From the 1985 fiscal year onwards, part of the consolidated companies are included under Fiscal Group 9/85 to the effects of the Corporations Tax, the said group being formed by COR- PORACIÓN MAPFRE and its subsidiaries meeting the requirements to be subject to the said tax regime. In 2003, the said Fiscal Group was formed by the following companies:
CORPORACION MAPFRE, MAPFRE RE, MAPFRE INMUEBLES, DESARROLLOS URBANOS CIC, SERVICIOS INMOBILIARIOS MAPFRE, MAPFRE ASISTENCIA, IBEROASISTENCIA, VIAJES MAPFRE, IBEROASISTENCIA SERVICIOS DE TELEMARKETING, MAPFRE SOFT, CONSULTING DE SOLUCIONES Y TECNOLOGIAS SIAM, MAPFRE AMERICA, MAPFRE ASISTENCIA ORO and VIAJES CITEREA.
Likewise, from 2002, some other consolidated companies are included under Fiscal Group 95/02 to the effects of the Corporations Tax, the said group being formed by MAPFRE CAJA MADRID HOLDING de Entidades Aseguradoras, S.A. (hereinafter “MAPFRE CAJA MADRID HOLDING”) and its subsidiaries meeting the requirements to be subject to the said tax regime. In 2003, Fiscal Group 95/02 was formed by the following companies:
MAPFRE CAJA MADRID HOLDING, MAPFRE VIDA, MAPFRE INVERSION, MAPFRE INVERSION DOS, MAPFRE VIDA PENSIONES, CONSULTORA ACTUARIAL Y DE PENSIONES MAPFRE VIDA, GESTION MODA SHOPPING, MIRACETI, MAPFRE SEGUROS GENERALES, MAPFRE INDUSTRIAL, GESTORA DE ACTIVOS FUNERARIOS, MULTISERVICIOS MAPFRE, MAPFRE
Business Line Spain European Union Other Countries
Premiums Reserves Premiums Reserves Premiums Reserves
Life Direct insurance 1,616,338 11,506,918 38,224 142,006 188,852 208,199 Accepted reinsurance 6,580 4,295 2,483 3,270 24,238 65,316 Subtotal Life 1,622,918 11,511,213 40,707 145,276 213,090 273,515 Non Life Direct insurance 3,841,980 4,213,093 91,817 111,038 1,214,169 800,053 Accepted reinsurance 52,707 130,058 232,832 267,693 278,964 243,095
Subtotal Non Life 3,894,687 4,343,151 324,649 378,731 1,493,133 1,043,148
TOTAL 5,517,605 15,854,364 365,356 524,007 1,706,223 1,316,663
FINISTERRE, ORIENTE, SEPROVAL, MESEVAL, FINISTERRE AGENCIA CANARIA DE SEGUROS, COSEBAL, HEJEAN, AGEPAL, LISS ASSURANCE, SEGURLIS, SEGESYMED, SEPENVAL, SEFIN, MAPFRE CAUCION Y CREDITO, MAPFRE SERVICIOS DE CAUCION Y CREDITO, MAPFRE CAJA SALUD, CENTRO MEDICO DE CHEQUEOS MAPFRE VIDA, IGUALSERVICIOS DE HUESCA, CENTROS MÉDICOS ISLAS CANARIAS, MAPFRE GUA- NARTEME and PROYECTOS Y SERVICIOS MAPFRE.
Reconciliation of accounting result with the tax base
The following table sets out the reconciliation between the consolidated profit after tax and minority interests with the aggregate tax base for the year’s Corporations Tax, for 2003, of all the fully consolidated companies, excluding foreign companies:
Increases in sole permanent differences in the year correspond, basically, to non deductible expenses related to employee’s Life insurance policies, taxes borne on foreign dividends and income received from abroad, to the non deductibility of the goodwill arising from the merg- er of ASEICA and MAPFRE CAJA SALUD, and to provisions for risks and expenses.
