Deferred tax assets and liabilities

12. Deferred tax assets and liabilities

These are composed as follows:

(in thousands of Euros)

12/31/2007

12/31/2006

Deferred tax assets

58,524

64,230

Deferred tax liabilities

(44,625)

(42,931)

13,899

21,299

Since deferred tax assets and liabilities are offset in the financial statements when the income taxes are levied by the same tax authority and where there is a legally enforceable right of offset, the composition of the gross amounts is presented below:

(in thousands of Euros)

12/31/2007

12/31/2006

Deferred tax assets:

156,211

157,851

- of which, recoverable within 12 months

55,188

66,561

- of which, recoverable beyond 12 months

101,023

91,290

Deferred tax liabilities:

(142,312)

(136,552)

. of which, recoverable within 12 months

(4,311)

(3,514)

. of which, recoverable beyond 12 months

(138,001)

(133,038)

13,899

21,299

Temporary differences which make up deferred tax assets and liabilities at December 31, 2007 and 2006 are as follows:

(in thousands of Euros)

12/31/2007

12/31/2006

Deferred tax assets

- Provision for other liabilities and charges

27,370

34,973

- Employee benefit obligations

25,486

36,763

- Inventories

14,063

16,108

- Tax loss carryforwards

26,679

13,806

- Depreciation and amortization

6,785

4,243

- Trade and other receivables

16,719

8,101

- Trade and other payables

17,458

18,079

- Intragroup transactions

8,650

9,027

- Other

13,001

16,751

156,211

157,851

Deferred tax liabilities

- Depreciation and amortization

(123,037)

(118,658)

- Other

(19,275)

(17,895)

(142,312)

(136,553)

At December 31, 2007, deferred tax assets relating to temporary differences that have not been recognized amount to Euros 54,087 thousand and refer to situations in which their recoverability
is not considered probable.

Unused tax loss carryforwards, by expiration date, are as follows:

(in thousands of Euros)

Year of expiration

12/31/2007

12/31/2006

2007

-

22,659

2008

146,727

147,262

2009

289,877

290,968

2010

144,746

165,187

2011

88,627

77,618

2012

479,072

52,470

2013

18,447

1,918

2014

669

-

2021

26,925

30,096

2022

62,067

68,844

2023

3,723

4,161

2024

9,043

10,108

without expiration

406,268

418,262

1,676,191

1,289,553

These losses, in most cases, refer to situations in which recoverability is not considered probable. As a result, deferred tax assets on unused losses have been recognized in the financial statements for Euros 12,408 thousand (Euros 13,806 thousand at December 31, 2006) and the unrecognized portion amounts to Euros 460,697 thousand (Euros 409,766 thousand at December 31, 2006).

The tax effect of gains and losses recognized directly in equity is a negative Euros 2,856 thousand (negative Euros 6,935 thousand at December 31, 2006), and is shown in the statement of recognized income and expense. These movements are mainly due to the tax effect of actuarial gains/losses on employee benefits and the changes in fair value of available-for-sale financial assets.