As a general rule and following the principle of correlation between income and expenses, any commission fees for sales staff and others of a general nature (sales
representatives, advertising, etc.) not specifically attributable to real estate developments, though solely connected to the same, incurred from the moment the
developments are initiated up to the moment the sales are booked are entered into the books under the “Other current assets” item of the assets side of the consolidated
balance sheet, so that they may be attributed to expenses at the moment the sales are booked, provided the margin from the sale agreements entered into pending entry
into the books exceeds the amount of such costs at the end of each year.
4.13
Official subsidies
Group companies follow the criteria set out below to book official subsidies:
-
Non-reimbursable capital subsidies (connected with assets) are valued at the amount granted, booked as deferred income and attributed to results in proportion
to the depreciation of the assets financed by such subsidies during the financial year.
-
Operating subsidies are booked as income at the moment of their accrual
4.14
Tax on profits
The cost of the year’s tax on profits is calculated through the sum of the current tax resulting from applying the tax rate on the year’s taxable base and then applying any
admissible tax write-offs plus any changes in deferred tax assets and liabilities.
Deferred tax assets and liabilities include any temporary differences, being any amounts expected to be payable or recoverable due to differences between the book
values of the assets and liabilities and their tax value, as well as any negative tax bases pending offsetting and any credits resulting from unapplied tax write-offs. Said
amounts are booked by applying to the relevant temporary difference or credit the tax rate at which they are expected to be recovered or settled.
In some countries, the tax rate varies depending on whether a transfer of assets is made. In these cases, the Group’s policy consists of applying the effective tax rate at
which they are expected to be recovered or settled. In the opinion of the Directors of the Group, the deferred tax thus calculated covers the amount whichmay eventually
be settled, if any, in the foregoing case.
Deferred tax liabilities for all taxable temporary differences are recognised, except for those in which the temporary difference arises from the initial recognition of
goodwill whose depreciation may not be written-off for tax purposes or the initial recognition of other operating assets and liabilities which do not affect either the tax
or accounting result.
Deferred tax assets identified as temporary differences, meanwhile, are only recognised if it is deemed probable that the consolidated entities will make sufficient tax
profits in the future to make them effective and they do not come from the initial recognition of other assets and liabilities in a transaction which does not affect either
the tax or accounting result. Other deferred tax asset (negative tax bases and write-offs pending offset) are only recognised if it is deemed likely that the consolidated
companies will make sufficient tax profits in the future to make them effective.
At each year-end, deferred taxes (both assets and liabilities) are reviewed in order to verify that they remain in force and the relevant corrections are made in accordance
with the outcome of the analyses conducted.
4.15
Undertakings made to the workforce
Spanish hotel companies are obliged to make a specific number of monthly salary payments to any employees who leave the company due to retirement, permanent
incapacity to work or upon reaching a certain age, as well as to those who have attained a certain level of seniority and meet certain pre-established requirements.
The liabilities accrued for obligations to employees is recognised under “Provisions for Contingencies and Charges” in the accompanying consolidated statement of
financial position (Note 21), in which the liabilities recognised in this connection relate mainly to the pension funds of certain employees of the Italy and Netherlands
business units.
Under current Italian legislation, they are entitled to receive benefits in the event of voluntary severance or termination. “Non-Current Provisions” in the accompanying
consolidated statement of financial position includes the liabilities accrued in this connection, which amounted to EUR 10,579 thousand at 31 December 2013 (31
December 2012: EUR 13,750 thousand).
In accordance with Real-Decree Law 16/2005, the Group has outsourced the above-mentioned undertakings, financing all the services accrued in advance.
4.16
Onerous agreements
The Group considers onerous agreements to be those in which the inevitable costs of fulfilling the obligations they entail exceed the economic benefits expected from
them.
The Group follows the principle of recording a provision at the present value of the aforementioned differences between the costs and benefits of the contract, or the
compensation foreseen for abandonment of the contract, if such is decided.
The pre-tax discount rates used reflect the current market value of money, as well as the specific risks associated with these agreements. More specifically, a rate between
7.03%
and 12% has been used.
REPORT ONTHE CONSOLIDATED FINANCIAL STATEMENTS
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