Tax issues

Tax moratorium

The appeals filed by ACEA against the notices of findings of April 2009 were rejected by the Provincial Tax Commission.

By sentence of 20 June 2012, the tax law judge also ordered the Tax Authorities to reimburse sums paid by ACEA following adoption of the tax amnesty pursuant to art. 9, Italian Law 289/2002 for 1998 and 1999.


SAO tax inspection

In November 2008, the competent Tax Authorities notified the company, and the former Parent Company EnerTAD S.p.A., assessment no. 872080100477, which amended the tax return for IRES purposes for the 2004 tax period and for an amount - to be borne by the Company - of 2.3 million euros for taxes, net of any fines. The illegalities challenged arise from the application of Article 14, paragraph 4-bis of Law no. 537 of 24 December 1993.

The company rejected the reconstruction of the Office by appealing before the Provincial Tax Commission. The Tax Commission, with ruling issued following the hearing held in March 2010, accepted the appeal lodged by the Company, thus cancelling the aforementioned assessment notice. In March 2011, the Tax Authorities appealed the aforementioned ruling. The company arranged to implement all defensive activities. In ruling no. 189/04/12 issued on 21 May 2012 and filed on 15 November 2012, the Umbria Regional Tax Commission rejected the appeal, and ordered the Tax Authorities to pay legal costs.

In December 2009 the Milan Tax Authorities notified SAO S.p.A., today SAO S.r.l., as a company formerly belonging to the tax consolidation ERG Renew S.p.A. (former Enertad S.p.A.), assessment notice no. R1P098F01180/2009, relating to IRES for the 2004 tax period. By said assessment notice, the tax return - form CNM 2005 - submitted for the 2004 tax period by the consolidating company ERG Renew S.p.A. (former EnerTAD S.p.A.) was amended for IRES purposes; said notice follows assessment no. 872080100477 issued by the Orvieto Tax Authorities by which the tax return submitted by SAO S.r.l. for the same 2004 tax period was amended. The company has filed an appeal.

In October 2011, the Milan Tax Commission referred the case to the new delinquent tax list, pending the definition of the proceedings pending before the Terni Provincial Commission.

It is believed that the actions of the tax authorities mentioned above are illegitimate, and that the risk of having to pay the full amount is remote, which previous shareholder Enertad, now Erg Renew, will be obliged to pay on the basis of the guarantees issued as part of the purchase/sale agreement regarding the shares of the direct parent company A.R.I.A. S.r.l., formerly Tad Energia Ambiente S.p.A., reaffirmed by the recent award of the Board of Arbitrators.

It should also be noted, for the purposes of completeness, that in January 2009 the company challenged measure no. 2008/27753 of 27 November 2008 by which the competent Tax Authorities suspended the disbursement of a VAT rebate claimed by the company for the 2003 tax period. Said rebate, totalling 1.3 million euros, was recognised by the Inland Revenue, even though for precautionary reasons due to the above assessments its disbursement was suspended. The Tax Commission, with Ruling issued following the hearing held in March 2010, upheld the appeal lodged by the company, thus cancelling the cited measure against the aforementioned ruling. The Tax Authorities submitted an appeal in September 2010. The proceedings are in progress. It should be noted that the receivable involved in the cited VAT reimbursement was settled via payment in July 2010. The assignee presented an appeal with a simultaneous request for discussion at a public hearing, for the cancellation of measure 73747/2011 with which the Terni Provincial Department of the Tax Authorities declared the transfer of said VAT credit from SAO to said assignee to be unacceptable. By sentence no. 52/04/12 issued on 3 October 2011 and filed on 26 March 2012, the Perugia Regional Tax Commission rejected the appeal filed by the Tax Authorities, with reimbursement of costs. The Tax Authorities has filed an appeal with the Supreme court.


Tax inspection on Marco Polo

On 23 June 2010, the Tax Authorities notified the associated company Marco Polo of a Report of Findings relating to the general tax inspection started in March 2010. The irregularities found by the Tax Authorities totalled 6.4 million euros, (plus interest and fines) and essentially concern objections to the equalisation calculation method of fees due to Shareholders of ACEA and AMA, based on the service contracts stipulated.

In April 2012 the company accepted the findings in agreement with the Tax Authorities, which led to the recognition of higher taxes amounting to 0.4 million euros, including penalties and interest. The more significant findings were then cancelled by the tax authorities.


ARSE tax inspection

On 14 June 2012, the Company was delivered a Report on Findings from the Italian Financial Police - Rome Tax Police Department following its inspection to check the correct use of the tax suspension provisions under the VAT tax warehouse system pursuant to article 50-bis of Law Decree no. 331 of 30 August 1993 (“VAT Warehouses”), relating to certain assets imported by the company in 2009, 2010 and 2011.

Based on the alleged abusive use of the aforementioned system by the company, the inspectors charged the company with failure to pay VAT on imports - for 2009, 2010 and 2011 - amounting to 16,198,714.87 euros.

