Munich Re Group Annual Report 2006 (PDF, 1.8

Munich Re Group Annual Report 2006 Notes_Notes to the consolidated income statement
The decrease in finance costs compared with the previous year is
due on the one hand to the redemption of Munich Reinsurance Company´s
exchangeable bond in the previous year. On the other hand,
the finance costs were reduced owing to the redemption of ERGO
International AG´s exchangeable bonds and repayment of ERGO
AG´s bank borrowing. Information on the Group’s strategic debt can
be found in the management report on page 100 f. and under (18)
“Subordinated liabilities” and (25) “Bonds and notes issued”.
Recognised tax expenses/income broken down according to Germany and other countries
All figures in €m 2006 Prev. year *
Current tax 572 1,527
– Germany 446 1,060
– Other countries 126 467
Deferred tax 1,076 –513
– Germany 362 –402
– Other countries 714 –111
Taxes on income 1,648 1,014
* Adjusted owing to first-time application of IAS 19 (rev. 2004).
Main components of tax expenses/income
All figures in €m 2006 Prev. year *
Current tax for financial year 533 1,352
Current tax for other periods 39 175
Deferred tax resulting from the occurrence or reversal of temporary differences 288 –220
Deferred tax resulting from the occurrence or reversal of loss carry-forwards 103 –671
Write-downs of deferred taxes 695 378
Effects of changes in tax rates on deferred tax –10 –
Taxes on income 1,648 1,014
* Adjusted owing to first-time application of IAS 19 (rev. 2004).
The current tax is derived from the tax results of the financial year, to
which the local tax rates of the respective subsidiaries are applied.
Deferred tax is also calculated using the local tax rates. Sometimes
for simplicity’s sake we use uniform tax rates for individual circumstances
or subsidiaries. Changes in tax rates and tax legislation that
have already been adopted by the government at the balance sheet
date are generally taken into account..
Deferred tax assets are recognised for unused loss carry-forwards
to the extent that, on the basis of tax result planning, it is sufficiently
probable that they will be utilised. The following table shows the
reconciliation between the expected taxes on income and the tax on
income actually shown. The expected tax expenses are calculated by
multiplying the operating result before taxes on income (after “other
tax”) by the Group tax rate. The Group tax rate amounts to 40%. This
takes into account corporation tax including solidarity surcharge,
and a mixed trade-tax rate.
198
(35) Taxes on income
This item shows the corporation tax and municipal trade earnings
tax paid by the German companies (including solidarity surcharge)
and the comparable taxes on earnings paid by the foreign companies
in the Group. In accordance with IAS 12, the determination of
taxes on income includes the calculation of deferred taxes.