Audi 2007 Annual Report Download - page 197

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10 Income tax expense
Income tax expense includes taxes passed on by Volkswagen AG on the basis of the single-
entity relationship between the two companies for tax purposes, along with taxes owed by
AUDI AG and its consolidated subsidiaries, as well as deferred taxes.
Tax expense consists of the following:
EUR million 2007 2006
Current income tax expense 1,355 1,207
of which for Germany 1,194 1,119
of which for other countries 161 88
of which income from the reversal of tax provisions – 1 0
Deferred tax income – 132 – 604
of which for Germany – 99 – 614
of which for other countries – 33 10
Total income tax expense 1,223 603
of which non-periodic tax income – 1 – 138
of which deferred tax expense from the measurement of tax
relief and loss carryforwards – 86
EUR 1,193 (1,118) million of the current tax expense was passed on by Volkswagen AG.
The current taxes in Germany are calculated at a tax rate of 38.3 (38.3) percent. This
represents the sum of the corporate income tax rate of 25.0 percent, the solidarity surcharge
of 5.5 percent and the average trade earnings tax rate for the Group. Deferred taxes are
calculated at the rate of 29.5 (38.3) percent. The reduction in the tax rate was the result of
the German Corporation Tax Reform Act of 2008.
The national income tax rates applicable for foreign companies range from 0 percent to
41 percent.
The effects arising as a result of the tax benefits on research and development expendi-
ture in Hungary are reported under tax-exempt income in the reconciliation accounts.
There are loss carryforwards totaling EUR 61 million, of which the amount of EUR 58 mil-
lion can be used indefinitely. The realization of tax losses resulted in a reduction of EUR 19
(20) million in current income tax expense in the 2007 fiscal year. Deferred tax assets total-
ing EUR 164 million were not carried for reasons of impairment. Unused tax loss carryfor-
wards accounted for EUR 2 million of this amount, tax rebates for EUR 162 million.
Deferred tax totaling EUR 161 (282) million was recognized directly in equity without af-
fecting the Income Statement. Treatment of actuarial gains or losses without affecting in-
come pursuant to IAS 19 led to a reduction in equity in the current fiscal year from the for-
mation of deferred tax amounting to EUR 40 (109) million. The change in deferred tax on
effects reported within equity for derivative financial instruments resulted in a EUR 121 (173)
million reduction in equity.
Deferred tax effects of EUR 142 (– 8) million resulted from tax-rate changes, particularly
in Germany.