Taxes

This item shows the income taxes due by the Italian and the foreign consolidated companies by applying the income tax rates
and rules in force in each country.

The components of the income tax expense for 2013 and 2012 are as follow:

(€ million)31.12.201331.12.2012
Income taxes 1,285 947
Deferred taxes -544 207
Total taxes of period 742 1,154
Income taxes on discontinued operations
111 184
Total income taxes 853 1,338

In Italy, with respect to the 2012 fiscal year, income taxes are calculated by using the ordinary corporate income tax rate of 27.50%. For the 2013 fiscal year, income taxes of the Group’s parent company, Assicurazioni Generali S.p.A., and its Italian subsidiaries carrying on banking or insurance business are computed at the ordinary corporate income tax rate of 27.50% plus a surcharge equal to 8.50%, whereas income taxes for the remaining companies are calculated at the ordinary corporate income tax rate of 27.50%. Furthermore, income taxes of Italian companies include the regional tax on productive activities (IRAP), which was computed – in respect of insurance companies – at the ordinary tax rate generally equal to 6.82%.

Income realised in Germany is subject to the corporate income tax - which is calculated on a rate of 15% plus a solidarity surcharge of 5.50% - and the trade tax (Gewerbesteuer). The trade tax rate varies depending on the municipality in which the company is situated. In 2013 the weighted average tax rate remained substantially unchanged at approximately 16.20%.

In France, income taxes are calculated by using an overall corporate income tax rate of 38% for the fiscal year 2013 and of 36.10% for the fiscal year 2012. The French corporate tax rate in effect amounts to 33.33%, plus a surcharge of 3.30% (contribution sociale) and other additional temporary surcharges calculated on the ordinary tax rate of 33.33%.

All other foreign subsidiaries apply their national tax rates, including: Austria (25%), Belgium (34%), Bulgaria (10%), China (25%), Czech Republic (19%), Netherlands (25%), Romania (16%), Spain (30%), Switzerland (22%) and United States (35%). The following table shows a reconciliation from the theoretical income tax expense, by using the Italian corporate income tax rate of 27.50%, to the effective tax rate.

(€ million)31.12.201331.12.2012
Expected income tax rate 27.5% 27.5%
Earnings before taxes 2,323 1,468
Expected income tax expense 639 403
Effect of foreign tax rate differential -324 519
Effect of permanent differencies 71 0
Effect of fiscal losses 48 -1
IraP, trade tax and other local income taxes 140 152
Substitute  taxes 159 113
Foreign withholding taxes not recoverable 18 22
Income taxes for prior years -15 -92
Exit tax su réserve de Capitalisation 0 54
Other 6 -16
Tax expenses 742 1,154
Effective tax rate 31.9% 78.6%

For the 2012 fiscal year, the effective tax rate was substantially influenced by the recognition – at year-end – of non-deductible impairments, and by the una tantum taxation on the Réserve de Capitalisation in France.

For the 2013 fiscal year, the effective tax rate is slightly higher than the theoretical tax rate. In particular, as for Italy, the effective tax rate was influenced by the 8.50% temporary surcharge on IRES on banks and insurance companies, as well as by the substitute tax on Controlled Foreign Companies whereas, in respect of Germany, the effective tax rate was substantially influenced by the recognition of deferred tax assets on tax losses and interest expenses carried forward by Generali Beteiligungs.

Fiscal losses carried forward are recognised to the extent that future taxable income will be sufficient to offset the amount of the losses before their expiration.

Fiscal losses carried forward as of 31 December 2013 and 2012 are scheduled according to their expiry periods as follows.

(€ million)31.12.201331.12.2012
2012 0 0
2013 0 64
2014 19 6
2015 19 13
2016 20 20
2017 42 24
2018 27 0
2019 55 0
2020 0 0
2021 and over
0 0
Unlimited 941 251
Fiscal losses carried forward 1,123 378

With regards to fiscal losses, it is worth noting that Italian Law Decree 98/2011 introduced that fiscal losses can be carried forward with no time limits (as opposed to the previous five year limitation). Losses from a given year may, however, only be used to offset up to 80% of the taxable income of any following fiscal year.

Deferred income taxes are calculated on the temporary differences between the carrying amounts of assets and liabilities reported in the financial statements and their tax base, by using the tax rates applicable at the expected time of realisation according to each country’s current legislation.

The ultimate realisation of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. Furthermore, in making this assessment, management considers the scheduled reversal of deferred tax liabilities and tax planning strategies.

Assessments show that deferred tax assets will be recovered in the future through either (i) expected taxable income of each consolidated company or (ii) expected taxable income of other companies included in the same tax group (e.g. "Consolidato fiscale" in Italy, "Steuerliche Organschaft" in Germany and "Régime d’intégration fiscale" in France).

Deferred taxes as of 31 December 2013 and 2012 are related to the following assets and liabilities.

(€ million)31.12.201331.12.2012
Intangible  assets 151 160
Tangible assets 64 59
Land and buildings (investment properties) 725 755
Available for sale financial assets 2,423 2,298
Other investments 283 292
Deferred acquisition costs 23 18
Other assets 337 341
Fiscal losses carried forward 280 134
Allocation to other provisions and payables 625 657
Insurance  provisions 394 447
Financial liabilities and other liabilities 726 648
Other 100 119
Total deferred tax assets 6,132 5,927
Netting -3,325 -3,303
Total net deferred tax assets 2,807 2,624
(€ million)31.12.201331.12.2012
Intangible  assets 302 387
Tangible assets 141 175
Land and buildings (investment properties) 372 332
Available for sale financial assets 3,278 4,111
Other investments 257 282
Deferred acquisition costs 426 516
Other assets 61 80
Allocation to other provisions and payables 179 119
Insurance  provisions 439 38
Financial liabilities and other liabilities 186 202
Other 23 58
Total deferred tax liabilities 5,663 6,300
Netting -3,325 -3,303
Total net deferred tax liabilities 2,338 2,996
Assicurazioni Generali S.p.A. - C.F. e P.IVA 00079760328