Income taxes
39. Income taxes
Income taxes for the year are composed as follows:
|
(in thousands of Euros) |
||
|
2007 |
2006 |
|
|
Current income taxes |
122,075 |
125,460 |
|
Deferred income taxes |
11,428 |
2,388 |
|
133,503 |
127,848 |
|
Deferred income taxes in 2007 include a limited net negative effect of Euros 183 thousand due to the change in the tax rates in Italy and Germany starting from 2008.
The reconciliation between theoretical and effective taxes is as follows:
|
reconciliation between theoretical and effective taxes (in thousands of Euros) |
||
|
2007 |
2006 |
|
|
Income before taxes |
424,023 |
1,049,061 |
|
Income (loss) from discontinued operations |
33,070 |
(1,970,039) |
|
Reversal of income (loss) from discontinued operations (*) |
– |
1,940,200 |
|
Reversal of share of earnings of associates and joint ventures |
(118,608) |
(103,958) |
|
Total taxable income |
338,485 |
915,264 |
|
Theoretical income taxes |
(90,494) |
(300,144) |
|
Main reasons for differences between theoretical and effective income taxes: |
||
|
- Non-taxable income |
169,692 |
288,359 |
|
- Non-deductible costs |
(74,226) |
(98,634) |
|
- Utilization of tax loss carryforwards |
32,788 |
27,483 |
|
- Unrecognized deferred taxes |
(137,676) |
(18,763) |
|
- Other |
(33,586) |
(26,149) |
|
Effective income taxes |
(133,503) |
(127,848) |
|
* Share of loss of Olimpia S.p.A. for the year ended December 31, 2006, reclassified for comparative purposes in these financial statement to “Income (loss) from discontinued operations” |
||
The effective tax charge of the Group for 2007 is 26.7 percent higher than the theoretical tax charge of the Group, since deferred tax assets were not recognized on the tax loss carryforwards held mainly by Pirelli & C. S.p.A. and largely attributable to disposals of investments to third parties. The figure also includes taxes unrelated to income such as IRAP taxes on labor costs and Pirelli & C. S.p.A.’s recognition of the tax effects generated by the option for national tax consolidation.
The theoretical tax charge of the Group is calculated by taking into account the nominal tax rates in the countries in which the major companies of the Group operate, as indicated in the following table:
|
theoretical tax charge of the Group |
||
|
2007 |
2006 |
|
|
EUROPE |
||
|
Italy |
37.25% |
37.25% |
|
Spain |
32.5% |
35% |
|
Germany |
38.36% |
38.34% |
|
United Kingdom |
30% |
30% |
|
Turkey |
20% |
20% |
|
North America |
||
|
USA |
40% |
40% |
|
South America |
||
|
Argentina |
35% |
35% |
|
Brazil |
34% |
34% |
|
Venezuela |
34% |
34% |
|
Source : KPMG Corporate Tax Rate Survey 2007 |
||