Decreases in sole permanent differences in the year arise, mainly, from the exemption on for- eign subsidiaries’ revenues, from the allocation of the Reserve for Investments in the Canary Islands, from the monetary adjustment of gains generated in the sale of assets, from the recovery of adjustments previously made by the Fiscal Authorities Inspection at MAPFRE MUTUALIDAD on excess depreciation of fixed asset elements with respect to the maximum tax allowance, as well as from the regularisation of the Corporation Tax for year 2002. Reconciliation of accounting results with the tax base for the Corporations Tax
Accounting result for the fiscal year 298,621
Increases Decreases Corporation Tax 159,560 -- 159,560 Permanent differences: › Of individual Companies 15,655 (18,188) (2,533) › Of consolidation adjustments 237,272 (90,067) 147,205 Temporary differences: › Of individual Companies:
Arising in the year 208,634 (1,200) 207,434
Arising in previous years 4,446 (101,332) (96,886)
› Of consolidation adjustments:
Arising in the year 30,340 (504,367) (474,027)
Arising in previous years 449,011 (3,371) 445,640
Set-off negative tax bases (15,115)
Tax Base (tax result) 669,899
Increases in permanent consolidation differences are due, mainly, to the elimination of intra- group dividends, eliminated in the accounting consolidation process, to external shareholders’ profit sharing, to the imputation of losses of companies consolidating by the equity method, and to the elimination of losses from foreign companies excluded in the reconciliation. Decreases in permanent consolidation differences relate, mainly, to the elimination of profits of companies consolidating by the equity method, to minority shareholders’ interests, and to the elimination of foreign companies’ results, which are not included in this reconciliation. Increases in sole temporary differences originating in the year correspond, mainly, to non deductible expenses on pension related commitments, to the allocation of provisions for lia- bilities, insolvencies, mathematical reserves, depreciation of the securities portfolio, and pre- miums pending collection, to complementary reserves for benefits, exceeding the tax deductible amounts, and to the depreciation of the financial goodwill.
Increases in sole temporary differences originating in previous years correspond to the rever- sion of the accelerated depreciation of assets as established in Royal Decrees 3/1993, 7/1994 and 2/1995, and to the reversion of profits deriving from the reinvestment deferral tax benefit. Decreases in sole temporary differences originating in previous years relate mainly to the recovery of provisions that were considered as non deductible in previous years, to the tax bases already imputed by companies operating under the fiscal transparency regime, to the partial reversion of insurance premiums covering pension related commitments to pension- ers, to the reversion of capital gains from disposal of securities that were subject to swap in previous years, to the reversion of premiums pending collection, to the additional provision for benefits made in the previous year, and to the reversion for liabilities and expenses allo- cated in year 2002.
The amount of increases in temporary consolidation differences originating in the year relates, basically, to depreciation of goodwill on consolidation and portfolio acquisition expenses.
The amount of decreases in temporary consolidation differences originating in the year corresponds mainly to the elimination of the accounting consolidation adjustment made in the concept of allocation to the provision for depreciation of investments in consolidated companies.
The amount of increases in temporary consolidation differences originating in previous years relates, basically, to the elimination of the accounting consolidation adjustment made for the reversion of the provision for depreciation of subsidiaries established at the end of the pre- ceding fiscal year.
The amount of decreases in temporary consolidation differences originating in previous years corresponds to the elimination of results from other fiscal years.
Of the amount of setoff of negative tax bases, EUR 14,625,388 correspond to Fiscal Group no. 9/85 and EUR 490,000 to Fiscal Group no. 95/02.
During 2003, consolidated companies obtained profits in several foreign countries, with the expense accrued on the various foreign taxes charged on the said profits amounting to EUR 3,890,000.
Prepaid and deferred taxes
Sole prepaid taxes of fully consolidated companies as at 31 December 2003, as a consequence of the positive temporary differences accumulated as at the said date, amount to EUR 111,373,000. Of this figure, EUR 49,393,000 have been included in the consolidated companies’ Balance Sheet and Profit and Loss Account, pursuant to the criteria established to that effect by the I.C.A.C. resolution of 9 October 1997 and its amendment of 15 March 2002. Of the said figure, EUR 16,967,000 originate in the present year and EUR 32,426,000 come from previous years.
