Siemens 2008 Annual Report Download - page 241

Notes to Consolidated Financial Statements 145
(in millions of €, except where otherwise stated and per share amounts)
In assessing the realizability of deferred tax assets, management considers to which extent it is probable that the
deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the genera-
tion of future taxable prots during the periods in which those temporary differences and tax loss carryforwards
become deductible. Management considers the expected reversal of deferred tax liabilities and projected future
taxable income in making this assessment. Based upon the level of historical taxable income and projections for
future taxable income over the periods in which the deferred tax assets are deductible, management believes it
is probable the Company will realize the benets of these deductible differences.
In jurisdictions that incurred signicant losses in scal 2008, a net deferred tax asset of €1,481 is recognized.
The losses are mainly caused by one-time expenses due to the transformation programs, e.g. restructuring
expense (see Note 5).
As of September 30, 2008, the Company had €8,571 of gross tax loss carryforwards. The Company assumes that
the future operations will generate sufcient taxable income to realize the deferred tax assets.
Deferred tax assets have not been recognized in respect of the following items (gross amounts):
As of September 30, 2008 and 2007, respectively, €190 and €203 of the unrecognized tax loss carryforwards
expire over the periods to 2024.
The Company provides for income taxes or foreign withholding taxes on the cumulative earnings of subsidiaries
when it is determined that such earnings either will be subject to taxes or are intended to be repatriated. In s-
cal year 2008, income taxes on cumulative earnings of subsidiaries of €12,110 have not been provided for,
because such earnings will either not be subject to any such taxes or are intended to be indenitely reinvested
in those operations. It is not practicable to estimate the amount of the unrecognized deferred tax liabilities for
these undistributed earnings.
Including the items charged or credited directly to equity and the expense (benet) from continuing and dis-
continued operations, the income tax expense (benet) consists of the following:
September 30,
2008 2007
Deductible temporary differences 260 182
Tax loss carryforward 602 565
862 747
Year ended
September 30,
2008 2007
Continuing operations 1,015 1,192
Discontinued operations (184) 1,001
Income and expense recognized directly in equity (120) 326
Other changes in equity* – (499)
711 2,020
* Tax effect of reclassification on conversion right (see Notes 23 and 27 for further information).