Mercedes 2013 Annual Report Download - page 207

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F | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
The Group has various unresolved issues concerning open
income tax years with the tax authorities in a number
of jurisdictions. Daimler believes that it has recognized adequate
provisions for any future income taxes that may be owed for
all open tax years. As a result of future adjudications or changes
in the opinions of the fiscal authorities, it cannot be ruled
out that Daimler might receive tax refunds for previous years.
At December 31, 2013, the valuation allowance on deferred
tax assets relates, among other things, to tax loss carryfor-
wards in connection with capital losses (€193 million), corpo-
rate income tax loss carryforwards (€453 million) and tax
credits (€17 million). The deferred tax assets on loss carryfor-
wards connected with capital losses were reduced to zero
by valuation allowances because the carryforward periods
of those losses are limited and can only be utilized with
future capital gains. As of today, these are not expected to
occur in the coming years. The capital losses expire in 2016.
Deferred tax assets for corporate income tax loss carryfor-
wards adjusted by a valuation allowance relate with €116 million
to tax loss carryforwards which expire at various dates from
2016 through 2018, with €120 million to tax loss carryforwards
which expire at various dates from 2019 through 2033 and
with €217 million to tax loss carryforwards which can be carried
forward indefinitely. Of the tax credit carryforwards adjusted
by a valuation allowance, €11 million expire at various dates from
2014 through 2018 and €6 million expire at various dates
from 2019 through 2033. Furthermore, the valuation allowance
primarily relates to temporary differences as well as net
operating losses for state and local taxes at the US companies.
Daimler believes that it is more likely than not that those
deferred tax assets cannot be utilized. In 2013 and prior years,
the Group had tax losses at several subsidiaries in several
countries. After offsetting the deferred tax assets with deferred
tax liabilities, the deferred tax assets not subject to valuation
allowances amounted to €320 million for those foreign subsid-
iaries. Daimler believes it is more likely than not that due
to future taxable income, deferred tax assets which are not
subject to valuation allowances can be utilized. In future
periods, Daimler’s estimate of the amount of deferred tax assets
that is considered realizable may change, and hence the
valuation allowances may increase or decrease.
The cumulative undistributed earnings of non-German subsid-
iaries are largely intended to be reinvested in those operations.
On retained earnings of non-German subsidiaries of €16,419
million (2012: €15,484 million), the Group did not recognize
deferred tax liabilities. If the dividends are paid out an amount
of 5% of the dividends will be taxed under German taxation
rules and, if applicable, with non-German withholding tax. Addi-
tionally, income tax consequences may arise if the dividends
first have to be distributed by a non-German subsidiary to a non-
German holding company. Normally, the distribution would
lead to an additional income tax expense. It is not practicable
to estimate the amount of taxable temporary differences
for these undistributed foreign earnings.
Change of deferred tax assets, net
2013 2012
In millions of euros
Deferred tax assets, net as of January 1 2,465 2,402
Deferred tax expense -614 -1,099
Change in deferred tax expense/benefit
on financial assets available-for-sale included
in other comprehensive income/loss
-6
.
Change in deferred tax expense/benefit
on derivative financial instruments included
in other comprehensive income/loss
-338
-287
Change in deferred tax expense/benefit
on actuarial gains/losses from defined benefit
pension plans
-372
1,537
Other changes1-198 -88
Deferred tax assets, net as of December 31 937 2,465
1 Primarily effects from currency translation.
F.28
Tax expense in equity
2013 2012
In millions of euros
Income tax expense -1,419 -1,286
Income tax expense/benefit
recorded in other reserves
-772
1,335
-2,191 49
F.29