Chrysler 2007 Annual Report Download - page 269

Net income from derivative financial instruments of 75,196 thousand euros (65,816 thousand euros in 2006) result from derivatives
arranged through other Group companies which, in their turn, are parties to agreements with primary banks. In particular, the 2007
amount includes gains of 69,813 thousand euros (71,198 thousand euros in 2006) arising from the change in fair value and other
income deriving from two equity swap agreements expiring in 2008 following extensions agreed during the year, which the
Company entered into in prior years to hedge the risk of an increase in the Fiat share price above the exercise price of stock
options granted in 2004 and 2006 to the Chief Executive Officer (see Note 18). At December 31, 2007 the equity swaps have a
notional amount of 219,853 thousand euros, determined on the basis of the contractual strike price, unchanged with respect to
December 31, 2006. Although these equity swaps were entered into for hedging purposes, they do not qualify for hedge accounting
under IFRS and accordingly are defined as trading derivative financial instruments.
8. Taxes
Taxes recognised in the income statement can be analysed as follows:
(in thousands of euros) 2007 2006
Current taxes:
- IRES (132,145) (30,587)
- IRAP 108 1,627
Total Current taxes (132,037) (28,960)
Deferred taxes for the period:
- IRES ––
- IRAP 819 3,438
Total deferred taxes for the period 819 3,438
Taxes relating to prior periods 3,379 (173)
Total Income taxes (127,839) (25,695)
IRES current tax income of 132,145 thousand euros arises from the compensation for the tax losses brought by the company into
the national tax consolidation system.
IRAP current tax expense of 108 thousand euros refers to the finalisation of the computation of taxable income for 2006 effected in
the relevant tax return.
IRAP deferred tax expense of 819 thousand euros relates to the part of the margins earned on the long-term agreements with T.A.V.
S.p.A. whose taxation is deferred to the completion of the work, net of deferred deductible costs relating to the same tax.
Tax income relating to prior periods of 3,379 thousand euros relates to the settlement of last year’s national consolidated tax
return.
Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements268