Chrysler 2015 Annual Report Download - page 172

172 2015 | ANNUAL REPORT
Consolidated
Financial Statements
Notes to the Consolidated
Financial Statements
7. Tax expense/(benefit)
The following table summarizes Tax expense/(benefit):
For the Years Ended December 31,
2015 2014 2013
(€ million)
Current tax expense 445 557 486
Deferred tax (income)/expense (277) (147) (1,563)
Taxes relating to prior periods (2) 14 18
Total Tax expense/(benefit) 166 424 (1,059)
The applicable tax rate used to determine the theoretical income taxes was 20.25 percent in 2015, which was the
weighted-average statutory rate applicable in 2015 in the United Kingdom, the tax jurisdiction in which FCA is resident.
In 2014, the weighted-average statutory rate in the United Kingdom was 21.5 percent. In 2013, the applicable tax
rate used to determine the theoretical income taxes was 27.5 percent, 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,
2015 2014 2013
(€ million)
Theoretical income taxes 51 168 178
Tax effect on:
Recognition and utilization of previously unrecognized deferred tax assets (20) (172) (1742)
Permanent differences (36) (132) 23
Tax credits (238) (68) (32)
Deferred tax assets not recognized and write-downs 303 378 380
Differences between foreign tax rates and the theoretical applicable tax
rate and tax holidays 70 66 23
Taxes relating to prior years (2) 14 22
Withholding tax 49 46 84
Other differences (36) 63 (46)
Total Tax expense/(income), excluding IRAP 141 363 (1,110)
Effective tax rate 54.4% 46.4% n.m.(1)
IRAP (current and deferred) 25 61 51
Total Tax expense/(benefit) 166 424 (1059)
(1) Number is not meaningful.
In 2015, the Regional Italian Income Tax (“IRAP”) recognized within current taxes was €16 million (€41 million in 2014
and €38 million in 2013) and IRAP recognized within deferred tax expense was €9 million (€20 million in 2014 and €13
million in 2013). Since the IRAP taxable basis differs from Profit before taxes, it is excluded from the above effective tax
rate calculation.
In 2015, the Group’s effective tax rate was 54.4 percent. The difference between the U.K. statutory tax rate and
the effective tax rate is primarily due to €303 million arising from the unrecognized deferred tax assets on temporary
differences and tax losses originating during the year, €70 million effect of higher foreign tax rates and a €98 million
effect of the decrease in the Italian corporate tax rate, which is partially offset by the recognition of non-taxable
incentives generating deferred tax benefits of €168 million, and U.S. tax credits of €238 million.
In 2014, the Group’s effective tax rate was 46.4 percent. The difference between the UK statutory tax rate and the
effective income tax rate was primarily due to €378 million arising from unrecognized deferred tax assets on temporary
differences and tax losses originating in the year in EMEA, which was partially offset by the recognition of non-recurring
deferred tax benefits of €172 million.