Chrysler 2011 Annual Report Download - page 168

167
Consolidated
Financial Statements
at 31 December 2011
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) 2011 2010 (*)
Theoretical income taxes 601 194
Tax effect of permanent differences 1108
Tax effect of non-taxable income recognised on the acquisition of control of Chrysler (555) -
Taxes relating to prior years (32) 3
Effect of difference between foreign tax rates and the theoretical Italian tax rate 69 53
Effect of deferred tax assets not recognised in prior years (181) (25)
Effect of deferred tax assets not recognised and write-off of deferred tax assets 452 45
Other differences 115 56
Current and deferred income tax recognised in the financial statements, excluding IRAP 470 434
IRAP (current and deferred) 64 50
Current and deferred income tax recognised in the financial statements 534 484
(*) The amounts relate to Continuing Operations.
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, 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 2011 and in 2010) to profit/(loss) before taxes.
As shown in the reconciliation, in 2011 theoretical income taxes were affected by permanent differences of €1 million (€108 million in 2010 for Continuing
Operations), which consist of the tax effect of non-deductible costs of €205 million (€131 million in 2010 for Continuing Operations) less the tax effect
of non-taxable income of €204 million (€23 million in 2010 for Continuing Operations). In 2011 the tax effect of non-taxable income recognised on the
acquisition of control of Chrysler arises from the fair value measurement of the 30% interest in Chrysler prior to the acquisition of control and the right to
receive an additional 5%, as discussed in Note 8, which has not been recognised as it relates to temporary differences on the investment and other financial
assets that are controlled by the Group whose reversal is not deemed to be probable in the foreseeable future. In addition, the difference between theoretical
income taxes and the tax charge recognised in the financial statements includes €452 million (€45 million in 2010 for Continuing Operations) arising from
unrecognised deferred tax assets on temporary differences and tax losses arising during the year and the write-down of deferred tax assets recognised
in previous periods, partially offset by the recognition of deferred tax income of €181 million (€25 million in 2010 for Continuing Operations) on previously
unrecognised deductible temporary differences and tax losses.
Other differences in the above reconciliation include unrecoverable withholding tax of €73 million (€74 million in 2010).
The deferred tax asset balance consists of the deferred tax assets less the deferred tax liabilities, where these may be offset, of the individual consolidated
companies.
The amounts stated in the statement of financial position are as follows:
(€ million) At 31 December 2011 At 31 December 2010 (*)
Deferred tax assets 1,690 1,678
Deferred tax liabilities (760) (135)
Total 930 1,543
(*) The amounts relate to Continuing Operations.