Income taxes break down as follows:

(EUR 000) 31.12.2011 31.12.2010
I.Re.S (corporate income tax) 23,615 32,384
IRAP (regional tax on productive activities) 7,010 8,416
Income from consolidation - -
Other taxes on profit (foreign companies) 6,421 6,163
Taxes relating to previous years 44 332
Provisions for disputes over taxes - -
Net deferred taxes 5,206 (8,992)
Total 42,296 38,303

Income taxes increased by EUR 3,993 thousand compared with the same period in the previous financial year. Specifically, this change is attributable to:

  • a decrease in the IRES and IRAP charge for the period (EUR 8,769 thousand and EUR 1,406 thousand respectively) mainly due to the lower result before taxes of the Group parent;
  • higher taxes due by foreign companies for EUR 258 thousand;
  • a higher provision for net deferred taxes going from EUR -8,992 thousand to EUR 5,206 thousand with a change in the two comparing years of EUR 14,198 thousand. This is mainly due to the provision for deferred tax assets on tax losses, made in 2010 (EUR 4,095 thousand primarily attributable to the subsidiary Ansaldo STS USA Inc.) that during 2011 was reversed for EUR 937 thousand, by the reversal of deferred tax assets on provisions for risks and charges and by the recording of deferred taxes on research subsidies and interest income on arrears set aside in the year but not collected.

Below is the analysis of the difference between the theoretical tax rate and the effective tax rate:

  31.12.2011 31.12.2010
(EUR 000) Amount % Amount %
Result before taxes 115,352   133,211  
Tax calculated at the applicable tax rate - 31,722 27.50% - 36,633 27.5%
Permanent differences 4,669 1,284 1.12% (8,316) (2,287) -1.71%
  120,021 33,006 28.62% 124,895 34,346 25.79%
Rate differential on foreign taxes and/or for losses for the period - 672 0.58% - 9,277 6.96%
IRAP and other taxes calculated on a basis other than the result before taxes - 8,574 7.43% - 7,793 5.85%
Prior years’ taxes - 44 0.04% - (13,316) -10.00%
Provisions for disputes over taxes  - - 0.00% 203 0.15%
Total effective taxes carried to Income Statement - 42,296 36.67% - 38,303 28.75%

The effective tax rate at 31 December 2011 is equal to 36.67% against a rate of 28.75% recorded at 31 December 2010.

The increase of 7.92% is mainly attributable to the provision for deferred tax assets on tax losses made in 2010 as described above. Moreover, since 2011 the French subsidiary, as a result of the recent regulatory measures, recorded new income taxes for a total of EUR 1,032 thousand contributing to an increase of some 0.9% of the Group tax rate.
The Group parent also contributes to increasing the tax rate by some 0.5% for the higher IRAP charge on the result before taxes.

Deferred taxes and the related receivables and payables at 31 December 2011 were generated by the following temporary differences:

  Income Statement Balance Sheet
(EUR 000) Assets Liabilities Assets Liabilities
Severance pay provision, pension funds 142 (79) 4,284 100
Remuneration - - 4,192 -
Goodwill - - - -
Property, plant and equipment and intangible assets (118) 280 2,180 518
Provisions for risks and charges (1,713) - 11,433 -
Research subsidies - 711 310 1,614
Provision relating to work in progress and Inventory write-down (356) - 9,397 -
Finance leases - - - -
Cash Flow Hedge - defined-benefit plans - - 491 1,514
Tax losses (937) - 5,080 -
Stock grants - - - -
Other (280) 1,032 4,842 2,633
Total (3,262) 1,944 42,209 6,379

Deferred tax assets deriving from the recognition of “Provisions for risks and charges” are mainly attributable to the American subsidiaries for EUR 7,488 thousand and to the Group parent for EUR 2,129 thousand.
Deferred tax assets on “tax losses” refer to the subsidiaries Ansaldo STS France (EUR 3,383 thousand) and Ansaldo STS USA (EUR 1,697 thousand).
Deferred tax assets relating to the inventory write-down and to the write-down provision relating to work in progress mainly refer to the subsidiary Ansaldo STS USA (EUR 1,262 thousand) and to the Group parent Ansaldo STS SpA (EUR 8,135 thousand).
The item “Other” refers to the Group parent Ansaldo STS (EUR 2,053 thousand), to the subsidiary Ansaldo STS Australia (EUR 196 thousand) and to the subsidiary Ansaldo STS USA (EUR 2,593 thousand).

Deferred tax liabilities mainly refer to the Group parent Ansaldo STS.
Deferred tax assets and liabilities include deferred taxes accounted for, with direct counterpart in equity, on derivative instruments recognised with the “cash flow hedge” method and on actuarial losses/gains as a result of the adoption of the equity method for defined-benefit plans. The movement for the period of this equity item is as follows:

(EUR 000) 31.12.2010 Reversal to the Income StatementFair value adjustments Other changes 31.12.2011
Deferred taxes recognised directly in equity (428) (54) 396 (368) (454)

Registered Office: 16151 Genoa Via Paolo Mantovani, 3 - 5
Paid-in Share Capital EUR 70,000,000 R.E.A. n. 421689 Register of Enterprises of Genoa Tax Code 01371160662
A Finmeccanica Company