The European Union has ordered France to recover €1.37bn of state aid extended to Electricite de France (EDF) after deciding that the firm had taken advantage of illegal tax breaks.

EU Competition policy commissioner Margrethe Vestager said: "Whether private or public, large or small, any undertaking operating in the Single Market must pay its fair share of corporation tax.

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"The commission’s investigation confirmed that EDF received an individual, unjustified tax exemption, which gave it an advantage to the detriment of its competitors, in breach of EU state aid rules."

"EDF received an individual, unjustified tax exemption, which gave it an advantage to the detriment of its competitors, in breach of EU state aid rules."

In 1997, European Commission had indicated that the French electricity utility had received an unjustified tax exemption of €889m that gave it an undue economic advantage compared with other market competitors.

During the year, EDF’s balance sheet was restructured while the company reclassified the provisions made to it as a capital injection, without levying corporation tax.

The commission had reopened the investigation involving EDF in 2013, in order to verify whether the tax concessions allowed by France can be considered as investments.

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EU has concluded that France’s tax revenue loss at the time was not economically justified, as ‘the profitability that could reasonably be expected of such an investment was too low’; however, the energy utility firm has denied the ‘existence of unlawful state aid’ and intends to file an annulment before the Tribunal of the EU, following thorough review of the decision.

EDF said the payment could lead to a net financial debt of €900m in the second half of this year.