BMW 2007 Annual Report Download - page 94

92 Group Financial Statements
73 Group Financial Statements
73 Income Statements
74 Balance Sheets
76 Cash Flow Statements
78 Group Statement of Changes
in Equity
79 Statement of Income and
Expenses recognised directly
in Equity
80 Notes
80 – Accounting Principles
and Policies
89 – Notes to the Income
Statement
96 – Notes to the Balance Sheet
117 – Other Disclosures
131 – Segment Information
The deferred tax expense was euro 520 million
lower than in the previous year, primarily reflecting
the impact of the Business Tax Reform Act 2008,
adopted by the German Bundesrat (Federal Council)
on 6 July 2007.
Deferred taxes are recognised on temporary dif-
ferences between the carrying amount of assets and
liabilities for IFRS purposes and their tax bases. De-
ferred taxes are computed using enacted or planned
tax rates which are expected to apply in the relevant
national jurisdictions when the amounts are recovered.
A corporation tax rate of 15.0 % applies in Germany
with effect from 1 January 2008 onwards. After taking
account of the average multiplier rate (Hebesatz) of
410 % for municipal trade tax and the solidarity charge
of 5.5 %, the overall income tax rate for companies
in Germany is 30.2 % (2006: 38.9 %). This reduced
rate has been applied in 2007 to measure deferred
tax assets and liabilities. As in the previous year, the
tax rates for companies outside Germany remain in
a range of between 12.5 % and 40.7 %. A valuation
allowance is recognised on deferred tax assets when
recoverability is uncertain. In determining the level
of the valuation allowance, all positive and negative
factors concerning the likely existence of sufficient
taxable profit in the future are taken into account.
These estimates can change depending on the ac-
tual course of events.
An analysis of deferred tax assets and liabilities
by position at 31 December is shown below:
Compared to the previous reporting period, the main
changes to deferred tax assets and liabilities were as
follows:
Application of the income tax rate of 30.2 %
(2006: 38.9 %), which is valid in Germany from 1 Jan-
uary 2008 onwards, significantly affected the meas-
urement of deferred tax assets and liabilities relating
to intangible assets, property, plant and equipment,
leased products, provisions and liabilities.
The changes in deferred tax assets and liabili-
ties relating to leased products and other current as-
sets are attributable primarily to the financial services
business.
Deferred tax assets on tax losses available for
carryforward and on capital losses increased margin-
ally on a net basis. Tax losses available for carryfor-
ward, which for the most part can be carried forward
without restriction, totalled euro 1.8 billion at the
year-end (2006: euro 1.7 billion). A valuation allow-
ance of euro 43 million (2006: euro 65 million) was
recognised in 2007 on deferred tax assets relating
to tax losses. Capital losses in the United Kingdom
increased to euro 2.2 billion at the end of 2007
(2006: euro 1.5 billion). In this context, a definitive
agreement was reached with the UK tax authorities
in 2007. As in previous years, these tax losses
in euro million Deferred tax assets Deferred tax liabilities
2007 2006 2007 2006
Intangible assets 1 – 1,528 1,859
Property, plant and equipment 43 48 428 510
Leased products 558 572 3,205 3,368
Investments 2 2 1 –
Other current assets 1,110 1,058 3,767 3,696
Tax loss carryforwards 1,072 849 – –
Provisions 1,145 1,540 51 134
Liabilities 3,084 3,653 690 827
Consolidations 1,661 1,600 329 403
8,676 9,322 9,999 10,797
Valuation allowance – 671 – 528 – –
Netting – 7,285 – 8,039 – 7,285 – 8,039
720 755 2,714 2,758