BMW 2005 Annual Report Download - page 88
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87
The decrease in tax expense in 2005 is attribut-
able to tax reimbursements for prior years and the
reversal of valuation allowances on deferred tax as-
sets relating to capital allowances in the United
Kingdom as a result of a renewed assessment of
recoverability.
out restriction. No valuation allowance is recognised
on deferred tax assets at 31 December 2005 for
capital allowances on property, plant and equipment
in the United Kingdom (31.12. 2004:euro 296 million).
In total, euro 240 million of the valuation allowance
on deferred tax assets was reversed in the financial
year 2005 (2004: euro 220 million). As a result of
newly gained information, deferred tax assets of
euro 202 million on capital allowances, which had
been fully written down in the past, were written off
without further profit or loss effect.The use of capital
allowances in the United Kingdom gave rise to a
deferred tax expense of euro 66 million (2004: euro
127 million); on the other hand, the valuation allow-
ance increased by euro 36 million (without profit or
loss effect) as a result of translation differences.
Interest and currency derivatives recognised di-
rectly in equity were euro 1,670 million (gross) lower
at the end of 2005 than one year earlier as a result
of reduced volumes and lower fair values. Deferred
tax liabilities recognised directly in equity fell corre-
spondingly by euro 627 million.
The actual tax expense for the financial year
2005 of euro1,048 million (2004: euro 1,341 million
*
)
is euro 231 million (2004: euro 53 million*) lower
than the expected tax expense of euro 1,279 million
(2004: euro1,394 million*) which would theoretically
arise if the tax rate of 38.9% (unchanged from the
previous year), applicable for German companies, was
applied across the Group. The difference between
the expected and actual tax expense is attributable
to the following:
in euro million 2005 2004*
Expected tax expense 1,279 1,394
Variances due to different tax rates –123 – 117
Tax reductions (–)/tax increases (+) as a result of non-taxable income and
non-deductible expenses 158 –77
Tax expense (+)/benefits (–) for prior periods – 232 198
Other variances –34 –57
Actual tax expense 1,048 1,341
*adjusted in accordance with Note [8] (b)