The remaining sole prepaid taxes of consolidated companies accumulated as at 31 December 2003, which amount to EUR 61,980,000, have not been accounted for pursuant to the criteria established in the said I.C.A.C. resolution of 9 October 1997 and its amendment of 15 March 2002.
Sole deferred taxes as at 31 December 2003 of fully consolidated companies amount to EUR 8,035,000, having been included in the respective Balance Sheets and Profit and Loss Accounts.
Negative tax bases
Negative tax bases from previous years pending set-off in fully consolidated companies amount to EUR 193,298,000 in aggregate, broken down as follows:
Tax credits relating to negative tax bases pending set-off by some of the consolidated com- panies have not been booked, pursuant to the principles established by the ICAC resolution of 9 October 1997, and its amendment dated 15 March 2002.
Imputation of transparent companies
As shareholders in entities declaring under the fiscal transparency system, consolidated companies received the following imputations in the year:
From fiscal year Amount Deadline for set-off
in fiscal year 1996 97 2011 199826,7682013 1999 41,688 2014 2000 13,369 2015 2001 41,507 2016 2002 69,869 2017 Figures in EUR 000s
Tax incentives
The detail of tax incentives in fully consolidated companies is as follows:
As at 31 December 2003, consolidated companies had booked tax credits for deductions pend- ing application amounting to EUR 28,828,000.
In fiscal year 2002, consolidated companies assigned income amounting to EUR 222,911,000 to the transitional regime of reinvestment of extraordinary profits established in the third tran- sitional provision of Act 24/2001, on Fiscal, Administrative and Labour Related Measures, giv- ing rise to a deduction in the amount to be paid under the Corporations Tax in 2001 of EUR 29,022,000. The assets where the reinvestment was carried out must remain in the compa- ny’s ownership until fiscal year 2007.
Likewise, in years 2002 and 2003, consolidated companies assigned income amounting to EUR 5,624,000 and EUR 45,353,000, respectively, to the deduction on reinvestment of extraor- dinary profits established in article 36 ter. of Act 43/1995.
In previous years, consolidated companies assigned positive income of EUR 9,234,000 to the tax benefit of reinvestment deferral pursuant to the repealed article 21 of Act 43/1995, on the Corporations Tax, having reinvested EUR 18,263,000 as at year end, namely, the whole amount corresponding to the reinvestment commitment, according to the following breakdown: BREAKDOWN OF TAX INCENTIVES
Type Amount applied Amount pending
in the year application
Deduction on double taxation - internal 23,237 39,455
Deduction on double taxation - international 1,284 --
Deduction on reinvestment of extraordinary profits 4,399 --
Bonuses and others 5,356 16
Staff training and contribution to pension plans 817 58
Creation of employment 16 - Figures in EUR 000s Concept Amount Tax base 784 Allowances 8 Withholdings 490 Figures in EUR 000s
Positive income subject to the tax benefit of deferral on reinvestment is integrated into the consolidated companies’ tax base in the tax periods when the assets in which the reinvest- ment was carried out are depreciated. Of the total amount of this positive income, consoli- dated companies have already integrated into their tax base the amount of EUR 640,000, as per the following detail:
The amount of EUR 8,594,000 is pending integration into consolidated companies’ tax base during fiscal years 2004 to 2052.
Verification by the tax authorities
Pursuant to the legislation in force, the tax returns filed for the different taxes may not be considered as definitive until they have been inspected by the tax authorities or until the pre- scription period of four years has elapsed. As a result of the inspection activities completed in 1997 in some of the consolidated companies, in relation to the Corporation Tax for fiscal years 1989 to 1993, as well as to the remaining taxes of fiscal years 1991 to 1994, tax assess- ments were raised, signed in disagreement, for the Corporation Tax of years 1991, 1992 and 1993, due to disagreement on the qualification of certain assets acquired upon the merger by takeover of several subsidiary companies, carried out on 31 December 1992, for the material- isation of reinvestment to which the exemption of certain positive income generated in years 1990 and 1993 was subject, as well as disagreement on the deductibility of the allocation to the provision for claims pending declaration, and on withholdings on account of the Personal Income Tax, due to disagreement on the determination of the applicable withholding per- centages. At year-end, MAPFRE INDUSTRIAL has made a provision for the amount of the tax assessment raised for the non deductibility of the provision for claims pending declaration.
