Chrysler 2014 Annual Report Download - page 187

2014 | ANNUAL REPORT 185
10. Tax expense/(income)
Income tax was as follows:
For the years ended December 31,
2014 2013 2012
(€ million)
Current tax expense 677 615 691
Deferred tax income (145) (1,570) (71)
Taxes relating to prior periods 12 19 8
Total Tax expense/(income) 544 (936) 628
For the year ended December 31, 2014 Total tax expense amounted to €544 million. In 2013, Total tax income was
€936 million and included a €1,500 million positive one-time recognition of net deferred tax assets related to tax loss
carry- forwards and temporary differences within the NAFTA segment.
In 2014, the Regional Italian Income Tax (“IRAP”) recognized within current taxes was €62 million (€58 million in 2013
and €64 million in 2012) and IRAP recognized within deferred tax costs was €18 million (€11 million in 2013 and €21
million in 2012).
The applicable tax rate used to determine the theoretical income taxes was 21.5 percent in 2014, which is the
statutory rate applicable in the United Kingdom, the tax jurisdiction in which FCA is resident. The applicable tax rate
used to determine the theoretical income taxes was 27.5 percent in 2013 and 2012, which was the statutory rate
applicable in Italy, the tax jurisdiction in which Fiat was resident. The change in the applicable tax rate is a result of
the change in tax jurisdiction in connection with the Merger. The reconciliation between the theoretical income taxes
calculated on the basis of the theoretical tax rate and income taxes recognized was as follows:
For the years ended December 31,
2014 2013 2012
(€ million)
Theoretical income taxes 253 279 419
Tax effect on:
Recognition and utilization of previously unrecognized deferred
tax assets (173) (1,745) (529)
Permanent differences (148) 8 (79)
Deferred tax assets not recognized and write-downs 379 380 472
Differences between foreign tax rates and the theoretical applicable tax
rate and tax holidays 66 24 164
Taxes relating to prior years 12 19 8
Unrecognized withholding tax 57 84 95
Other differences 18 (54) (7)
Total Tax expense/(income), excluding IRAP 464 (1,005) 543
Effective tax rate 39.5% n.a. 35.7%
IRAP (current and deferred) 80 69 85
Total Tax expense/(income) 544 (936) 628
Because the IRAP taxable basis differs from Profit before taxes, it is excluded from the above effective tax rate
calculation.
In 2014, the Group’s effective tax rate is equal to 39.5%. The difference between the theoretical and the effective
income taxes is primarily due to €379 million arising from the unrecognized deferred tax assets on temporary
differences and tax losses originating in the year in EMEA, which is partially offset by the recognition of non-recurring
deferred tax benefits of €173 million.