UBI Banca Group

Tax litigation
As already reported, Group companies have adopted IAS-IFRS accounting standards in
accordance with Legislative Decree No. 35/2005 and the relative taxation for direct tax
purposes was not clearly defined in the legislation until the enactment of the 2008 Finance Act
(Law No. 244/2007) and the issue of the relative Regulation No. 48/2009, which was
supplemented by a ministerial decree of 8 th June 2011. It was not until the issue of the tax
authorities Circular No. 7/E/2011 that the interpretative framework was set out by the
financial authorities, a good six years after the first income tax return affected by IFRS was
filed.
This, together with the complexity of specific tax legislation in the financial and banking
sectors has generated questions of interpretation both now and in the past, with respect to
which the tax authorities make objections of an interpretative nature or with regard to tax
avoidance and evasion.
In relation to the above, the Group has been subjected to a significant number of tax
inspections in recent years followed by tax assessment reports, from which notices of tax
assessment have arisen which generally confirm what was found during the inspection. Where
tax consolidation for corporate income tax (IRES) purposes exists, with the relative joint
liability, these inspections are then duplicated for the Parent as the consolidating company.
The initiatives of importance which took place during the year are described below.
Banca Popolare di Ancona: on conclusion of a tax inspection conducted for the tax years 2007 and
2008, on 10 th June 2011 the Marches Regional Department of the tax authorities served a tax
assessment report which raised questions over the attribution of some expenses incurred. Considering
the differing interpretation in law of the concept of the attribution of expenses, inclusive of
documentation factors, an application was filed for full compliance by consent with the tax assessment
report pursuant to Art. 5 bis of Legislative Decree No. 218/1997. A total payment of €602.7 thousand
was therefore made on 7 th September 2011.
Banca Popolare Commercio e Industria, Banca Popolare di Bergamo: the tax authorities – the
Regional Department for Lombardy – Large Taxpayers Office – served a notice of assessment on BPCI on
24 th October 2011 and on BPB on 6 th December 2011, which challenged them over the treatment applied
for VAT purposes to revenues received in 2006 for activity performed as a depository bank for mutual
investment funds.
More specifically, it was alleged that Banca Popolare Commercio e Industria had failed to pay taxes of
€1.202 million and a fine of €2.777 million, while Banca Popolare di Bergamo was accused of failing to
pay taxes of €2.774 million and a fine of €4.682 million.
This issue is a common one in the banking sector and it arises over the interpretation at national level of
the EU Directive 77/388/EEC of 17 th May 1977. The banking sector believes that the consideration for
that activity is exempt from VAT (Italian Banking Association Circular, Tax Series No. 25 of 28 th
December 2010 and Assogestioni – national association of asset management companies – Circular No.
138 of 10 th December 2010), while the tax authorities consider it subject to VAT in full.
The issue is currently being analysed by the relative associations, partly in view of a hoped for solution to
the interpretation. In the meantime the banks in question will present appeals to the competent tax
commission.
Banca Regionale Europea: on 20 th December 2011, on conclusion of inspections relating to 2008, the
tax authorities’ Regional Department for Piedmont delivered the relative tax assessment report where the
tax deduction of losses was alleged for the disposal without recourse of the loans to a customer in
difficulty in 2008 by the bank, together with other banks and finance company creditors in a broader
context of the restructuring of the customer’s debt. More specifically, the inspectors alleged the absence
of the assumptions of certainty and finality of the disposal because of the existence of guarantees
granted to the creditors recognised by the purchaser. As a consequence, the bank was considered to have
greater taxable income for IRES and IRAP purposes of €2.836 million, which gave rise to increased taxes
for IRES and IRAP totalling approximately €916 thousand, in addition to fines – estimated at between
€152 thousand and €305 thousand – plus interest.
The inspectors evidently did not consider the principle known as “reinforced derivation”, which the bank
employs as an entity subject to IFRS where, as in the case in question, the requirements are met for the
derecognition of the loans in question.
Banco di Brescia: on 16 th November 2011, Banco di Brescia and UBI Banca (as the consolidating
company) were served with notices of assessment and notified of fines for corporate income tax (IRES)
purposes relating to 2006 for a total of €5.134 million (of which €1.945 million for increased taxation,
€272 thousand for interest and €2.917 million of fines). These notices resulted from a tax assessment
report received by Banco di Brescia on 19 th June 2009, the findings of which are fully accepted, in which
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