Mercedes 2006 Annual Report Download - page 183

In 2005, tax-free income at foreign companies arose relating to
the compensation for MFTBC and the sale of other securities.
The reduction of the calculated expected tax expenses on those
issues is included in the line “foreign tax rate differential”.
In 2005, DaimlerChrysler sold all of its MMC shares. The realized
gain – with the exception of the net gains from hedging the Group’s
net investment in MMC – was tax-free. The expected tax expense
on the tax-free gain was reversed in the line “tax-free income and
non-deductible expenses” with an amount of €82 million.
In 2004, the non tax-deductible loss of MMC resulting from
accounting under the equity method and from the dilution of
DaimlerChrysler’s interest in MMC affected the line “tax effect
of equity method investments” negatively by €298 million due
to the missing tax benefit.
In 2004, DaimlerChrysler sold its investment in HMC and
realized a tax-free gain of €252 million. This led to a positive
reconciling item of €97 million in the line “tax-free income
and non-deductible expenses”.
The line “tax-free income and non-deductible expenses” includes
furthermore mainly tax-free gains included in net periodic
pension costs at the German companies and from financial
transactions to hedge price risks of EADS shares. Moreover,
the line “tax-free income and non-deductible expenses” includes
all other effects at German companies due to tax-free income
and non-deductible expenses.
Tax-free income at US companies arose in connection with the
net periodic postretirement benefit costs in the years 2006 and
2005. The reduction of the calculated expected tax expenses
on this issue is included in the line “foreign tax rate differential”.
Moreover, the line “foreign tax rate differential” includes all
other reconciling items between expected and actual expense
for income taxes at foreign companies.
Deferred income tax assets and liabilities are summarized
as follows:
At December 31,
2005
2006
347
387
3,481
822
762
1,030
2,254
6,478
5,432
2,096
1,521
93
24,703
(867)
23,836
(171)
(3,556)
(6,853)
(2,662)
(295)
(2,925)
(326)
(234)
(994)
(444)
(18,460)
5,376
401
520
3,135
727
752
749
1,854
5,125
6,477
2,516
1,670
111
24,037
(640)
23,397
(932)
(3,987)
(7,125)
(3,482)
(360)
(2,479)
(311)
(261)
(1,010)
(404)
(20,351)
3,046
Intangible assets
Property, plant and equipment
Investments and long-term financial assets
Equipment on operating leases
Inventories
Receivables and other assets
Net operating loss and tax credit carryforwards
Pension plans and similar obligations
Other accrued liabilities
Liabilities
Deferred income
Other
Valuation allowances
Deferred tax assets
Intangible assets
Property, plant and equipment
Equipment on operating leases
Receivables and other assets
Prepaid expenses
Pension plans and similar obligations
Other accrued liabilities
Taxes on undistributed earnings of
non-German subsidiaries
Liabilities
Other
Deferred tax liabilities
Deferred tax assets, net
(in millions of €)
Consolidated Financial Statements | Notes to the Consolidated Statements of Income | 167