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Note 11 Deferred tax assets and liabilities


In assessing the recognition of the deferred tax assets, management considers whether it is probable that some portion or all of the deferred tax assets will be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The amount of deferred tax assets considered realizable, however, could change in the near term if future estimates of projected taxable income during the carryforward period are revised.

Breakdown of deferred tax assets and liabilities

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In € millions

Assets

Liabilities

Assets

Liabilities

 

 

2008

 

2007

 

 

 

 

 

Intangible assets

85

895

49

38

Property, plant and equipment

53

237

18

86

Inventories

34

5

22

5

Trade and other receivables

32

16

13

19

Share-based compensation

15

40

 

 

 

 

 

Provisions:

 

 

 

 

- Pensions and other post-retirement benefits

469

21

153

- Restructuring

33

2

9

1

- Other provisions

441

53

169

44

Other items

180

78

83

27

Net operating loss carryforwards

517

189

Deferred tax assets not recognized

(377)

(28)

Tax assets/liabilities

1,482

1,307

717

220

 

 

 

 

 

Set-off of tax

(592)

(592)

717

(87)

 

 

 

 

 

Net deferred taxes

890

715

630

133

In the deferred tax asset for other provisions (€441 million), an amount of €194 million is related to interest expense carried forward.

From the total amount of recognized deferred tax assets €186 million (2007: €143 million) is related to entities that have suffered a loss in either 2008 or 2007 in the tax jurisdiction to which a deferred tax asset relates, and where utilization is dependent on future taxable profit in excess of the profit arising from the reversal of existing taxable temporary differences.

Deferred tax assets not recognized on the balance sheet mainly related to capital losses in connection to the on-sale to Henkel, which were already taken into account in the purchase price allocation. These capital losses cannot be offset against operational taxable profits.

Movement in deferred tax in 2007

 

 

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In € millions

Net balance January 1, 2007

Changes in exchange rates

Acquisitions/ divestitures

Recognized in income

Recognized in equity

Net balance December 31, 2007

 

 

 

 

 

 

 

 

Intangible assets

67

(7)

(41)

(8)

11

Property, plant and equipment

(60)

3

6

(17)

(68)

Inventories

19

(1)

(10)

9

17

Trade and other receivables

(27)

(1)

(1)

30

(7)

(6)

Share-based compensation

19

(6)

27

40

 

 

 

 

 

 

 

Provisions:

 

 

 

 

 

 

-

Pensions and other post-retirement benefits

290

(2)

(5)

(130)

153

-

Restructuring

19

(1)

(10)

8

-

Other provisions

288

(16)

(139)

(8)

125

Other items

5

(2)

(29)

82

56

Net operating loss carryforwards

192

(7)

(16)

20

189

Deferred tax assets not recognized

(33)

2

3

(28)

 

 

 

 

 

 

 

 

Tax assets/liabilities

779

(32)

(232)

(38)

20

497

Movement in deferred tax in 2008

 

 

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In € millions

Net balance December 31, 2007

Changes in exchange rates

Acquisitions/ Divestitures

Recognized in income

Recognized in equity

Net balance December 31, 2008

 

 

 

 

 

 

 

 

Intangible assets

11

87

(1,020)

112

(810)

Property, plant and equipment

(68)

32

(204)

56

(184)

Inventories

17

2

(18)

28

29

Trade and other receivables

(6)

5

17

16

Share-based compensation

40

(1)

(11)

(13)

15

 

 

 

 

 

 

 

 

Provisions:

 

 

 

 

 

 

-

Pensions and other post-retirement benefits

153

(12)

193

114

448

-

Restructuring

8

(1)

24

31

-

Other provisions

125

(9)

196

76

388

Other items

56

(3)

(103)

155

(3)

102

Net operating loss carryforwards

189

(25)

563

(210)

517

Deferred tax assets not recognized

(28)

11

(223)

(137)

(377)

 

 

 

 

 

 

 

 

Tax assets/liabilities

497

81

(616)

212

1

175

Classification of the deferred tax assets and liabilities, which is determined at fiscal entity level, is as follows:

Recognized deferred tax assets and liabilities

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In € millions

 

 

 

2008

2007

 

 

 

Deferred tax assets

890

630

Deferred tax liabilities

(715)

(133)

 

 

 

Total

175

497

In 2009, €70 million of the net deferred tax of €175 million is expected to reverse.

At December 31, 2008, the gross amounts of the net operating loss carryforwards of €1,749 million, expire as follows:

Expiration loss carryforwards

 

 

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In € millions

 

 

 

 

 

 

2009

2010

2011

2012

2013

later

unlimited

 

 

 

 

 

 

 

6

33

28

38

586

340

718

The €377 million deferred tax assets not recognized in the balance sheet of 2008 relate to the following items:

Unrecognized deferred tax assets

 

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In € millions

 

 

 

2008

2007

 

 

 

Capital losses related to Henkel

200

Tax losses

175

28

Deductible temporary differences

2

 

 

 

Total

377

28

At December 31, 2008, the gross amounts of the net operating loss carryforwards for which no deferred tax assets have been recognized in the balance sheet, with a total of €1,145 million, expire as follows:

Expiration of loss carryforwards
with unrecognized deferred tax assets

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In € millions

 

 

 

 

 

 

2009

2010

2011

2012

2013

later

unlimited

 

 

 

 

 

 

 

4

6

10

7

579

66

473

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