BMW 2008 Annual Report Download - page 90

91 Group Financial Statements
Deferred taxes are recognised on temporary differences
between the carrying amount of assets and liabilities for
IFRS purposes and their tax bases. Deferred 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 uniform corporation
tax rate of .  applies in Germany from  January .
After taking account of the average multiplier rate (Hebe-
satz) of .  for municipal trade tax and the solidarity
charge of . , the overall tax rate for BMW companies in
Germany is .  (: . ). This reduced rate was
already applied in the financial year  to measure de-
ferred
tax assets and liabilities. The non-deductibility of
municipal trade tax for corporation tax purposes with effect
from the beginning of the financial year  has been
taken into account. The tax rates for companies outside
Germany range from .  (: . ) to .  (:
. ). A valuation allowance is recognised on deferred
tax assets when recoverability is uncertain. In determining
the level of the valuation allowance, all positive and nega-
tive factors concerning the likely existence of sufficient
taxable profit in the future are considered. These estimates
can change depending on the actual course of events.
An analysis of deferred tax assets and liabilities by position
at  December is shown below:
“Netting” relates to the offset of deferred tax assets and
liabilities within individual separate entities or tax groups.
Deferred tax assets on tax losses available for carryforward
and on capital losses increased on a net basis. Tax losses
available for carryforward, which for the most part can be
carried forward without restriction, totalled euro . billion
at the end of the reporting period (: euro . billion). A
valuation allowance of euro  million (: euro  million)
was recognised in  on deferred tax assets relating to
tax losses available for carryforward. Capital losses in the
United Kingdom decreased to euro . billion in  (:
euro . billion) due to exchange rate factors. As in pre-
vious years, these tax losses – amounting to euro  mil-
lion at the end of the reporting period (: euro 
mil-
lion) – were fully written down since they can only be
utilised against future capital gains. Capital losses are not
connected to on-going business operations.
Deferred tax assets were recognised in  for entities
which recorded tax losses in either  or . These
deferred tax assets exceed deferred tax liabilities by
euro  million (: euro  million). Deferred tax
assets are recognised on the basis of management’s
assessment of whether it is probable that the relevant
entities will generate sufficient taxable profits against
which deductible temporary differences can be offset.
Deferred taxes recognised directly in equity amounted to
euro  million (: euro  million). The increase of
euro  million relates to deferred taxes on gains and losses
arising on items recognised directly in equity, namely on
marketable securities (negative amount of euro  million),
on derivative financial instruments (positive amount of
euro  million) and on actuarial gains and losses relating
to defined benefit pension plans (negative amount of euro
 million). The change also includes a euro  million re-
duction in deferred taxes arising from the translation of for-
eign subsidiaries’ financial statements.
Deferred taxes are not recognised on retained profits of
euro , million (: euro , million) of foreign
sub-
sidiaries, as it is intended to invest these profits to maintain
and expand the business volume of the relevant companies.
A computation was not made of the potential impact of
income taxes on the grounds of disproportionate expense.
Deferred tax assets Deferred tax liabilities
in euro million 2008 2007 2008 2007
Intangible assets 1 1 1,541 1,528
Property, plant and equipment 43 43 454 428
Leased products 573 558 4,137 3,205
Investments 3 2 5 1
Other current assets 1,796 1,110 3,196 3,767
Tax loss carryforwards 1,438 1,072 – –
Provisions 1,197 1,145 7 5 51
Liabilities 2,945 3,084 1,296 690
Consolidations 1,736 1,661 406 329
9,732 8,676 11,110 9,999
Valuation allowance – 513 – 671 – –
Netting – 8,353 – 7,285 – 8,353 – 7,285
Deferred taxes 866 720 2,757 2,714