Other debt

At 31 December 2013, other debt amounted to €214,351 thousand, a net decrease of €150,109 thousand over 31 December 2012, broken down as follows:

(€ thousand)31 December 201331 December 2012Change
Advances 864 700 164
Other debt:      
  • Debt payable to Group companies and other related parties
     
  - Consolidated VAT 92,098 211,221 (119,123)
  - Consolidated IRES  106,996 137,891 (30,895)
  - Other debt payable to Group companies and other related parties - 6 (6)
  • Total debt payable to Group companies and other related parties
199,094 349,118 (150,024)
  • Social security payables
2,130 2,128 2
  • Current amounts payable to employees, directors and statutory auditors
4,524 7,439 (2,915)
  • Dividends payable
318 373 (55)
  • Other
684 667 17
Total other debt 206,750 359,725 (152,975)
Taxes payable:      
  • VAT payable
2,668 1,588 1,080
  • Taxes withheld on payments to employees and independent contractors
1,756 1,972 (216)
  • Other
428 428 -
Total taxes payable 4,852 3,988 864
Accrued expenses and deferred income 1,885 47 1,838
Total other debt 214,351 364,460 (150,109)

Advances

This item represents the difference between the value of work completed for Treno Alta Velocità – T.A.V. S.p.A. (merged into Rete Ferroviaria Italiana S.p.A. from 31 December 2010) and progress payments and contractual advances received, as follows:

(€ thousand)31 December 201331 December 2012Change
Contract work in progress 246,627 244,858 1,769
Less: Net advances for work completed 247,360 245,426 1,934
Gross amount due to the customer 733 568 165
Net contractual advances 131 132 (1)
Total advances 864 700 164

The item relates to contracts between Fiat S.p.A. and Treno Alta Velocità – T.A.V. S.p.A. (acting on behalf of F.S. S.p.A.) for engineering and construction work on two lines forming part of the high-speed rail project in northern Italy (Bologna-Florence and Turin-Milan, consisting of the Turin-Novara and Novara-Milan sub-lines). At 31 December 2013, the contractual amounts due (including additional work, monetary adjustments and other contractual amounts) totaled €5,236 million for the Bologna-Florence line and €2,463 million for the Milan-Novara sub-line. The contract amount for the Turin-Novara sub-line (completed and accounting closed at the end of 2009) was €4,669 million.

Fiat S.p.A., as general contractor, engaged CAV.E.T. and CAV.TO.MI. for the engineering and construction activities, retaining responsibility for work coordination, organization and management activities. Contract work in progress therefore reflects the fees earned by Fiat S.p.A. as a percentage (approximately 3.5%) of the total contractual amount for activities carried out directly. Progress payments are made by the customer to Fiat S.p.A. based on the stage of completion of the works and advance payments, which Fiat S.p.A. then pays to CAV.E.T. and CAV.TO.MI., net of its contractual percentage.

These amounts may be analyzed by line as follows:

(€ thousand)31 December 201331 December 2012Change
Contract work in progress 246,627 244,858 1,769
  • Florence-Bologna line
161,906 162,212 (306)
  • Novara-Milan line
84,721 82,646 2,075
Less: Net advances for work completed 247,360 245,426 1,934
  • Florence-Bologna line
162,629 162,580 49
  • Novara-Milan line
84,731 82,846 1,885
Gross amount due to the customer 733 568 165
  • Florence-Bologna line
723 368 355
  • Novara-Milan line
10 200 (190)

Contract work in progress is measured on the basis of the stage of completion in relation to the sales price, which in this case is the consideration contractually agreed for the activities directly carried out by Fiat S.p.A. Contract costs relating to the contract revenue recognized totaled €101,034 thousand at 31 December 2013 (€98,750 thousand at 31 December 2012). Changes in contract work in progress have been recognized in the income statement under the item other operating income (see Note 4). When the lines are contractually completed, the final contractual revenues for the activities directly carried out are recognized in the income statement under other operating income, net of any decrease in inventories. At the same time, the accounts for inventories and amounts classified as advances are closed.