Fiscal Year Amount of Reinvestment Assigned income
1996 491 299 1998355 168 1999 4,015 2,703 2000 12,4685,847 2001 934 217 TOTAL 18,263 9,234 Figures in EUR 000s
Fiscal Year Amount
1999 62 2000 97 2001 98 2002 191 2003 192 TOTAL 640 Figures in EUR 000s
Tax liquidations deriving from the said assessments were appealed against and are pending resolution at present, except for those relating to the personal income tax, which have been admitted.
As a consequence of inspection activities relating to fiscal years running from 1 January 1987 to 31 December 1991, regarding the companies MAPFRE FINISTERRE and its subsidiary ORI- ENTE, certain tax assessments were raised that were appealed against, with said appeals having been partly successful. For the portion not accepted, new tax liquidations were raised, which were again appealed against.
In 2001, inspection activities were completed in relation to Group 9/85, formed by CORPO- RACIÓN MAPFRE and its tax-controlled companies, for all taxes relating to fiscal years 1996 and 1997, as well as for the Corporation Tax of years 1994 and 1995. As a result of said inspec- tion, tax assessments were raised, signed in disagreement, for the Corporation Tax of the years under review, due basically to disagreement on the deductibility of technical reserves, provision for depreciation of fixed assets, Tax on Insurance Premiums, discrepancy in the incorporation to the taxable base of the said tax of certain surcharges collected from insured persons, and on withholdings on account of the Personal Income Tax, due to disagreement on whether certain amounts paid in the concept of transport expenses should be subject to withholding. The said tax assessments have been appealed against, and the appeal was pending resolution at year end.
In 2001, inspection activities were completed at CAJA MADRID VIDA, a company taken over by MAPFRE VIDA pursuant to the general assignment of assets and liabilities that took place on 31 December 2001, relating to all the taxes to which said companies are subject for years 1996 and 1997, as well as to withholdings on account of returns on capital of fiscal year 1998. As a result, tax assessments were signed in disagreement in relation to withholdings on account of returns on capital of fiscal years 1996 to 1998 deriving from deposit administration agree- ments; these tax assessments were appealed against and are pending resolution, as well as the appeal brought against the tax assessment raised for the same concept and relating to fiscal years 1992 to 1995.
There are inspection assessments for years 1995, 1996 and 1997 on MUSINI, corresponding to withholdings on account of the personal income tax, signed in disagreement, as there are major discrepancies with the criteria held up by the tax inspectors. Against the mentioned assessments, an appeal was filed with the Tribunal Económico Administrativo Central, which was pending resolution at year end. As at 31 December 2003, there is a provision assigned to meet any liabilities that may arise from the settlement of the said appeal.
In 2003, a tax inspection took place at CAJA MADRID VIDA, a company taken over by MAPFRE VIDA, with assessments having been signed in agreement for insignificant amounts, in the concept of withholdings on account of the personal income tax and Value Added Tax of years 1998 to 2000, as well as for the 2000 Corporations Tax; the relevant tax settlements had been honoured at year end.
Likewise, an assessment has been signed in disagreement for the Corporations Tax of year 2000, due to discrepancies on the fiscal allowability of the default interest from tax assess- ments raised in previous years, with the liquidation deriving from the said assessment having been appealed against.
In addition, and as regards the Corporations Tax for years 1998 and 1999, when CAJA MADRID VIDA formed part of the Tax Group fiscally controlled by CAJA MADRID, the relevant pro- ceedings have been signed containing hardly significant regularisations, which will give rise to the corresponding assessments upon completion of the tax inspection at CAJA MADRID VIDA’s controlling company in the mentioned years.
