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15 Income taxes

Current, deferred and prepaid taxes77,63778,597-960

The impact of income taxes on profit before tax is 47.7%, compared to 41,6% of the year 2008. The increase in the tax rate compared to the previous year is mainly due to (non-deductible) costs borne for the tax moratorium, as well as to a higher proportional impact of IRAP, taken into account that the taxable basis and the tax rate applied, over the total cost, increased compared to the previous year. In calculating the tax impact, 1% increase was included of the IRES tax, the so-called "Robin tax", applicable to companies which operate in the segment of gas and electricity production and/or sale. The effect of this tax is not significant. This increase was set forth by Law no. 99 of 23 July 2009, published in the Official Gazette on 31 July 2009. The additional amount was therefore applied in the overall percentage of 6.5%.

While calculating taxes for the year, the effects resulting from the IAS tax reform introduced by Law no. 244 of 24 December 2007, and the related implementation decree, Ministerial Decree no. 48 of 1 April 2009 were kept in duly consideration, and especially the derivation principle set out by Art. 83 of the FCA which now sets out that for entities that apply international accounting standards, also notwithstanding provisions set out by the FCA, "criteria regarding definition, time-based recognition and classification in the balance sheet, as set out by the above-mentioned accounting standards" shall apply.

Information regarding the tax moratorium
In accordance with Law Decree no. 10 of 15 February 2007, subsequently converted into Law no. 46 of 6 April 2007, governing the terms for reimbursement of government aid declared illegitimate by the Ruling of the European Commission no. 2003/193 dated 5 June 2002, on 6 April 2007 Hera Spa (with respect to the position regarding the former Seabo Spa) was served the notices/orders issued by the Inland Revenue office responsible for the area, demanding the payment of a total amount of Euro 22,313 thousand for the four tax periods involved in the recovery. On 31 May 2007, Hera Spa filed an appeal against the aforementioned notices and injunctions with the Bologna provincial tax commission (Commissione Tributaria Provinciale di Bologna), requesting the suspension of the execution of these payment injunctions. On 6 July 2007, the Bologna provincial tax commission issued ordinances accepting the suspension requests made by the company, scheduling a hearing of the case for 13 December 2007. On 19 April 2008, notification was made that the appeals had been rejected, except for that relating to the tax period 1997. In this case, the commission recognised the legitimacy of the deduction of tax withheld and of the tax credit carried over from previous years. After the partial relief obtained on 2 May 2008 for taxes related to the 1997 tax period, following the approval of the above-mentioned withholding taxes and credits, equal to Euro 3,738 thousand, a payment was made for a total amount of Euro 17,400 thousand. Subsequently, on 11 September 2008, the Inland Revenue Office served a further tax payment slip regarding the payment of interest for the suspension period, then paid in December 2008, and amounting to Euro 660 thousand.
On 3 October 2008, appeals were filed against above-mentioned rulings. On 29 January 2010 the rulings, issued on 21 January 2010, were filed. Based on these rulings, the Emilia Romagna Regional Tax Commission rejected the appeals submitted by Hera Spa and reformed the first-instance rulings, rejecting the deduction made in the income returns submitted and related to withholding taxes paid: to this purpose, the amount expected to be paid, for the only capital share, is equal to Euro 3,362 thousand. As of today, the payment slip has not been received yet. The appeals before the Court of Cassation are being prepared.

Please also note that, under the terms of agreements made between shareholders (and specified in the IPO prospectus) at the time of the incorporation giving rise to the creation of Hera Spa and reported in the IPO prospectus, local authorities undertook "to compensate Hera Spa for any cost, loss or damage sustained by the same in relation to mandatory regulatory measures revoking tax benefits that the company and the companies taking part in the incorporation have enjoyed". Consequently no cost has been booked in this regard. It is also worth noting that on 31 December 2007, some Municipality Shareholders set up suitable guarantees in favour of the Company through the prepayments of amounts due to Hera Spa. Following the negative outcome of the first instance judgement and following payment of the tax assessments, debit/credit positions were therefore defined with respect to each Municipality.

On 31 December 2009, outstanding receivables for collection, related to all payments made by Hera spa for the position related to the former Seabo, up to 20 October 2009, amounted to Euro 1,644 thousand.

Regarding the former Meta Modena, merged into Hera with effect as from 31 December 2005, for which there was no indemnity mentioned above, pursuant to and in accordance with the Law Decree no. 10 of 15 February 2007, on 10 May 2007 the Inland Revenue Office of Modena served Hera Spa with notices and injunctions for the recovery of state aid relating to the tax periods 1997, 1998 and 1999. On 6 June 2007, Hera Spa filed self-defence petitions requesting the amendment of the notices and injunctions. On 11 June 2007, the Inland Revenue office of Modena issued partial self-defence measures relating to the communicated notices/orders, requesting the Company, as a way of settling the issue, the payment of a minimal amount resulting from the failure to acknowledge withholding taxes paid.

