Mercedes 2010 Annual Report Download - page 197

Consolidated Financial Statements | Notes to the Consolidated Financial Statements | 193
A reconciliation of expected income tax expense/benefit to actual
income tax expense determined using the applicable German
combined statutory rate of 29.825% is included in the following
table:
2010 2009
In millions of euros
Expected income tax expense (2009: tax benefit) -1,977 685
Foreign tax rate differential -65 74
Trade tax rate differential 38 40
Tax law changes -22 -2
Change of valuation allowance on deferred tax
assets
259
-695
Tax-free income and non-deductible expenses -143 -509
Other -44 61
Actual income tax expense -1,954 -346
In 2010, the Group released valuation allowances on deferred
tax assets of foreign subsidiaries while in 2009, the Group had
to record additional valuation allowances on deferred tax assets
of foreign subsidiaries. The resulting tax expenses and benefits
are included in the line “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 companies
and tax-free results of our equity-method investments. More-
over, the line also includes the following effects:
In 2010, Daimler realized tax-free gains on the sale of Daimler’s
equity interest in Tata Motors.
In 2009, adjustments regarding transfer pricing risks at our former
investment Chrysler in Canada caused an additional tax expense.
The Daimler Group has to account for this obligation. Furthermore,
additional tax expenses are included relating to tax assessments
and estimations for prior years.
In respect of each type of temporary difference and in respect
of each type of unutilized tax losses and unutilized tax credits,
the deferred tax assets and liabilities before offset are summa-
rized as follows:
At December 31,
2010 2009
In millions of euros
Intangible assets 81 84
Property, plant and equipment 673 646
Equipment on operating leases 917 659
Inventories 695 562
Investments accounted for using the
equity method
16
15
Receivables from financial services 168 117
Other financial assets 3,336 3,324
Tax loss and tax credit carry forwards 4,970 5,770
Provisions for pensions and similar obligations 607 620
Other provisions 2,048 1,874
Liabilities 1,427 882
Deferred income 863 751
Other 78 74
15,879 15,378
Valuation allowances -3,578 -3,096
Deferred tax assets, gross 12,301 12,282
Development costs -1,795 -1,598
Other intangible assets -88 -67
Property, plant and equipment -1,066 -999
Equipment on operating leases -2,582 -3,159
Inventories -142 -132
Receivables from financial services -727 -805
Other financial assets -181 -110
Other assets -296 -257
Provisions for pensions and similar obligations -2,882 -2,851
Other provisions -235 -264
Taxes on undistributed earnings
of non-German subsidiaries
-50
-46
Other -319 -270
Deferred tax liabilities, gross -10,363 -10,558
Deferred tax assets, net 1,938 1,724
Deferred tax assets and deferred tax liabilities were 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 state-
ment of financial position, the deferred tax assets and liabilities
are not divided into current and non-current.