Chrysler 2009 Annual Report Download - page 165

164 FIAT GROUP
CONSOLIDATED
FINANCIAL
STATEMENTS
AT 31 DECEMBER
2009
NOTES
The reconciliation between the tax charges recorded in the consolidated financial statements and the theoretical tax charge, calculated on the basis of the
theoretical tax rate in effect in Italy, is the following:
(€ million) 2009 2008
Theoretical income taxes (101) 602
Tax effect of permanent differences 56 52
Taxes relating to prior years 24 23
Effect of difference between foreign tax rates and the theoretical Italian tax rate 45 100
Effect of deferred tax assets not recognised in prior years - (193)
Effect of deferred tax assets not recognised and write-off of deferred tax assets 426 -
Use of tax losses for which no deferred tax assets were recognised (64) (250)
Other differences 29 29
Current and deferred income tax recognised in the financial statements, excluding IRAP 415 363
IRAP (current and deferred) 66 103
Current and deferred income tax recognised in the financial statements 481 466
Since the IRAP tax has a taxable basis that is different from income before taxes, it generates distortions between one year and another. Accordingly, in order
to render the reconciliation between income taxes recognised and theoretical income taxes more meaningful, the IRAP tax is not taken into consideration;
theoretical income taxes are determined by applying only the tax rate in effect in Italy (IRES equal to 27.5% in 2009 and in 2008) to profit/(loss) before
taxes.
Permanent differences in the above reconciliations include the tax effect of non-taxable income of฀€136 million in 2009 (€130 million in 2008) and of non-
deductible costs of฀€192 million in 2009 (€182 million in 2008).
A net cost of฀€362 million was recognised in 2009 in relation to deferred tax assets, compared to income of฀€443 million in 2008, consisting of฀฀
€177 million resulting from the decision not to recognise assets deriving from temporary differences and tax losses arising during the year and from an
updated assessment of deferred tax assets recognised in prior years having an effect of฀€249 million, partially offset by฀€64 million representing the tax
effect on the utilisation of tax losses for which deferred tax assets had not been recognised in prior years.
Other differences included unrecoverable withholding tax for฀€57 million (€50 million in 2008).
Net deferred tax assets at 31 December 2009 consist of deferred tax assets, net of deferred tax liabilities, which have been offset where possible by the
individual consolidated companies. The net balance of Deferred tax assets and Deferred tax liabilities may be analysed as follows:
(€ million) At 31 December 2009 At 31 December 2008 Change
Deferred tax assets 2,580 2,386 194
Deferred tax liabilities (152) (170) 18
Total 2,428 2,216 212
The increase in net deferred tax assets, as analysed in the following table, is mainly due to:
the recognition of deferred tax assets of฀€187 million, arising from temporary differences and tax losses that arose during the year, net of the effect of
recognising or writing off deferred tax assets relating to prior years;
the corresponding tax effect of items recorded directly in equity amounting to฀€-54 million;
positive exchange differences, change in the scope of consolidation and other changes amounting to฀€79 million.