2011 Annual Report - OTCIQ.com

The decrease in tax expense by €3 billion compared with 2010
primarily reflects the changes in the earnings environment.
The effective tax rate has increased from 22 percent in 2010
to 36 percent in 2011.
German legislation providing for fiscal measures to accompany
the introduction of the European Company and amending
other fiscal provisions (“SE-Steuergesetz” or “SEStEG”), which
came into effect on December 13, 2006, altered the regulations
on corporate tax credits arising from the corporate imputation
system (“Anrechnungs verfahren”), which had existed
until 2001. The change de-links the corporate tax credit from
distributions of dividends. Instead, after December 31, 2006,
an unconditional claim for payment of the credit in ten equal
annual installments from 2008 through 2017 has been established.
The resulting receivable is included in income tax assets
and amounted to €153 million in 2011 (2010: €958 million).
The decline in income tax assets is mainly attributable to the
significant reduction of corporate tax credits in 2011.
Income tax liabilities consist primarily of income taxes for the
respective current year and for prior-year periods that have
not yet been definitively examined by the tax authorities.
Reconciliation to Effective Income Taxes/Tax Rate
Income taxes relating to discontinued operations are reported
in the income statement under “Income/Loss from discontinued
operations, net.” They relate to the U.S. Midwest market unit
and amounted to €149 million in 2010. See Note 4 for additional
discussion.
CEO Letter
E.ON Stock
Combined Group Management Report
Consolidated Financial Statements
Corporate Governance Report
Supervisory Board and Board of Management
Tables and Explanations
As of December 31, 2011, €47 million (2010: €12 million) in
deferred tax liabilities were recognized for the differences
between net assets and the tax bases of subsidiaries and
associated companies (the so-called “outside basis differences”).
Deferred tax liabilities were not recognized for subsidiaries
and associated companies to the extent that the Company can
control the reversal effect and that it is therefore probable
that temporary differences will not be reversed in the foreseeable
future. Accordingly, deferred tax liabilities were not
recognized for temporary differences of €1,434 million (2010:
€1,833 million) at subsidiaries and associated companies, as
E.ON is able to control the timing of their reversal and the
temporary difference will not reverse in the foreseeable future.
Changes in tax rates in the United Kingdom, Hungary and a
number of other countries resulted in tax income of €34 million
in total. In 2010, changes in foreign tax rates produced deferred
tax income of €54 million in total.
The differences between the 2011 base income tax rate of
30 percent (2010: 30 percent) applicable in Germany and the
effective tax rate are reconciled as follows:
2011 2010
€ in
millions %
€ in
millions %
Expected corporate income tax -873 30.0 2,719 30.0
Credit for dividend distributions -37 1.3 -96 -1.0
Foreign tax rate differentials -163 5.6 -148 -1.6
Changes in tax rate/tax law -34 1.2 -54 -0.6
Tax effects on tax-free income -8 0.3 -743 -8.2
Tax effects on equity accounting -144 4.9 -196 -2.2
Other1 223 -7.7 464 5.1
Effective income taxes/tax rate -1,036 35.6 1,946 21.5
1 In 2011, including €258 million primarily in tax effects on dividends and disposals; in 2010, including €358 million due to goodwill impairment.
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