Chrysler 2008 Annual Report Download - page 277

Net expense from derivative financial instruments of €262,832 thousand (net income of €75,196 thousand in 2007) resulted from
derivative transactions with other Group companies which, in turn, are parties to agreements with major banks. Specifically, the
€262,832 thousand figure for 2008 was entirely attributable to the loss (gain of €69,813 thousand in 2007) arising from the change
in fair value, net of income received, of the two equity swaps expiring in 2009 (as a result of extensions to these contracts during
the year) entered into in previous periods to hedge against an increase in the price of Fiat shares above the exercise price for stock
options granted to the Chief Executive Officer in 2004 and 2006 (see Note 19). At 31 December 2008, the equity swaps had a
notional value of €203,941 thousand determined on the basis of the contractual strike price. 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
derivatives.
9. Income Taxes
A breakdown of Taxes recognised in the income statement is provided below:
(€ thousands) 2008 2007
Current taxes:
- IRES –(132,145)
- IRAP 19,012 108
Total Current taxes 19,012 (132,037)
Deferred taxes for the period:
- IRAP 1,602 819
Total deferred taxes for the period 1,602 819
Taxes relating to prior periods 23,428 3,379
Total Income taxes 44,042 (127,839)
For 2008, current IRAP of €19,012 thousand was payable on income generated during the year which was primarily associated with
the non-recurring gain from sale of the “FIAT” brand.
IRAP deferred tax payable of €1,602 thousand relates to profit recognised on the contract work in progress with T.A.V. S.p.A. for
which taxation is deferred until completion of the work, net of associated deferred costs deductible.
Tax income relating to prior periods amounted to €23,428 thousand and principally referred to the settlement of last year’s national
consolidated tax return.
In 2007, current IRES consisted of a rebate received from the tax authorities in relation to taxable losses contributed to the
domestic tax consolidation.
Fiat S.p.A. Statutory Financial Statements at 31 December 2008276