Volvo 2014 Annual Report Download - page 140

As of December 31 2014, the Volvo Group’s unused tax-loss carryfor-
wards amounted to SEK 21,310 M (23,382). These loss carryforwards
expire according to the table below:
Due date, unused tax-loss
carryforwards Dec 31, 2014 Dec 31, 2013
after 1 year 45 91
after 2 years 173 104
after 3 years 479 183
after 4 years 1,013 533
after 5 years 305 752
after 6 years or more
119,295 21,719
Total 21,310 23,382
1 Tax-loss carryforwards with long or indefi nite periods of utilization were mainly
related to Sweden, France and Japan. Tax-loss carryforwards with indefi nite
periods of utilization amounted to SEK 16,364 M (17,395) which corresponds to
77% (74) of the total tax-losses carryforward.
The Swedish corporate income tax rate amounted to 22% in 2014. The
table below discloses the principal reasons for the difference between
this rate and the Volvo Group’s income tax rate, based on income after
fi n a n c i a l i t e m s .
Specifi cation of income tax rate 2014, % 2013, %
Swedish corporate income tax rate 22 22
Difference in tax rate in various countries 8 6
Other non-taxable income (12) (7)
Other non-deductible expenses 27 5
Current taxes attributable to prior years (4) (7)
Remeasurementof deferred tax assets 10 (3)
Otherdifferences 5 4
Income tax rate for the Volvo Group156 20
1 The high income tax rate for the Volvo Group, as of December 31 2014, was
mainly a result of the provision for the EU Commission antitrust investigation not
being deductible. The non-deductible tax expense for the provision amounted to
SEK 1,020 M.
Read more about the provision for the EU Commission antitrust
investigation in Note 21.
Changes in deferred tax
assets/liabilities, net 2014 2013
Opening balance 10,760 11,026
Deferred taxes recognised in the year’s income 331 2,206
Recognised in Other comprehensive income,
changes attributable to:
Remeasurements of defi ned-benefi tplans 853 (1,777)
Cash fl ow hedge reserve 6 2
Available-for-sale reserve 4 22
Translation differences 1,081 (719)
Deferred tax assets/liabilities, net,
as of December 31 13,035 10,760
Income tax for the period includes current and deferred taxes. Current
taxes are calculated on the basis of the tax regulations prevailing in the
countries in which the Parent Company and subsidiaries are active and
generate taxable income.
Deferred taxes are recognized on differences that arise between the
taxable value and carrying value of assets and liabilities as well as on tax-
loss carryforwards. Furthermore deferred taxes are recognized to the
extent it is probable that they will be utilized against taxable income.
Deferred tax assets and deferred tax liabilities on temporary differ-
ences on participations in subsidiaries and associated companies are only
recognized when it is probable that the difference will be recovered in the
near future.
Tax laws in Sweden and certain other countries allow companies to defer
payment of taxes through allocations to untaxed reserves. However, in the
consolidated fi nancial statements untaxed reserves are reclassifi ed to
deferred tax liability and equity. In the consolidated income statements a
provision to, or reversal of, untaxed reserves is split between deferred
taxes and net income for the year.
SOURCES OF ESTIMATION UNCERTAINTY
!
The Volvo Group recognizes valuation allowances for deferred tax assets
where management does not expect such assets to be realized based
upon current forecasts. In the event that actual results differ from these
estimates or adjustments are made to future periods in these estimates,
changes in the valuation allowance may be required, this could have sig-
nifi cant impact on the fi nancial position and the income for the period.
The Volvo Group has substantial tax-loss carryforwards that are
assessed as being probable to be utilized due to suffi cient income gener-
ated in the coming years. The base for this assessment is possibilities to
offset tax assets and tax liabilities and that a signifi cant part of tax-loss
carryforwards is related to countries with long or indefi nite periods of
utilization. Securing the probability of utilization is based upon business
plans when relevant.
Income taxes were distributed as follows:
Distribution of Income taxes 2014 2013
Current taxes relating to the period (3,383) (3,453)
Adjustment of current taxes for prior periods 198 327
Deferred taxes originated or reversed during the
period 362 2,048
Remeasurementsof deferred tax assets (31) 158
I/S Total income taxes (2,854) (919)
Provisions have been made for estimated tax charges that may arise as
a result of prior tax audits. Tax processes are evaluated on a regular basis
and provisions are made for possible outcome when it is probable that the
Volvo Group will have to pay more taxes and when it is possible to make
a reasonably assessment of the possible outcome. Tax claims for which no
provision was deemed necessary were recognized as contingent liabilities.
Read more about contingent liabilities in Note 24.
ACCOUNTING POLICY
NOTE 10 INCOME TAXES
FINANCIAL INFORMATION 2014
136