Consequently, and excluding the above mentioned exceptions, consolidated companies have open to inspection all the taxes to which they are subject for the past four fiscal years. In the opinion of the consolidated companies’ advisers, the likelihood of fiscal liabilities affecting significantly consolidated companies’ financial position as at 31 December 2003 is remote. On 9 January 2004, inspection actions have been initiated at MAPFRE AGROPECUARIA Mutu- alidad de Seguros y Reaseguros a Prima Fija, in relation to all non prescribed taxes corre- sponding to the period 1999 to 2002.
Transactions subject to the special Regime of Chapter VIII, Title VIII of Act 43/1995
Fiscal year 2003
On 1 December 2003, an overall assignment of assets and liabilities of MAPFRE AUTOMÓ- VILES RIESGOS ESPECIALES, S.A. took place in favour of its sole shareholder, MAPFRE MUTUALIDAD, the said transaction being subject to the tax regime established in Chapter VIII, Title VIII of Act 43/1995, on the Corporation Tax.
On 31 January 2003, a capital increase took place at MAPFRE RE where CORPORACIÓN MAPFRE contributed the premises located at Paseo de Recoletos no. 25, in Madrid, which, in turn, had been transferred to it under Incalbarsa’s overall transfer of assets and liabilities, which was formalised on 27 December 2000. Both transactions are subject to the special tax Regime contemplated in Chapter VIII, Title VIII of Act 43/1995 on the Corporations Tax. The said premises had a book value of EUR 11,868,822.10 on the date of its contribution and an accumulated depreciation of EUR 1,567,104.37. As a result of the non cash contribution made in the mentioned capital increase, CORPORACIÓN MAPFRE has received MAPFRE RE shares for an amount of EUR 30,000,000. On 1 December 2003, a capital increase was carried out at CENTRO MÉDICO DE CHEQUEOS MAPFRE VIDA, S.A., where MAPFRE CAJA SALUD contributed the premises envisaged for parking places on the first basement and the offices of the first floor of the building owned by it, located at Llodio street w/n of Madrid, which, in turn, had been transferred to it by MAPFRE VIDA in a capital increase whereby the latter Company contributed all the assets assigned to the health business. Both transactions are subject to the special fiscal regime provided for in Chapter VIII, Title VIII of Act 43/1995, on the Corporations Tax. The premises contributed to CENTRO MÉDICO DE CHEQUEOS MAPFRE VIDA had a book value of EUR 2,492,000 on the date of the contribution, and an accumulated depreciation of EUR 412,000. As a result of the non cash contribution made in the mentioned capital increase, MAPFRE CAJA SALUD has received shares in CENTRO MÉDICO DE CHEQUEOS MAPFRE VIDA for an amount of EUR 1,309,000 of nominal value and EUR 785,000 of paid-in premium.
Fiscal year 2002
Merger by takeover of ASEICA on the part of MAPFRE CAJA SALUD. Fiscal year 2001
› CORPORACIÓN MAPFRE exchanged shares in MAPFRE SEGUROS GENERALES for shares in MAPFRE CAJA MADRID HOLDING.
› Overall assignment of assets and liabilities of IGUALATORIO MÉDICO QUIRÚRGICO DE HUESCA in favour of its sole shareholder, MAPFRE CAJA SALUD.
› Assignment of the health business of MAPFRE VIDA to MAPFRE CAJA SALUD by a capital increase with non cash contribution of the assets assigned to the said business.
› Overall assignment of assets and liabilities of CAJA MADRID VIDA in favour of its sole shareholder, MAPFRE VIDA.
Fiscal year 2000
› CORPORACIÓN MAPFRE carried out exchanges of securities, consisting of contributing shares in MAPFRE VIDA, MAPFRE CAUCIÓN Y CRÉDITO and MAPFRE SEGUROS GEN- ERALES.
› Incalbarsa’s overall assignment of assets and liabilities in favour of its sole shareholder, CORPORACIÓN MAPFRE.
› MAPFRE CAJA MADRID HOLDING approved a capital increase by non cash distribution of shares in MAPFRE SEGUROS GENERALES, MAPFRE VIDA and MAPFRE CAUCIÓN Y CRÉDITO (shares contributed by CORPORACIÓN MAPFRE) and of shares in CAJA MADRID