14. DEFERRED TAX ASSETS AND PROVISION FOR DEFERRED TAX LIABILITIES

This item is broken down as follows:

(in thousands of euro)
  12/31/2011 12/31/2010
Deferred tax assets 198,748 69,642
Provision for deferred tax liabilities (21,298) (33,733)
  177,450 35,909

 

The increase in deferred tax assets from December 31, 2010 stems almost entirely (euro 128,092 thousand) from the deferred taxes recognised by the parent company Pirelli & C. S.p.A. for residual tax losses carried forward under the tax consolidation programme, following the amendment to tax law governing the use of losses that, on the one hand, limited their use to 80% of taxable income every year but, on the other hand, extended the period for use of those losses indefinitely.

In particular, most of the prior period tax losses carried forward by the parent company, which underlie these deferred tax assets, would have expired at December 31, 2012 without this change in tax law.

Deferred tax assets and liabilities have been recognised on the balance sheet if they satisfied the applicable conditions and considering the offsets made for each legal entity. They are broken down as follows, gross of offsets:

(in thousands of euro)
  
12/31/2011 12/31/2010
Deferred tax assets 299,992 170,799
- of which recoverable in 12 months 70,985 56,889
- of which recoverable after 12 months 229,007 113,910
Provision for deferred tax liabilities (122,542) (134,890)
- of which recoverable in 12 months (1,328) (4,448)
- of which recoverable after 12 months (121,214) (130,442)
 
177,450 35,909

 

The tax effect of temporary differences and of tax losses carried forward which make up the item at December 31, 2011 and at December 31, 2010 is shown in the following table:

(in thousands of euro)
  12/31/2011 12/31/2010
Deferred tax assets:     
Provisions for future liabilities and charges 26,739 30,204
Provisions for employee benefits 39,893 38,236
Stocks 14,195 11,727
Tax losses carried forward 156,958 43,649
Amortisation and depreciation 3,765 865
Trade receivables and other receivables 4,499 5,800
Trade payables and other payables 42,534 31,602
Derivatives 9,618 7,565
Other
1,791 1,151
Total 299,992 170,799
Fondo imposte differite:     
Ammortamenti (113,980) (123,971)
Other8,562) (10,919)
Total (122,542) (134,890)

 

At December 31, 2011 unrecognised deferred tax assets relating to temporary differences amounted to euro 139,645 thousand (euro 139,228 thousand at December 31, 2010), and those relating to tax losses amounted to euro 172,515 thousand (euro 318,556 thousand at December 31, 2010). These amounts refer to situations where recovery is not probable at this time.

Tax losses broken down by maturities, against which no deferred tax assets were recognised, are shown below:

(in thousands of euro)
Year of expiry 12/31/2011 12/31/2010
2011 - 86
2012 - 495,421
2013 - 43,548
2014 285 8,378
2015 1,437 7,031
2016 3,799 4,129
2017 3,989 2,433
2018 1,162 1,162
2019 1,239 1,239
2020 3,254 -
2021 9,565 -
2022 6,491 20,305
2023 4,235 -
2024 10,631 343
2025 12,690 12,690
2026 1,477 -
with no expiry 524,769 515,953
  
585,023 1,112,718

 

The tax effect of gains and losses recognised directly in equity was a positive euro 9,232 thousand (a positive euro 2,810 thousand at December 31, 2010), and is shown in the Statement of Comprehensive Income. These changes were mainly due to the tax effects associated with actuarial gains/losses on employee benefits and to the adjustment to fair value of derivatives in cash flow hedges.