Taxes

Income taxes
(€ million) 31.12.2011 31.12.2010
Income taxes 976.9 1,140,4
Italy 211.8 150.8
Other countries 765.1 989.6
Deferred taxes -325.1 -271.1
Italy -6.4 -171.4
Other countries -318.7 -99.7
Total taxes of period 651.8 869.3
Income taxes on discontinued operations 0.0 56.4
Total taxes on continued operations 651.8 925.7

The Group’s parent company, Assicurazioni Generali S.p.A., and its Italian subsidiaries apply the Italian corporate income tax rate of 27.5% for the fiscal year 2011 and 2010. Furthermore, income taxes of Italian companies include the regional tax on productive activities (IRAP). In this latter respect, the Italian Law Decree 98/2011 - converted into Law 111/2011 - increased the IRAP standard rate for banking institutions and insurance companies from 3.9% to 4.65% and 5.9% respectively.
Income realised in Germany is subject to the corporate income tax - which is calculated on a rate of 15% plus a solidarity surcharge of 5.5% - and the trade tax (Gewerbesteuer). The trade tax varies depending on the municipality in which the company is situated. In 2011 the weighted average tax rate remained substantially unchanged at 16.2%.
In France, income taxes are calculated by using the corporate tax rate of 36,1% for the fiscal year 2011 and of 34,43% for the fiscal year 2010. The French corporate tax rate in effect amounts to 33,33%, plus a surcharge of 3,3% (contribution sociale). Only for the fiscal years 2011 and 2012, the corporate tax includes a temporary 5% surcharge. Both surcharges are calculated on the tax rate of 33,33%.

All other foreign subsidiaries apply their national tax rates as well, among others: Austria (25%), Belgium (34%), Bulgaria (10%), China (25%), Czech Republic (19%), Israel (24%), Netherlands (25%), Romania (16%), Spain (30%) Switzerland (22%) and USA (35%).

Reconciliation between expected and effective tax rate

The following table shows a reconciliation from the theoretical income tax expense, by using the Italian corporate income tax rate of 27.5%, to the effective tax expense.

(€ million) 31.12.2011 31.12.2010
Expected income tax rate 27.50% 27.50%
Earnings before taxes 1,804.6 2,836.8
Expected income tax expense 496.3 780.1
Effect of foreign tax rate differential -87.0 -93.2
Effect of permanent differencies 186.5 119.3
Effect of fiscal losses -37.1 -8.9
IRAP, trade tax and other local income taxes 167.6 126.9
Foreign withholding taxes not recoverable 25.1 39.6
Income tax es for prior years -90.5 -36.9
Other -9.1 -57.6
Effective tax expenses 651.8 869.3
Effective tax rate 36.12% 30.64%

The effective tax rate in 2011 (36,12%) is higher than the effective tax rate of the previous year (30,64%), mainly due to the increase of the IRAP standard rate for Italian insurance companies and of non-deductible impairment charges on equity instruments (principally Telco).
The tax benefit of € 87.0 million concerning the foreign tax rate differential corresponds to the difference between the expected income taxes, calculated at each entity level by applying the foreign statutory corporate tax rate, and the expected income taxes, calculated by using the Italian corporate tax rate (27,50%).
Furthermore, the effect of permanent differences equal to € 186.5 million mainly represents the impact of non-deductible financial impairments and realized capital losses on equity instruments, together with non-taxable dividends and realized capital gains on equity instruments.
Income taxes for prior years refer principally to a tax refund obtained by a German company.
Fiscal losses carried forward are recognised to the extent that future taxable income will be sufficient to offset the amount of the losses before their expiration.
Fiscal losses carried forward as of 31 December 2011 and 2010 are scheduled according to their expiry periods as follows:

(€ million) 31.12.2011 31.12.2010
2011 - 3.8
2012 6.8 2.9
2013 4.3 124.2
2014 22.7 222.6
2015 36.1 12.5
2016 21.6 1.9
2017 0.1 7.0
2018 0.0 0.0
2019 0.0 25.2
2020 0.0 0.0
Unlimited 639.9 16.5
Fiscal losses carried forward 731.5 416.6

The unused fiscal losses carried forward of unlimited duration increased in particular as a result of the above mentioned Italian Law Decree 98/2011, which  introduced that fiscal losses can be carried forward with no time limits (as opposed to the current five year limitation). Losses from a given year may, however, only be used to offset up to 80% of the taxable income of any following fiscal year.
Deferred income taxes are calculated on the temporary differences between the carrying amounts of assets and liabilities reported in the financial statements and their tax base, by using the tax rates applicable at the expected time of realisation according to each country’s current legislation.
The ultimate realisation of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. Furthermore, in making this assessment, the management considers the scheduled reversal of deferred tax liabilities and tax planning strategies.
Assessments show that deferred tax assets will be recovered in the future through either (i) expected taxable income of each consolidated company or (ii) expected taxable income of other companies included in the same tax group (e.g. “Consolidato fiscale” in Italy, “Steuerliche Organschaft” in Germany and “Régime d’intégration fiscale” in France).

Details on deferred tax assets

(€ million) 31.12.2011 31.12.2010
Intangible assets 166.7 162.6
Tangible assets 47.7 47.2
Land and buildings (investment properties) 758.5 623.0
Available for sale financial assets 3,242.3 526.4
Other investments 213.0 140.5
Deferred acquisition costs 20.2 16.6
Other assets 318.9 365.8
Fiscal losses carried forward 207.9 103.1
Allocation to other provisions and payables 397.5 348.2
Insurance provisions 392.7 347.3
Financial liabilities and other liabilities 895.3 748.0
Other 182.6 167.6
Total deferred tax assets 6,843.1 3,596.3

Details on deferred tax liabilities

(€ million) 31.12.2011 31.12.2010
Intangible assets 433.5 475.6
Tangible assets 190.7 136.6
Land and buildings (investment properties) 329.4 325.3
Available for sale financial assets 723.4 905.4
Other investments 243.3 199.9
Deferred acquisition costs 531.9 491.3
Other assets 96.8 97.7
Allocation to other provisions and payables 322.9 121.5
Insurance provisions 2,840.1 571.3
Financial liabilities and other liabilities 164.0 393.9
Other 73.1 34.9
Total deferred tax liabilities 5,949.2 3,753.3