Reebok 2008 Annual Report Download - page 194
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190 Consolidated Financial Statements Notes
Deferred tax assets are recognised only to the extent that the realisation of the related benefi t
is probable. When estimating the probability, suitable fi scal structural measures are taken into
consideration along with past performance and the prospects of the respective business for the
foreseeable future.
Deferred tax assets, whose realisation of the related tax benefi ts is not probable, increased on
a currency-neutral basis and after considering initial consolidation effects from € 195 million to
€ 212 million for the year ending December 31, 2008. These amounts mainly relate to tax losses
and unused foreign tax credits of the USA tax group. Remaining unrecognised deferred tax
assets relate to companies operating in certain emerging markets, since the realisation of the
related benefi t is not considered probable.
The Group does not recognise deferred tax liabilities for unremitted earnings of non-German
subsidiaries to the extent that they are expected to be permanently invested in international
operations. These earnings, the amount of which cannot be practicably computed, could become
subject to additional tax if they were remitted as dividends or if the Group were to sell its share-
holdings in the subsidiaries.
Tax expenses
Tax expenses are split as follows:
Income tax expenses
€ in millions
Year ending
Dec. 31, 2008
Year ending
Dec. 31, 2007
Current tax expenses 331 286
Deferred tax (income) (71) (26)
Income tax expenses 260 260
The effective tax rate of the Group differs from an anticipated tax rate of 30% and 40% for the
years ending December 31, 2008 and 2007, respectively, as follows:
Tax rate reconciliation
Year ending Dec. 31, 2008 Year ending Dec. 31, 2007
€ in millions in % € in millions in %
Expected income tax expenses 271 30.0 326 40.0
Tax rate differentials (72) (7.9) (122) (15.0)
Non-deductible expenses 45 4.9 57 7.0
Losses for which benefi ts were not recognisable and
changes in valuation allowances 2 0.2 81.0
Changes in tax rates 1 0.1 (19) (2.4)
Other, net 1 0.1 20.2
248 27.4 252 30.8
Withholding tax expenses 12 1.4 81.0
Income tax expenses 260 28.8 260 31.8
The line “changes in tax rates” refl ects changes enacted in German and non-German tax rates
which are utilised in the calculation of deferred taxes. In 2007, the total change related mainly to
a UK tax rate reduction effective in 2008.