Regarding the former Sat Sassuolo, which was incorporated into Hera as at 1 January 2008, on 3 and 17 April 2007, the company was served with nine notices and injunctions by the competent Inland Revenue Office (six of these related to Alpegas and Seacs, companies that were already incorporated within Sat), and was asked to pay a total of Euro 9,502 for the tax recovery periods in question. On 13 June 2007, the company filed appeals against these notices and injunctions with the Modena provincial tax commission, requesting the suspension of the payment injunctions. On 30 July 2007, the company received nine demands for payment for Euro 10,194 in total from the collection agency. On 19 September 2007, the Modena provincial tax commission issued ordinances rejecting the suspension requests and scheduling a hearing of the case for 12 December 2007. On 10 March 2008, all the company's appeals were formally rejected, and on 2 April 2008 and 10 June 2008 respective payments of Euro 7,334 thousand and Euro 3,216 thousand were made, amounting to Euro 10,550 thousand in total. On 12 March 2009, appeals against the first-instance rulings were filed before the Bologna Regional Tax Commission. The rulings of the regional tax commissions passed on 13 November 2009 rejected the appeals, thus confirming the first-instance decision. The appeals before the Court of Cassation are being prepared.

Art. 24 of the Law Decree 185 of 29 November 2008, converted with amendments into Law no. 2 of 28 January 2009, charged the Inland Revenue Office to recover aid equivalent to unpaid taxes and related interest "in order to totally implement" the afore-mentioned decision of the commission on 5 June 2002. As for this provisions, on 30 April 2009, the Emilia Romagna Regional Management - Large Taxpayers Office, sent three assessment notices on the position of the former Meta for the 1997, 1998 and 1999 tax periods, taking duly account of indications contained in the opinion expressed by the Presidency of the Council of Minister on 28 April 2009, shared with the Attorney General, with special reference to the exclusion from the taxable basis of the following:

  • profits, which were reissued into the public circuit, as they were distributed, under the form of dividends, to public bodies shareholders.
  • the portion of income regarding the electricity segment (net of profits distributed and related to the electricity segment itself).

On 8 May 2009, the amount of Euro 4,823 thousand was paid. On 7 July 2009, the company lodged appeals against the assessment notices at the Bologna provincial tax commission, asking for their cancellation. The hearing for the discussion on the ruling is scheduled on 17 May 2010.
Always with reference to Art. 24 of the above-mentioned Law Decree no. 185 of 29 November 2008, as regards the position related to the former Seabo, on 12 June 2009 Hera filed before the Inland Revenue Office - Bologna 3 Office - and the Emilia Romagna Regional Management - Large Taxpayers Office, a request for partial cancellation of the notices and injunctions received on 6 April 2007 regarding tax recovery for years 1997, 1998 and 1999 on the de-taxation of profits distributed to Public Bodies, according to instructions contained in the opinion issued on 28 April 2009 by the Presidency of the Council of Ministers. As of today, the hearing to discuss on the request of cancellation has not been scheduled yet.

For a more thorough information, it should be noted that on 11 June 2009 the First-Instance Court of the European Community issued rulings regarding the appeals filed by the Italian Government, together with some companies (A2A, Acea, Iride, etc.) against the decision of the European Commission 2003/193/EC. The decisions of the European Community court rejected, or declared not receivable, all appeals filed, thus confirming the legitimacy of the above-mentioned decision of the European Commission. Hera S.p.a. did not take part in the ruling in question for none of the positions mentioned above.

Art. 19 of the Law Decree no. 135 of 25 September 2009, published in the O.G. no. 223 of 25 September 2009, added subsection 1-bis to Art. 24 of the Law Decree no. 185 of 29 November 2008, setting out the following:

  • while calculating the tax basis, for the purposes to a recover of aid equivalent to unpaid taxes and related interest, capital gains resulting from extraordinary transactions are not relevant;
  • for the purposes of a correct calculation of the taxable basis, assessments issued by the Inland Revenue office can be however supplemented or increased through new notices;
  • the payment of amounts due based on the above-mentioned supplementary assessments should be made within the fiftieth day after the notification date of these assessments.

On 2 October 2009, the Emilia Romagna Regional Management - Large Taxpayers Office - sent two further assessment notices for the former company Meta S.p.a., regarding the 1998 and 1999 tax periods, as a "supplement" to notices already sent on 30 April 2009, in order to cancel two deductions made and previously accepted according to the opinion, shared by the Attorney General, expressed on 28 April 2009 by the Presidency of the Council of Ministers on profits, which were reissued into the public circuit due to the distribution to public bodies shareholders, and the further portion of profits made in the electricity segment. The amounts required total Euro 22,751 thousand, of which Euro 12,590 thousand related to the capital and Euro 10,161 thousand related to interest.

On the same date, the Emilia Romagna Regional Management - Large Taxpayers Office - sent four assessment notices for the former company Seabo Spa, regarding the 1997, 1998, 1999 tax periods - first half year and 1999 - second half year, in order to adopt the remarks already expressed in the report of 17 October 2005. These remarks could not be taken into account when the notices and injunctions were issued on 6 April 2007, as, at that time, Art. 1 of the Law Decree no. 10 of 15 February 2007 granted the Inland Revenue Office powers of "simple settlement" of the income returns submitted by the taxpayer.
The amounts required for the former company Seabo, amounted to Euro 759 thousand, of which Euro 386 thousand for the capital and Euro 373 thousand for interest.
The total amounts required, by effect of the proceeding provided for by Art. 19 of the Law Decree no. 135/2009, amounted therefore to Euro 23,510 thousand, which were paid on 20 October 2009.
On 27 November 2009, the Company filed all appeals to the Bologna provincial tax commission to cancel all assessment notices of 2 October 2009, regarding the positions of both former Seabo and former Meta.
These financial statements therefore reflect the recording to income statement of the total amount of Euro 27,573 thousand. Of this amount, Euro 12,254 thousand was charged to financial charges, while the remaining Euro 15,319 thousand was charged to "Other non-operating costs", as it referred to past taxes.

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