+1 - Solvay

Financial
(12b) Deferred taxes on the balance sheet
Deferred tax assets and liabilities are recorded in the balance sheet in respect of temporary differences arising from
the fact that the tax authorities apply different rules when assessing assets and liabilities than those used for drawing
up annual accounts. Variations occurring during the year in the deferred taxes recorded in the balance sheet are
taken into income, except where they relate to items that are recorded directly in shareholders’ equity (see above).
Deferred taxes are calculated based on the prevailing tax rates, or where they have been changed, at the enacted
rates that are expected to apply at the time of recording the taxes payable (or recoverable) in the statutory accounts.
This required deferred taxes to be revalued in 2007 (cf. 12a) to reflect the new nominal tax rates coming into effect
from 1 January 2008 in Germany and in Italy.
Deferred tax assets are written down to the extent that it appears unlikely, in the light of expected future tax
situations, that they will in the future generate either a reduction in the tax base or tax credits.
Unless a dividend payment is planned, no deferred tax is calculated on the undistributed profits of subsidiaries as
these profits are, as a general rule, reinvested locally.
The deferred taxes recorded in the balance sheet fall into the following categories:
81
Deferred tax assets
Deferred tax liabilities
EUR Million 2006 2007 2006 2007
Employee benefits obligations 220 190
Provisions other than employee benefits 218 198
Tax losses 384 305
Tax credits 51 57
Depreciation of tangible assets and
278 241 -419 -366
amortization of intangible assets
Development costs -3 -29
Other 240 264 -225 -200
Total 1 391 1 255 -647 -595
Valuation allowance on deferred tax assets -375 -381
Offset -510 -350 510 350
Total 506 524 -137 -245
Other information
All the Group’s tax loss carryforwards have generated deferred tax assets, on certain of which valuation allowances
have been recorded. These tax loss carryforwards are given below by expiry date.
EUR Million 2006 2007
Within 1 year 24 1
Within 2 years 2 14
Within 3 years 13 38
Within 4 years 41 24
Within 5 or more years 121 113
No time limit 891 820
Solvay Global Annual Report 2007