Mercedes 2009 Annual Report Download - page 201

Consolidated Financial Statements |Notes to Consolidated Financial Statements |197
In 2009, the increase in deferred tax assets, net, amounted to
€621 million (2008: decrease of €106 million; 2007: decrease of
€3,292 million) and was composed of:
In 2007, the neutral change of deferred tax assets, net, includes
a neutral reduction of 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
consists of the following:
The valuation allowances relate to deferred tax assets of foreign
companies and – although additional valuation allowances
were accounted for affecting net profit - decreased in the state-
ment of financial position by €414 million from December 31,
2008 to December 31, 2009. This is a result of the neutral short-
fall of deferred tax assets, which were subject to a valuation
allowance due to the total Chrysler disinvestment. Furthermore,
the valuation allowance decreased neutrally due to currency
translation effects. At December 31, 2009, the valuation allowance
on deferred tax assets relates, among other things, to capital
losses amounting to €824 million which will expire in 2014, to cor-
porate tax net operating losses amounting to €934 million, and
to tax credit carryforwards amounting to €677 million. Of the total
amount of deferred tax assets adjusted by a valuation allowance,
deferred tax assets for corporate tax net operating losses amount-
ing to €2 million expire in 2010, €145 million expire in 2011,
€191 million expire in 2012, €162 million expire in 2013, €219 mil-
lion expire at various dates from 2014 through 2016, €138 million
expire at various dates from 2017 through 2029 and €77 million
can be carried forward indefinitely. Deferred tax assets for tax
credit carryforwards amounting to €116 million expire at various
dates from 2014 through 2019, €31 million expire in 2029 and
€530 million can be carried forward indefinitely. Furthermore, the
valuation allowance primarily relates to temporary differences
and net operating losses for state and local taxes at the US com-
panies. Daimler believes that it is more likely than not that
those deferred tax assets cannot be utilized. In 2009 and prior
years, the Group had taxable losses in several subsidiaries in
some countries. After offsetting the deferred tax assets with
deferred tax liabilities, the deferred tax assets not subject to
valuation allowances amounted to €1,065 million for those for-
eign subsidiaries. Daimler believes 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 valua-
tion allowances may increase or decrease.
Daimler recorded deferred tax liabilities for German tax of €46
million (2008: €48 million) on €3,082 million (2008: €3,190 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 €6,413 million (2008:
€10,773 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 by a non-German
subsidiary to a non-German holding company. Normally, the dis-
tribution would lead to an additional income tax expense. It is not
practicable to estimate the amount of taxable temporary differ-
ences 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.
2007
20082009
8
(123)
.
–
43
(549)
(549)
–
(13)
(15)
25
–
(48)
157
203
(46)
(16)
177
(146)
120
165
2,992
3,348
(356)
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 (loss)
from continuing operations
Thereof included in net profit (loss)
from discontinued operations
1 Primarily effects from currency translation.
in millions of €
2007
20082009
346
–
(60)
.
286
1,091
(93)
(240)
25
783
4,326
(273)
(151)
(146)
3,756
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 €