5.11 Income taxes

This caption comprises:

  For the first half of
(€’000) 2014 2013 restated
IRES 2,471 2,805
IRAP 2,046 2,224
Other foreign taxes 9,753 11,381
Net deferred tax expense 1,908 514
Total 16,178 16,924

Income taxes decreased by an overall €746 thousand compared to the corresponding period of the previous year.
Specifically, the decrease is due to the parent’s smaller IRES and IRAP taxes.
The decrease in other foreign taxes is offset by that of the net deferred tax expense in profit or loss.

The difference between the theoretical and effective tax rates is analysed below:

  For the first half of
  2014 2013 restated
(€’000)   amount %   amount %
Pre-tax profit 52,466     49,199 -  
Taxes calculated at ruling tax rates 14,428 27.50%   13,530 27.50%
Permanent differences (4,309) (1,185) -2.26% (3,467) (953) -1.94%
  48,157 13,243 25.24% 45,732 12,576 25.56%
Different rates on foreign taxes and/or due to losses of the year - 1,244 2.37% - 3,401 6.91%
IRAP and other taxes calculated on a basis other than pre-tax profit - 1,690 3.22% - 947 1.93%
Total effective taxes recognised in profit or loss 16,178 30.83%   16,924 34.40%

At 30 June 2014, the effective tax rate is 30.83%, compared to 34.40% in the same period of the previous year.
The decrease is due to the smaller taxes recognised in the period by the foreign subsidiaries, notably those in Australia.

Deferred taxes and the related assets and liabilities at 30 June 2014 can be analysed as follows:

  Income statement Statement of financial position
  Assets Liabilities Assets Liabilities
Italian post-employment benefits and pension funds 78 - 4,749 -
Remuneration (1,489) - 543 -
Property, plant and equipment and intangible assets (254) 16 1,661 157
Provisions for risks and charges 463 - 7,862 -
Research grants - (14) 35 1,805
Allowances for WIP and inventory write-down (468) - 10,477 -
Cash flow hedges - defined benefit plans 333 - 1,912 989
Tax losses (792) - 2,313 -
Stock grant plan - - 84 -
Other 429 206 5,609 7,302
Total (1,700) 208 35,245 10,253

The deferred tax assets related to Italian post-employment benefits and pension plans mainly relate to Ansaldo STS France S.A.S. (€4,132 thousand).
The deferred tax assets generated by undeductible accruals to “Provisions for risks and charges” mainly relate to the parent Ansaldo STS S.p.A. (€4,994 thousand) and the US subsidiaries (€2,743 thousand).
The deferred tax assets related to the allowance for work in progress and inventory write-down mainly relate to the parent Ansaldo STS S.p.A. (€8,724 thousand) and Ansaldo STS France S.A.S. (€1,085 thousand).
Finally, deferred tax assets on tax losses mainly relate to the Ansaldo STS USA group subsidiaries of €1,201 thousand.
“Other” mainly relates to the parent, Ansaldo STS S.p.A. (€3,552 thousand), and the American subsidiaries of Ansaldo STS USA Inc. (€1,312 thousand).
Deferred tax assets and liabilities include those recognised with a balancing entry directly in equity, on derivatives recognised as cash flow hedges and actuarial gains/losses following the adoption of the equity method for defined benefit plans. This equity item changed as follows during the reporting period:

  31.12.2013 restated Transfers to profit or loss Fair value gains or losses Other changes 30.06.2014
Deferred taxes directly recognised in equity 139 - 745 - 884

Registered Office: 16151 Genoa Via Paolo Mantovani, 3 - 5
Paid-in Share Capital EUR 100,000,000 R.E.A. n. 421689 Register of Enterprises of Genoa Tax Code 01371160662
A Finmeccanica Company