Mercedes 2013 Annual Report Download - page 206

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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 com-
panies and tax-free results of our equity-method investments.
Moreover, in 2013 and 2012, the line item also includes
tax-free gains realized on the sale and remeasurement of EADS
shares and tax benefits relating to tax assessments for prior
years. The tax benefits relating to tax assessments for prior years
consist of the current tax benefits recognized for prior periods
as well as partly offsetting deferred tax expenses recognized
for prior periods.
Deferred tax assets and deferred tax liabilities are 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
presentation of deferred tax assets and liabilities in the con-
solidated statement of financial position, no difference is made
between current and non-current. In the consolidated state-
ment of financial position, deferred tax assets and liabilities
are presented as shown in table  F.26.
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 summarized in table  F.27.
The development of deferred tax assets, net, is shown
in table  F.28.
Including the items recognized in other comprehensive
income/loss (including items from investments accounted
for using the equity method), the expense for income taxes
is comprised as shown in table  F.29.
In the consolidated statement of financial position, the valua-
tion allowances on deferred tax assets, which are mainly
attributable to foreign companies, decreased by €1,256 million
compared to December 31, 2012. On the one hand, this is
a result of the reversal of valuation allowances of €143 million
recorded in net profit. On the other hand, the capital losses
resulting from the sale of the former investment in Chrysler were
utilized. At December 31, 2012 the deferred tax assets on
those capital losses were completely offset by a valuation allow-
ance because the losses have a limited carryforward period
and can only be offset by gains on disposal of capital. In 2013,
as a result of intercompany sales, gains on disposal of capital
were realized and the capital loss in the amount of €2,161 million
was used. Because the Group did not recognize deferred tax
liabilities on retained earnings of non-German subsidiaries as
these earnings are intended to be permanently reinvested
in those operations, no significant impact on earnings resulted
from the intercompany sale. Additionally, a decrease of the
valuation allowance was recognized in equity due to the expira-
tion of tax loss carryforwards, which were already adjusted
by a valuation allowance at December 31, 2012 and due to trans-
lation effects.
F.26
Deferred tax assets and liabilities
At December 31,
2013 2012
In millions of euros
Deferred tax assets 1,829 2,733
Deferred tax liabilities -892 -268
Deferred tax assets, net 937 2,465
Split of tax assets and liabilities before offset
At December 31,
2013 2012
In millions of euros
Intangible assets 59 40
Property, plant and equipment 367 288
Equipment on operating leases 1,131 1,122
Inventories 603 729
Investments accounted for using the
equity method
15
26
Receivables from financial services 275 280
Other financial assets 3,391 3,428
Tax loss and tax credit carryforwards 3,542 4,718
Provisions for pensions and similar obligations 818 1,060
Other provisions 1,862 1,779
Liabilities 614 758
Deferred income 899 836
Other 292 279
13,868 15,343
Valuation allowances -1,081 -2,337
Deferred tax assets, gross 12,787 13,006
Development costs -2,195 -2,141
Other intangible assets -175 -135
Property, plant and equipment -1,442 -1,301
Equipment on operating leases -4,940 -4,294
Inventories -72 -50
Receivables from financial services -656 -672
Other financial assets -249 -172
Other assets -98 -125
Provisions for pensions and similar obligations -1,604 -1,288
Other provisions -159 -124
Other -260 -239
Deferred tax liabilities, gross -11,850 -10,541
Deferred tax assets, net 937 2,465
F.27