On 6 August 2012 the company submitted a defence brief pursuant to art. 12, paragraph 7, of Law no. 212 of 27 July 2000 concerning the findings contained in the aforementioned Report on Findings.

The issue relating to the concepts of simulated warehouses and the introduction of goods to the country is particularly well-known and debated, and has been the subject of numerous papers on practices issued by the Customs Authority and several cases of legal intervention.

The company considers that all the factual and legal conditions envisaged in the regulation on the use of VAT Warehouses, as interpreted by the relevant administrative bodies, were fully satisfied and therefore the aforementioned Report on Findings is without grounds.

With regard to VAT warehouses, please also note that, as concerns the particular case of the provision of services for the assets held at the VAT warehouses (case set forth in letter h) of art. 50-bis of Law Decree no. 331/1993), art. 34, paragraph 44 of Law Decree no. 179 of 18 October 2012 recently amended art. 16, paragraph 5-bis of Law Decree no. 185 of 29 November 2008 (on the authoritative interpretation of letter h) of art. 50-bis noted above) establishing, for that case, that VAT must be deemed definitively paid if, when the merchandise is taken from the VAT warehouse for marketing within the country, the regulations set forth in paragraph 6 of art. 50-bis of Law Decree 331/93 are correctly implemented, or the reverse charge procedures pursuant to art. 17, paragraph 2, of Presidential Decree no. 633 of 26 October 1972 are correctly applied.


GORI tax inspection

In 2011, the Tax Authorities carried out an inspection for the year 2008. At the end of the inspection, inspectors contested the payment of roughly an additional 1 million euros in taxes with the company (plus interest and fines). In respect of the irregularities identified, the company is evaluating whether to lodge an appeal against the assessment notice, which has not yet been notified as yet, or, alternatively, to formulate a tax settlement proposal in accordance with art. 6, paragraph 1, of Legislative Decree no. 218/97.

In December 2012, as a direct consequence of the tax inspection noted above, the company was sent a notice of assessment relative to 2007 which claimed higher taxable bases with respect to IRES, for 2.9 million euros, IRAP, for 2.8 million euros and VAT, for 0.1 million euros. On 13 February 2013, the company submitted a request for a tax settlement.


Sarnese Vesuviano tax inspection

On 7 February 2012, Provincial Office I of the Rome Tax Authorities launched a general inspection (IRES, IRAP and VAT) for 2009 against Sarnese Vesuviano.

The inspection terminated on 4 May 2012 with a Report on Findings served upon the company: the only finding charged by the inspectors concerns the undue deduction for IRES and IRAP purposes of amortisation on share usage rights, pursuant to art. 109, paragraph 8 of the Consolidated Income Tax Act. The higher tax deductions amounted to 0.5 million euros.

On 31 May 2012 and exercising the right granted under art. 5-bis, Italian Legislative Decree 218/1997, Sarnese Vesuviano filed a claim for full adoption of the notice of findings procedure.

On 11 September 2012, the company received the settlement notice for the amount of 180 thousand euros for the higher taxes ascertained, including reduced penalties.


ARIA (formerly EALL) tax inspection

On 17 February 2012, the Terni Tax Police Department of the Guardia di Finanza launched a general inspection (IRES, IRAP and VAT) against EALL for the years 2010/2011 until its merger into ARIA. A request for the 2009 inspection to be extended to VAT was submitted during the course of the inspection.

On 26 April 2012, ARIA S.r.l., as incorporating company of EALL, was served a notice of findings report containing the following findings:

  • deductions pursuant to Tremonti ter;
  • undue deduction of VAT on the disposal of ash and waste.

Regarding the first of these findings, the inspectors pointed out the incorrect calculation for 2009 of a negative income component, but at the same time recognised the amount due for 2010.

In the opinion of the company this finding does not result in higher taxes as the higher payments made for 2009 fully cover the higher taxes ascertained. It should be remembered, in fact, that the Tremonti ter subsidy was challenged by the Tax Authorities in relation to its aggregation with green certificates and the CIP6, and by virtue of this initial interpretation the subsidy was first excluded and subsequently higher payments were made.

Regarding the second finding, the inspectors charged the company with unlawful deduction in 2009, 2010 and 2011 of part of the VAT on services received for the disposal of ash and waste. In practice the company had received invoices indicating the standard VAT rate rather than the subsidised rate.

The notices of assessment relative to VAT for the years 2009 and 2010 were received in November. The company submitted a request for a tax settlement for the year 2010, while it paid 297 thousand euros for the higher taxes ascertained regarding 2009, including reduced penalties.


ACEA Distribuzione tax inspection

On 19 December 2012, the Tax Authorities sent ACEA Distribuzione an official notice of access to begin a general inspection concerning direct taxes and VAT for the 2010 tax period.