EDF has been ordered to repay €1.37 billion (£0.96bn) of state aid to French authorities.
The European Commission’s investigation found the energy company, which is the main electricity provider in France, benefited from tax breaks that were incompatible with EU state aid rules.
In 1997, France did not levy all the corporation tax payable by EDF “when the company reclassified certain accounting provisions as capital”, it added.
The Commission said the tax exemption, which amounts to around €899 million (£629m) plus €488 million (£341m) in interest, gave EDF an unfair economic advantage and distorted competition.
“In order to remedy this distortion, EDF must now repay that aid”, it added.
Margrethe Vestager, the Commissioner responsible for competition policy, said: “Whether private or public, large or small, any undertaking operating in the Single Market must pay its fair share of corporation tax.
“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.”
The French Government owns 84% of EDF.