Mercedes 2015 Annual Report Download - page 213

220 E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Table  E .21 shows a reconciliation of expected income
tax expense to actual income tax expense determined using
the unchanged applicable German combined statutory tax
rate of 29.825%.
In 2015, the Group impaired deferred tax assets of foreign
subsidiaries while in 2014, the Group released valuation
allowances on deferred tax assets of foreign subsidiaries.
The resulting tax expenses and benefits are included in the
line item change of valuation allowance on deferred tax assets.
Tax-free income and non-deductible expenses include all other
effects at foreign and German companies relating to tax-free
income and non-deductible expenses, for instance tax-free gains
included in net periodic pension costs at the German com-
panies and tax-free results of our equity-method investments.
Furthermore, in 2015, the line item also includes tax benefits
relating to tax assessments of prior years. The tax benefits
relating to tax assessments of prior years consist of the current
tax benefits recognized for prior periods as well as partly
offsetting deferred tax expenses recognized for prior periods.
Moreover, in 2014, the line item includes tax-free gains real-
ized on the sale of RRPSH as well as non-deductible expenses
in connection with the EU commission’s ongoing antitrust
proceedings concerning European commercial vehicle manu-
facturers.
Deferred tax assets and deferred tax liabilities are offset
if the deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority and if there is the right
to set off current tax assets against current tax liabilities.
In the presentation of deferred tax assets and liabilities in the
consolidated statement of financial position, no difference
is made between current and non-current. In the consolidated
statement of financial position, deferred tax assets
and liabilities are presented as shown in table  E.22.
In respect of each type of temporary difference and in
respect of each type of unutilized tax loss carryforwards and
unutilized tax credits, the deferred tax assets and liabilities
before offset are summarized in table  E.23.
The development of deferred tax assets, net, is shown
in table  E.24.
Including the items recognized in other comprehensive
income/loss (including items from equity-method investments),
the expense for income taxes is comprised as shown
in table  E.25.
In the consolidated statement of financial position, the valua-
tion allowances on deferred tax assets, which are mainly
attributable to foreign companies, increased by €70 million
compared to December 31, 2014. On the one hand, this is
a result of the additional valuation allowances of €147 million
recorded in net profit. On the other hand, a decrease
of the valuation allowance was recognized in equity, mainly
due to currency translation.
Reconciliation of expected income tax expense
to actual income tax expense
2015 2014
In millions of euros
Expected income tax expense -3,801 -3,034
Foreign tax rate differential -126 -91
Trade tax rate differential 44 21
Tax law changes -49 -21
Change of valuation allowance
on deferred tax assets
-147
276
Tax-free income and non-deductible expenses 41 -44
Other 510
Actual income tax expense -4,033 -2,883
E.21
E.22
Deferred tax assets and liabilities
At December 31,
2015 2014
In millions of euros
Deferred tax assets 3,284 4,124
Deferred tax liabilities -2,215 -1,070
Deferred tax assets, net 1,069 3,054
Split of tax assets and liabilities before offset
At December 31,
2015 2014
In millions of euros
Intangible assets 52 52
Property, plant and equipment 409 327
Equipment on operating leases 1,178 1,273
Inventories 992 752
Receivables from financial services 303 275
Other financial assets 4,984 4,349
Tax loss carryforwards and unused tax credits 2,693 3,323
Provisions for pensions and similar obligations 869 958
Other provisions 2,304 2,313
Liabilities 1,645 1,384
Deferred income 1,611 1,186
Other 331 315
17,371 16,507
Valuation allowances -988 -918
Deferred tax assets, gross 16,383 15,589
Development costs -2,317 -2,162
Other intangible assets -125 -73
Property, plant and equipment -1,742 -1,639
Equipment on operating leases -7,188 -6,053
Inventories -63 -50
Receivables from financial services -575 -736
Other financial assets -363 -352
Other assets -169 -189
Provisions for pensions and similar obligations -2,390 -872
Other provisions -183 -177
Other -199 -232
Deferred tax liabilities, gross -15,314 -12,535
Deferred tax assets, net 1,069 3,054
E.23