Daimler Annual Report 2011 - Alle jaarverslagen

7 | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
In 2011, the decrease in deferred tax assets, net, amounted
to €247 million (2010: increase of €214 million) and was
composed as shown in table 7.21.
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 composed as shown in table 7.22.
The valuation allowances relate primarily to deferred tax
assets of foreign companies.
At December 31, 2011, the valuation allowance on deferred
tax assets relates, among other things, to tax loss carryforwards
in connection with capital losses (€1,658 million),
corporate income tax loss carryforwards (€859 million)
and tax credits (€156 million). The deferred tax assets on loss
carryforwards 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. These are not expected to occur in the
coming years. Of the total amount of deferred tax assets
adjusted by valuation allowances, deferred tax assets in connection
with capital losses amounting to €1,273 million expire
in 2014, €100 million expire in 2015 and €285 million expire
in 2016. Deferred tax assets for corporate income tax
loss carryforwards amounting to €219 million expire in 2012,
€459 million expire at various dates from 2013 through
2016, €58 million expire at various dates from 2017 through
2031 and €123 million can be carried forward indefinitely.
Of the deferred tax assets for tax credit carryforwards adjusted
by a valuation allowance, €144 million expire at various
dates from 2012 through 2016, €10 million expire at various
dates from 2017 through 2031 and €2 million can be carried
forward indefinitely. Furthermore, the valuation allowance primarily
relates to temporary differences and 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 2011 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 €895 million for those foreign subsidiaries.
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.
quences could arise if the dividends first had 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.
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.
7.21
Change of deferred tax assets, net
In millions of euros
2011 2010
Deferred tax expense -476 -253
Change in deferred tax benefit on
financial assets available-for-sale included
in other comprehensive income/loss -3 7
Change in deferred tax benefit on
derivative financial instruments included
in other comprehensive income/loss 173 212
Income tax expense for deduction in excess
of compensation expense for equity-settled
employee stock option plans -1 -1
Other changes 1 60 249
1 Primarily effects from currency translation.
7.22
Tax expense in equity
In millions of euros
2011 2010
Income tax expense -2,420 -1,954
Income tax benefit recorded in other reserves 205 427
Income tax expense for deduction in excess
of remuneration expense for equity-settled
employee stock option plans -1 -1
-2,216 -1,528
In 2011, the deferred tax liabilities for German tax of €50 million
on €3,323 million in cumulative undistributed earnings of
non-German subsidiaries on the future payout of these foreign
dividends to Germany have been released through profit and
loss because, as of today, the earnings are intended to be permanently
reinvested in those operations.
The Group did not recognize deferred tax liabilities on
retained earnings of non-German subsidiaries of €14,539 million
(2010: €9,578 million) because these earnings are intended
to be permanently reinvested in those operations. If the dividends
are paid out, an amount of 5% of the dividends will be taxed
under the German taxation rules and, if applicable, with non-
German withholding tax. Additionally, income tax conse­
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