Chrysler 2010 Annual Report Download - page 326

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8. Income taxes
A breakdown of taxes recognized in the income statement is provided below:
(€ thousand) 2010 2009
Current taxes:
IRES (39,619) -
IRAP - -
Total current taxes (39,619) -
Deferred taxes for the period:
IRAP 7,000 (5,858)
Total deferred taxes for the period 7,000 (5,858)
Taxes relating to prior periods (1,159) 11,973
Total income taxes (33,778) 6,115
Current IRES tax for 2010 represents a €39,619 thousand income and relates to compensation receivable by Fiat S.p.A. for tax loss carryforwards
contributed to the domestic tax consolidation scheme.
Deferred IRAP relates to profit recognized on contract work in progress with T.A.V. S.p.A. (now Rete Ferroviaria Italiana S.p.A.)., for which there is a timing
difference between taxation and accounting recognition.
Taxes relating to prior periods represents income of €1,159 thousand related to the prior year’s domestic tax consolidation. For 2009, taxes relating to prior
periods of €11,973 thousand consisted almost entirely of IRAP paid during the year in relation to the prior year’s income.
A reconciliation between theoretical income taxes determined on the basis of tax rates applicable in Italy and income taxes reported in the financial
statements is as follows:
(€ thousand)
2010 2009
Theoretical income taxes 112,250 95,172
Tax effect of permanent differences (148,589) (90,928)
Taxes relating to prior periods (1,159) (2)
Tax loss carryforwards utilized (3,280) (4,244)
Current and deferred income tax recognized in the financial statements, excluding IRAP (40,778) (2)
IRAP (current and deferred) 7,000 6,117
Income taxes reported in the income statement (current and deferred income taxes) (33,778) 6,115
Theoretical income taxes are calculated by applying the IRES tax rate (27.5% for 2009 and 2010) to the result before taxes. IRAP tax is excluded to facilitate
an understanding of the reconciliation between theoretical and reported income taxes; since it is calculated on a tax basis that differs from profit before taxes,
it would otherwise generate distortions between one year and another.
The permanent differences referred to above include, among other things, the tax effect of non-taxable income amounting to €183,506 thousand in 2010
(€329,236 thousand in 2009) and of non-deductible costs amounting to €34,917 thousand in 2010 (€238,308 thousand in 2009). In particular, for 2010
the tax effect of non-taxable income was principally attributable to dividends (€112,004 thousand vs. €329,131 thousand in 2009) and impairment reversals
on investments (€71,500 thousand). Non-deductible costs principally included impairment losses on investments whose tax effect was €28,682 thousand
(€235,950 thousand in 2009).