Annual Report 2010 - Hannover Re

Tax-relevant bookings on the Group level are made using the
Group tax rate of 32% unless they refer specifically to individual
companies.
Deferred tax liabilities on profit distributions of significant affiliated
companies are established in the year when they are
received.
Tax risks
In the previous year we reported that, contrary to a very clear
opinion expressed by tax attorneys, the revenue authority is
of the view that not inconsiderable investment income generated
by the Group’s reinsurance subsidiaries domiciled in
Ireland is subject to taxation of foreign sourced income at the
parent companies in Germany on the basis of the provisions of
the Foreign Transactions Tax Act. Insofar as tax assessments
to this effect have already been received, appeals have been
filed – also with respect to the amounts already recognised as
a tax expense. After our opinion had already been confirmed
in full by the court of the first instance in 2009, we evaluated
as slight the risk that tax assessments containing taxation of
foreign sourced investment income generated by Irish companies
at the parent companies would be upheld.
In October 2010 the Federal Fiscal Court confirmed the decision
of the lower court. Provisions constituted for these circumstances
were therefore released. As a result, a non-capitalised
contingent asset also existed as at 31 December 2010
in connection with the refund of prepaid taxes and interest in
a substantial amount.
Breakdown of taxes on income
The breakdown of current and deferred income taxes was as
follows:
Income tax in EUR thousand 2010 2009
Current tax for the year under review 307,519 146,887
Current tax for other periods (52,498) 37,804
Deferred taxes due to temporary differences (2,792) 105,239
Deferred taxes from loss carry-forwards 6,299 1,822
Change in deferred taxes due to changes in tax rates (899) 18
Total 257,629 291,770
Domestic/foreign breakdown of recognised tax expenditure/income in EUR thousand 2010 2009
Current taxes
Germany 198,204 124,921
Abroad 56,817 59,770
Deferred taxes
Germany (22,189) 90,342
Abroad 24,797 16,737
Total 257,629 291,770
Notes
Hannover Re Group annual report 2010
6.5 Taxes on income Notes
171