Mercedes 2008 Annual Report Download - page 169

Consolidated Financial Statements |Notes to Consolidated Financial Statements |165
In 2008, the decrease in deferred tax assets, net, amounted to
€106 million (2007: decrease of €3,292 million; 2006: decrease
of €403 million) and was composed of:
In 2007, the neutral change of deferred tax assets, net, includes a
neutral reduction of the deferred tax liabilities amounting to €76
million due to tax law changes.
Including the items charged or credited directly to related com-
ponents of equity without an effect on earnings (including items
charged or credited from investments accounted for using the
equity method) and the income tax expense (benefit) from discon-
tinued operations, the expense (benefit) for income taxes con-
sists of the following:
The valuation allowances relate to deferred tax assets of foreign
companies and increased by €595 million from December 31,
2007 to December 31, 2008. At December 31, 2008, the valua-
tion allowance on deferred tax assets relates, among other
things, to corporate tax net operating losses amounting to €659
million and tax credit carry forwards amounting to €76 million.
Of the total amount of deferred tax assets adjusted by a
valuation allowance, deferred tax assets for corporate tax net
operating losses amounting to €2 million expire in 2009,
€532 million expire at various dates from 2011 through 2013,
€48 million expire at various dates from 2016 through 2018,
€4 million expire at various dates from 2019 through 2023 and
€73 million can be carried forward indefinitely. Deferred tax
assets for tax credit carry forwards amounting to €76 million
expire at various dates in the next 10 years. Furthermore,
the valuation allowance primarily relates to temporary differences
and net operating losses for state and local taxes at the US
companies. Daimler believes that it is more likely than not that
those deferred tax assets cannot be utilized or Daimler has
no control over the realization of the tax benefit. Daimler believes
that it is more likely than not that due to future taxable income,
deferred tax assets which are not subject to valuation allowances
can be utilized. In future periods Daimler’s estimate of the
amount of deferred tax assets that are considered realizable may
change, and hence the valuation allowances may increase
or decrease.
Daimler recorded deferred tax liabilities for German tax of €48
million (2007: €45 million) on €3,190 million (2007: €3,016
million) in cumulative undistributed earnings of non-German
subsidiaries on the future payout of these foreign dividends
to Germany because, as of today, the earnings are not intended
to be permanently reinvested in those operations.
The Group did not recognize deferred tax liabilities on retained
earnings of non-German subsidiaries of €10,773 million (2007:
€10,568 million) because these earnings are intended to be
indefinitely reinvested in those operations. If the dividends are
paid out an amount of 5% of the dividends will be taxed under
the German taxation rules and, if applicable, with non-German
withholding tax. Additionally, income tax consequences could
arise if the dividends first had to be distributed from a non-Ger-
man subsidiary to a non-German holding company. Normally,
the distribution would lead to additional income tax expenses.
It is not practicable to estimate the amount of taxable temporary
differences for these undistributed foreign earnings.
The Group has various unresolved issues concerning open
income tax years with the tax authorities in a number of jurisdic-
tions. Daimler believes that it has recognized adequate provi-
sions for any future income taxes that may be owed for all open
tax years.
2006
20072008
(14)
(9)
25
–
(53)
157
203
(46)
(11)
177
(146)
120
160
2,992
3,348
(356)
25
175
.
-
243
(40)
(14)
(26)
Deferred tax expense (benefit)
on financial assets available-for-
sale charged or credited directly
to related components of equity
Deferred tax expense (benefit)
on derivative financial instruments
charged or credited directly
to related components of equity
Income tax expense (benefit) for
deduction in excess of compensation
expense for equity-settled employee
stock option plans
Disposal of Chrysler activities
Other neutral decrease (increase)1
Deferred tax expense (benefit)
Thereof included in net profit
from continuing operations
Thereof included in net profit (loss)
from discontinued operations
1 Primarily effects from currency translation.
in millions of €
200620072008
1,091
(93)
(240)
25
783
4,326
(273)
(151)
(146)
3,756
1,736
(433)
182
.
1,485
Income tax expense from
continuing operations
Income tax expense (benefit) from
discontinued operations
Income tax expense (benefit)
recorded in other reserves
Income tax expense (benefit) for
deduction in excess of remuneration
expense for equity settled employee
stock option plans
in millions of €