Impact of regulatory changes

Here below are the regulatory changes introduced in 2016 the impacting Banca IFIS Group:

  • Issue of the joint Bank of Italy/Consob/Ivass document no. 7 of 9 November 2016 “Accounting of interest on arrears as per Italian Legislative Decree 231/2002 on performing loans purchased outright”, which is consistent with the new model to estimate the cash flows associated with the receivables of the Pharma BU implemented during 2016.
  • Tax aspects: among the latest regulations on tax matters, the following impacted the determination of the Banca IFIS Group's income tax expense the most. In particular:
    • Italian Legislative Decree No. 83 of 27 June 2015, art. 16, para. 1: this provision has changed the rules for deducting bad debt and impairment losses. Effective from the annual period ending 31 December 2016, banks will be able to fully deduct credit losses in the first year they are accrued. This provision also established that all amounts in excess that were not deducted up to the tax year 2015 must be claimed as a reduction to taxable income (with diversified tax rates) over the following ten tax years starting from 2016. This regulatory change does not impact the Group's effective tax rate, but it does affect the current tax expense.
    • Italian Legislative Decree No. 59 of 3 May 2016, art. 11: it introduced the option for the recipients of the provisions in Italian Legislative Decree 225/2010 (banks and financial intermediaries) to continue applying the laws in force concerning the conversion of qualified deferred tax assets in tax credits, provided they pay an annual fee equal to 1,5% of the qualified deferred tax assets recognised and adjusted in accordance with said Legislative Decree. The exercise of the option is irrevocable, and the payment (if owed) must be made by the due date for paying income tax.
    • Italian Law no. 208 of 28 December 2015 (“2016 Budget Law”): it introduced the so-called “Super Depreciation” as a tax relief aiming to promote investments in new capital goods acquired between 15 October 2015 and 31 December 2016. This consists in an additional deduction equal to 40% of deductible depreciation charges.