20. Deferred tax assets
The following table provides a breakdown of net deferred tax assets:
|
(thousands of Euro) |
12.31.2007 |
Increases |
Decreases |
Translation differences and other movements |
12.31.2008 |
|
Tax effect of eliminating intercompany profits |
6,120 |
7,756 |
(6,120) |
- |
7,756 |
|
Tax effect of provisions, costs and revenues relating to future periods for fiscal purposes |
35,320 |
12,215 |
(14,658) |
(1,255) |
31,622 |
|
Deferred taxes on reversal of excess depreciation and application of finance lease accounting |
(8,764) |
(1,919) |
6,290 |
(988) |
(5,381) |
|
Deferred taxes on capital gains taxable over a number of accounting periods |
(2,885) |
(2,249) |
1,199 |
- |
(3,935) |
|
Different basis for depreciation/amortization |
126,723 |
2,500 |
- |
- |
129,223 |
|
Benefit on carried forward tax losses |
20,801 |
2,321 |
(3,521) |
577 |
20,178 |
|
Deferred taxes on distributable earnings/reserves |
(7,579) |
(486) |
- |
- |
(8,065) |
|
Tax effect of business combination |
(6,686) |
- |
1,188 |
(1,410) |
(6,908) |
|
Total |
163,050 |
20,138 |
(15,622) |
(3,076) |
164,490 |
The Group offsets deferred tax assets against deferred tax liabilities for Italian companies that have made the group tax election and for foreign subsidiaries to the extent legally allowed in their country of origin.
This balance is mostly attributable to taxes paid in advance as a result of differences in calculating the amortizable/depreciable base of assets. The associated deferred tax assets have been recognized on the basis of the Group's future expected profitability following its reorganization in 2003. The balance also includes deferred tax assets recognized on provisions and costs already reported in the financial statements that will become deductible for tax in future periods. The potential tax benefit associated with carried forward tax losses of Group companies is about Euro 237 million (188 million in 2007) but has been adjusted by Euro 217 million for amounts that are currently unlikely to be fully recovered. Details of these unrecognized benefits are analyzed by year of expiry as follows:
|
(thousands of Euro) |
12.31.2008 |
|
From 1 to 3 years |
11,334 |
|
From 4 to 6 years |
19,126 |
|
From 7 to 9 years |
7,322 |
|
Beyond 10 years |
31,560 |
|
Unlimited |
147,504 |
|
Total |
216,846 |