Mercedes 2015 Annual Report Download - page 214

E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 221
At December 31, 2015, the valuation allowance on deferred
tax assets relates, among other things, to corporate income tax
loss carryforwards (€590 million), tax loss carryforwards
in connection with capital losses (€19 million) and tax credits
(€27 million). €21 million of the deferred tax assets for cor-
porate income tax loss carryforwards adjusted by a valuation
allowance relates to tax loss carryforwards which expire
at various dates from 2018 through 2020, €189 million relates
to tax loss carryforwards which expire at various dates from
2021 through 2025, €4 million relates to tax loss carryforwards
which expire at various dates from 2031 through 2035 and
€376 million relates to tax loss carryforwards which can be
carried forward indefinitely. The deferred tax assets on loss
carryforwards connected with capital losses were reduced by
valuation allowances because the carryforward periods of
those losses are partly limited and can only be utilized with
future capital gains. Of the total amount of deferred tax assets
adjusted by valuation allowances, deferred tax assets in
connection with capital losses amounting to €4 million expire
in 2016; €15 million can be carried forward indefinitely.
Of the tax credit carryforwards adjusted by a valuation allow-
ance, €4 million expire at various dates from 2016 through
2020 and €21 million expire at various dates from 2021 through
2025; €2 million relates to tax credits which can be carried
forward indefinitely. Furthermore, the valuation allowance primar-
ily relates to temporary differences as well as 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. In 2015 and prior years, the Group
had tax losses at several subsidiaries in several countries.
After offsetting the deferred tax assets with deferred tax liabili-
ties, the deferred tax assets not subject to valuation allow-
ances amounted to €191 million for those subsidiaries. Daimler
believes it is more likely than not that future taxable income
will be sufficient to allow utilization of the deferred tax assets.
Daimler’s current estimate of the amount of deferred tax
assets that is considered realizable may change in the future,
necessitating higher or lower valuation allowances.
The retained earnings of non-German subsidiaries are largely
intended to be reinvested in those operations. The Group did not
recognize deferred tax liabilities on retained earnings of non-
German subsidiaries of €27,005 million (2014: €21,242 million).
If earnings are paid out as dividends, an amount of 5% would
be taxed under German taxation rules and, if applicable, with
non-German withholding tax. Additionally, income tax conse-
quences may arise if the dividends first have to be distributed
by a non-German subsidiary to a non-German holding company.
Normally, the distribution would lead to an additional income
tax expense. It is not practicable to estimate the amount of tax-
able 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
jurisdictions. Daimler believes that it has recognized adequate
provisions for any future income taxes that may be owed
for all open tax years. As a result of future adjudications
or changes in the opinions of the fiscal authorities, it cannot
be ruled out that Daimler might receive tax refunds for
previous years.
Change of deferred tax assets, net
2015 2014
In millions of euros
Deferred tax assets, net as of January 1 3,054 937
Deferred tax expense in the
financial statement of income
-1,557
-363
Change in deferred tax expense/benefit
on financial assets available-for-sale included
in other comprehensive income/loss
-8
-6
Change in deferred tax expense/benefit
on derivative financial instruments included
in other comprehensive income/loss
278
800
Change in deferred tax expense/benefit
on actuarial gains/losses from defined benefit
pension plans
-579
1,682
Other changes1-119 4
Deferred tax assets, net as of December 31 1,069 3,054
1 Primarily effects from currency translation.
E.24
Tax expense in equity
2015 2014
In millions of euros
Income tax expense in the consolidated
financial statement of income
-4,033
-2,883
Income tax expense/benefit
recorded in other reserves
-309
2,476
-4,342 -407
E.25