UBI Banca Group

Banco di Brescia Spa, the former Banca Popolare di Bergamo-Credito Varesino Scrl and the former
Banca Popolare Commercio e Industria Scrl each individually conducted operations to strengthen capital,
the results of which are still in existence, by issuing preference shares through special companies located
in the State of Delaware (U.S.A.). These operations were authorised by the Bank of Italy and were
conducted in compliance with the authorisation received. As already reported, at the time (1999-2000)
and in any case until the introduction of the company reform pursuant to Legislative Decree No. 6/2003
(the “Vietti Reform”), the direct issue in Italy of financial instruments with the characteristics necessary
to comply with the requirements of the above supervisory regulations was forbidden and, in view of that
circumstance, those same supervisory recommendations stated that “the innovative capital instruments,
such as preference shares, are instruments issued by foreign subsidiaries included in the banking
group”.
Between 2009 and 2011, the Large Taxpayers Office of the Lombard Regional Department of the tax
authorities served specific notices of tax assessment on UBI Banca and Banco di Brescia for the years
2004, 2005 and 2006 in relation to those transactions (for a total of €41.363 million of which €17.997
million for increased corporate income tax, €2.568 million for interest and €20.780 million of fines)
alleging the failure to apply a withholding tax of 12.5% pursuant to article 26 paragraph 5 of Presidential
Decree No. 600/1973 by the Italian bank (UBI Banca and BBS) on the interest paid on the subordinated
deposit made by the LLC located in Delaware. The tax authorities’ argument is based on a change in the
classification for tax purposes only of the subordinated deposit from the foreign company to the Italian
company (exempt from withholding tax) as a loan (subject to withholding tax of 12.5%).
The banks appealed against those notices. After a number of hearings, on 22 nd December 2011 section
35 of the Tax Commission of Milan rejected the appeal presented by UBI Banca relating to 2004, based
on the statements made by the Bank of Italy for supervisory capital purposes, rather than on the
provisions of the Italian Civil Code or tax legislation. Moreover, that same commission held that fines
were not due because of the objective uncertainty surrounding the regulations. The hearing that regards
Banco di Brescia in relation to 2004 is set for 25 th October 2012.
With regard to the litigation in question, in the light, amongst other things, of expert opinions received by
the Parent and Banco di Brescia, the risk of losing is considered unlikely and more specifically it is held
that the legal basis of the appeal will be recognised in the courts.
UBI Banca, BPB Immobiliare and Banca Carime – These companies in the UBI Banca Group have
appealed against notices of tax assessment with which the tax authorities have reclassified transactions
as property disposals, which the companies had considered contributions of property operations
performed in 2003 to Immobiliare Serico, with a consequent demand for increased corporate income tax
and VAT and the relative fines for a total of approximately €82.8 million. These companies won their
cases in the court of first instance and in 2011 hearings were held in the competent regional tax
commissions initiated by the relative departments of the tax authorities which had lost. The Lombard
Regional Tax Commission upheld the decision of the court of first instance with regard to both UBI
Banca and BPB Immobiliare, while a ruling by the Calabria Regional Tax Commission regarding Carime
has not yet been issued.
UBI Leasing: on 20 th June 2011, on conclusion of a tax inspection which initially concerned the tax year
2007, but was subsequently extended to also include the following years, the Brescia tax unit of the
Guardia di Finanza (finance police) issued a tax assessment report to UBI Leasing (the inspection, which
was interrupted repeatedly, had started in February 2009). The tax assessment report was centred
primarily on the legality in civil (violation of the prohibition on agreements of forfeiture) and tax law of
sale and lease back transactions on property (land), from which greater VAT payable arose amounting to
€7.2 million.
The company considers that the inspectors classified the transaction incorrectly and in that respect it
commenced negotiations with the relative department of the tax authorities and filed its observations on
the tax assessment report (in accordance with the Taxpayers Statute Law 212/2000).
Banque de Dépôts et de Gestion: in May the Swiss tax authorities rejected the appeal made by UBI
Banca and Banque de Dépôts et de Gestion against a demand concerning the failure by BDG to apply a
withholding tax of 15% on dividends paid in the years 2006-2008 to its parent, UBI Banca, because in
the opinion of the Swiss authorities, as a co-operative UBI Banca is not entitled to the exemption allowed
for joint stock companies. Since it is held, on the contrary, that grounds exist in the case in question for
the application of the parent-subsidiary directives, a further appeal was lodged against the decision in
the competent Federal Administrative Court. That court rejected the appeal in January 2012. The
litigation regards a sum of €1.59 million in addition to tax credits recognised by the Swiss tax authorities
worth approximately €2 million. UBI Banca will assess the action to be taken in the light of studies
currently in progress in order to see its right to refunds or tax relief upheld, partly in the light of the
bilateral Italian-Swiss Convention. An appeal was lodged in this respect on 23 rd February 2012 with the
Federal Court against the decision of the Federal Administrative Court.
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