33 Income taxes

Income taxes (€906 million) break down as follows:

Income taxes of €906 million have increased by €374 million compared with the previous financial year, mainly due to the increased charges arising from the application of additional corporate income tax (the “Robin Hood Tax”) to the natural gas transportation and distribution segments (€344 million, of which €169 million is in higher current taxes and €175 million in higher deferred taxes, essentially linked to the adjustment of deferred taxes at 31 December 2010).

Specifically, Article 7 of Decree Law No. 138 of 13 August 2011, converted into Law No. 148 of 14 September 2011, amended Decree Law No. 112 of 25 June 2008 (converted into Law No. 133 of 6 August 2008), introducing an additional IRES (the Robin Hood Tax) for companies operating in the fields of hydrocarbons exploration and development, oil refining, production and sale of petrol, oil, diesel, lubricants, liquefied natural gas and liquefied petroleum gas, and the production or sale of electricity, making provision, from the current financial year, for:

• extending the scope of the Decree to include companies operating in the fields of transmission, dispatch and distribution of electricity and transportation and distribution of natural gas;
• for the 2011, 2012 and 2013 tax periods only, the rise in the rate of additional tax from 6.5% to 10.5%;
• changes to the ceiling above which the additional tax applies, identified, with reference to the previous financial year, as revenue of €10 million and taxable income of €1 million, to replace the previous threshold of €25 million.

As a result of the measures in question, Snam companies operating in the natural gas transportation and distribution segments are subject to the additional IRES at a rate of 10.5% for financial years 2011, 2012 and 2013 and 6.5% from 2014.

The impact of taxes on pre-tax profit for the period is 53.4% (32.5% in 2010) in view of the theoretical tax rate of 33% (the same as in 2010), which is obtained by applying the statutory tax rate of 27.5% (IRES) to pre-tax profit and 3.9% (IRAP) to the net value of production.

The analysis of the difference between the theoretical and actual tax rates is as follows:

The effective rate for the 2011 financial year is 53.4%. The increase is mainly due to the application of the additional IRES (Robin Hood Tax), which resulted in an increase of 20.3 percentage points (€344 million).

Permanent differences and other factors include:

• increase: (i) 0.9 percentage points (€16 million) in the different rates of regional production tax (IRAP); (iii) 0.3 percentage points (€5 million) for the 5% tax on dividends received;
• decrease: (i) 0.7 percentage points (€12 million) in the valuation of equity investments using the equity method; (ii) 0.1 percentage points (€2 million) in the effects of Article 1 of Decree Law No. 201/2011, converted by Law No. 214/2011 on economic growth subsidies relating to the allocation to non-distributable reserves; (iii) 0.1 percentage points (€2 million) in the deduction for IRES purposes of 10% regional production tax (IRAP).

The analysis of deferred and prepaid taxes based on the nature of the most significant temporary differences is given in Note 25 “Deferred tax liabilities”, to which we refer.