Chrysler 2012 Annual Report Download - page 155

Notes
154 Consolidated
Financial
Statements
at 31 December
2012
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) 2012 2011
Theoretical income taxes 560 601
Tax effect of permanent differences (79) 1
Tax effect of non-taxable income recognised on the acquisition of control of Chrysler -(555)
Taxes relating to prior years 8(32)
Effect of difference between foreign tax rates and the theoretical Italian tax rate 165 69
Effect of deferred tax assets not recognised in prior years (529) (181)
Effect of deferred tax assets not recognised and write-down of previous years deferred tax assets 332 452
Other differences 88 115
Current and deferred income tax recognised in the financial statements, excluding IRAP 545 470
IRAP (current and deferred) 80 64
Current and deferred income tax recognised in the financial statements 625 534
Since the IRAP (an Italian employment-related tax) taxable basis differs from income before taxes, it is excluded in the reconciliation above. Theoretical
income taxes are determined by applying only the tax rate in effect in Italy (IRES equal to 27.5% in 2012 and in 2011) to Profit/(loss) before taxes.
As shown in the reconciliation, in 2012 theoretical income taxes were affected by negative permanent differences of €79 million (positive for €1 million in
2011), which consist of the tax effect of non-deductible costs of €209 million (€205 million in 2011) less the tax effect of non-taxable income of €288 million
(€204 million in 2011), that includes for €190 million the effect deriving from the transfer of the taxable income generated in the U.S. by Chrysler Group
LLC to its minority shareholders due to the “tax transparency” of the company. In 2011 the tax effect of non-taxable income recognised on the acquisition
of control of Chrysler arose 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%, which had not been recognised as it relates to temporary differences on the investment and other financial assets that are controlled by the
Group whose reversal was 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 a benefit of €529 million
(€181 million in 2011) deriving from deductible temporary differences and tax losses for which no deferred tax assets had been recognised in previous
years, partially offset by the negative effects of €332 million (€452 million in 2011) deriving from unrecognised deferred tax assets on temporary differences
and tax losses originated during the year and the write-down of deferred tax assets recognised in previous periods.
Other differences in the above reconciliation include unrecoverable withholding tax of €95 million (€73 million in 2011).
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 2012 At 31 December 2011
Deferred tax assets 1,736 1,690
Deferred tax liabilities (802) (760)
Total 934 930