In 2009, the Secondary Final Test Certificate relating to the completion of residual work on the Turin-Novara line was signed, representing the final contractual document for the work on the line, and the project was closed from an accounting perspective (the Principal Final Test Certificate had already been signed in 2006, year in which the line was opened to the public).

Net advances for work completed were as follows:

 Advances received from customersAdvances paid to suppliersNet advances for work completed
(€ thousand)31 December 201331 December 2012 31 December 201331 December 2012 31 December 201331 December  2012
Florence-Bologna line 5,236,310   5,073,681 5,069,854 162,629 162,580
Novara-Milan line 2,456,036   2,371,305 2,194,697 84,731 82,846
Progress payments for work completed 7,692,346   7,444,986 7,264,551 247,360 245,426

Advances relates to amounts received as down payments from the customer T.A.V. S.p.A. at the commencement of the contracts, which are then recovered as the work progresses. Amounts were as follows:

 Contractual advances received from customersContractual advances paid to suppliersNet contractual advances
(€ thousand)31 December  201331 December 2012 31 December 201331 December 2012 31 December 201331 December 2012
Florence-Bologna line -   - 51 - 1
Novara-Milan line 5,168   5,037 5,037 131 131
Contractual advances 5,168   5,037 5,088 131 132

At 31 December 2013, bank guarantees and sureties totaling €414 million were given by Fiat S.p.A. to T.A.V. S.p.A. against contractual advances received, performance of the work and withholding amounts on progress payments. Under agreements entered into with the consortia mentioned and the institutions issuing the guarantees, €399 million of the total represents the direct liability of the consortia towards the issuing banks and insurance companies, with no joint responsibility for Fiat S.p.A.

Specifically, €52 million in guarantees provided by Fiat S.p.A. to T.A.V. S.p.A. relate to the Bologna-Florence line, €361 million to the Novara-Milan sub-line and €1 million to the Turin-Novara sub-line (remaining guarantee for work to be carried out during the Final Test phase).

Indemnities assumed directly by the CAV.E.T. consortium totaled €50 million. For the CAV.TO.MI. consortium, indemnities totaled €348 million for the Novara-Milan sub-line and €1 million for the Turin-Novara sub-line.

Release of these guarantees is usually linked to the formal testing (Final Test Certificates) required contractually for acceptance of the work by the customer and expiry of the subsequent two-year period for the technical and functional warranties issued, unless other specific conditions have been agreed.

Finally, for those lines where work was still in progress at year end (Bologna-Florence and Novara-Milan) the lines were formally handed over to T.A.V. S.p.A. in 2009 and the high-speed line was opened to the public, following the favorable technical opinion received from the Testing Commissions. However, given that at 31 December 2013 (as also at 31 December 2012), activities to complete the ancillary work and cleanup, in addition to the contractual obligation for final approval of the work (Final Principal and/or Secondary Test Certificates) and to release the bank guarantees were still in progress, from an accounting perspective the project remained open at that date.

Taxes payable and other debt

The principal items were as follows:

At 31 December 2013, debt payable to Group companies and other related parties for consolidated VAT, totaling €92,098 thousand (€211,221 thousand at 31 December 2012), related to VAT credits of Italian subsidiaries transferred to Fiat S.p.A. as part of the VAT consolidation.

At 31 December 2013, debt payable to Group companies and other related parties in connection with the IRES tax consolidation amounting to €106,996 thousand (€137,891 thousand at 31 December 2012) represents the remuneration due for tax losses contributed by the Italian subsidiaries to the domestic tax consolidation for 2013, IRES tax credits of Italian subsidiaries transferred to Fiat S.p.A. as part of the tax consolidation procedure for 2013 and residual amounts payable in relation to the domestic tax consolidation for 2012.

Taxes payable and other debt are all due within one year and their carrying amount is deemed to approximate their fair value.