the book value

and fair value in 2025 increased, compared to 2024, which is explained by the movement in the market during

the year as the price of the bonds has increased significantly.

The Company calculates the fair value of the long term loans and bonds using the following fair value hierarchy

that reflects the significance of the inputs used in making the measurements.

-Level 1: Inputs that are quoted market prices (unadjusted) in active markets for either: (i) the instruments

issued by the Company or (ii) identical instruments to those issued by the company.

-Level 2: Inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as

prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market

prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that

are considered less than active; or other valuation techniques in which all significant inputs are directly or

indirectly observable from market data.

-Level 3: Inputs that are unobservable. This category includes all instruments for which the valuation

technique includes inputs not based on observable data and the unobservable inputs have a significant effect on

the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar

instruments but for which significant unobservable adjustments or assumptions are required to reflect

differences between the instruments.

The Company has calculated the fair value for the bonds issued by applying level 1 of the above hierarchy. The

bonds fair value has been calculated using the market price at balance sheet date as published at the stock

exchange where the bonds are admitted for trading.

The fair value of the Loans subscribed by the Company has been calculated by applying level 2 of the above

hierarchy, after discounting the cash flows of the Loans using an estimated credit spread curve for each

applicable currency.

7.Short term loans and bonds

As at December 31, 2025, the short term loans and bonds payable comprises the amount due under the

Company’s EUR 5,000,000 thousand Euro Commercial Paper Program. The balance on December 31, 2025, totals

EUR 1,169,118 thousand (EUR 1,143,746 thousand at December 31, 2024). The average interest rate is 2.46% for

financial year 2025 and 3.76% for financial year 2024.


Euros in thousands
	2025	2024
EUR 5,000,000,000 ST European Commercial Paper Programme	1,169,118	1,143,746
Balance	1,169,118	1,143,746

The fair value of the short term bonds and loans does not substantially differ from the book value. Given the

short term nature of the loans and bonds, the impact of discount is not relevant.

23


Telefonica Europe B.V.	2025 Annual Report

8.Net Financial Result

The Net Financial Result is comprised as follows:


Euros in thousands
	2025	2024
Interest income	518,606	541,579
Interest expense	(513,858)	(536,736)
Currency exchange result	(1)	(13)
Net Financial Result	4,747	4,830

Interest income fully derives from related companies as all loan’s receivables have been granted to related

companies. It also includes the one-off impact to P&L for the repurchase and cancellation of hybrid securities that

took place on March 18, 2024.

9.Administrative expenses

For the year ended December 31, 2025, the administrative expenses total EUR 1,055 thousand (EUR 1,087

thousand for the year ended December 31, 2024). The decrease in administrative expenses (when compared to

last year) is mainly due to lower legal fees related to hybrid repurchases as no repurchases took place in 2025.


	Euros in thousands
	2025	2024
Administrative expenses	(1,055)	(1,087)
Total	(1,055)	(1,087)

10.Taxation

As of FY2024, the Dutch Minimum Tax Act 2024 was enacted, implementing the OECD Global Model Rules, which

established a global minimum tax of 15% for multinational corporations. This legislation includes transitional safe

harbour rules designed to lower the administrative burden and facilitate compliance for the first three years,

provided that certain criteria are met.

Telefónica S.A., the Spanish parent entity, has analysed the applicability of the Pillar Two requirements. Based on

this assessment, the transitional safe harbour applies and no top‑up tax is expected to arise in the Netherlands

for 2025. In accordance with the temporary relief permitted under the Pillar Two framework, the Company does

not recognise deferred tax assets or liabilities arising from the application of the global minimum tax.

The tax charge on the profit can be broken down as follows:



	2025	2024
Corporate income tax 2025	912	-
Corporate income tax 2024	3	907
Corporate income tax 2023	-	-
Total	915	907

24


Telefonica Europe B.V.	2025 Annual Report

The latest final tax assessment received from the DTA is for the year 2023.

The Company is subject to Dutch taxation and tax calculations are made in accordance with a Transfer Pricing

report prepared by an international tax advisor.

The main features of this report are the establishment of a minimum financial margin for the transactions

registered between Telefónica, S.A. and the Company as well as a capped yearly amount of operational expenses.

The effective and applicable tax rates do not differ significantly from those of previous fiscal year.

The applicable tax rate for the current financial statements is 25.8% (2024: 25.8%) and the effective tax rate is

25.51% (2024: 25.42%). The difference between the applicable tax rate and the effective tax rate is caused by a

different tax rate considered for the first EUR 200 thousand 19% (2024: 19%).

Average number of employees

During the period under review the Company employed 1 person (in 2024: 2 people until September and 1

person thereafter) working in The Netherlands.


	Euros in thousands
		2025	2024
Wages and salaries		60	109
Social security contributions		46	64
Total		106	174

Independent auditor’s fees

The independent auditor’s fees for the 2025 financial statements audit come up to EUR 57 thousand (EUR 55

thousand in 2024).

No fees for other audit services rendered by PricewaterhouseCoopers Accountants N.V. were paid in 2025 (EUR

54 thousand in 2024).

There were no fees other than audit and other audit services (hence no consultancy and no tax fees).