Milan

Mediolanum facing 344-million-euro fine from tax authorities

Financial-services company half-owned by Berlusconi

Mediolanum facing 344-million-euro fine from tax authorities

Milan, April 2 - Italian financial-services company Mediolanum faces a 344-million-euro fine from Italy's tax authorities, the company said in its full-year results document which was deposited with Italy's stock exchange on Tuesday. Mediolanum is controlled by the family of entrepreneur Ennio Doris and by former premier Sivlio Berlusconi's Fininvest holding company. Italy's inland revenue agency is investigating the investment company's financial transactions with its fully controlled Irish unit. In its full-year statements, Mediolanum said that just before last Christmas the company received notification from Italy's tax authorities that the accounts of two of its units - the Mediolanum Banca commercial bank and the Mediolanum Vita insurer - were being reviewed for the financial years 2005-2007 and that the firm was facing calls for 323.4 million euros in unpaid taxes and fines. The final bill could be even higher, as tax police have examined the company's 2008-09 reports. According to Italy's tax authorities, Mediolanum's financial-services activities pay lower royalties to their Italy-based owners than the average industry-wide, meaning that the firm has a higher proportion of its income subject to Ireland's lighter tax take. The Italian inland revenue agency estimates that overall some 500 million euros in revenues were kept free from higher Italian tax rates in the period 2005-07. In a statement, Mediolanum said the tax authority's analysis is "illegitimate" and "wrong" as far as regards the calculation of taxable revenues and "illegitimate" in terms of the sanctions imposed. The company said it would submit the matter to European arbitration procedures on double taxation, which should determine the appropriate amount of taxes the company is to pay. Mediolanum also said it disagreed with the finding that it underreported its royalty-fee structure, saying its calculations "enter into the range of free-market values determined by independent economists".

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