The amount of tax postponed from this year to be paid in a future year.
The starting point for calculating the tax expenditure in the commercial balance sheet is the income statement for tax purposes. Allowance must also be made for deferred taxes if the taxable profit of the financial year diverges from the profit in the commercial income statement and the discrepancy is likely to be offset in subsequent financial years. If the net income in the commercial income statement is greater, a deferred tax liability must be shown on the liabilities side. The reporting of deferred taxes on the assets side, on the other hand, is optional under the German Commercial Code (HGB).
Income tax to be paid or received as a result of differences in the carrying amounts in the financial accounts and the tax base. At the balance sheet date, deferred taxes do not yet represent actual amounts receivable from or due to tax authorities.
Are a temporary source of free cash flow. This liability is a non-cash expense until it is paid.
Taxes taken as an expense now to be paid to the government in a later year.
A non-cash expense that provides a source of free cash flow. Amount allocated during the period to cover tax liabilities that have not yet been paid.
Assets and liabilities in the balance sheet arising from the different treatment of transactions for financial and tax reporting purposes.
An allocation of cash to cover tax liabilities that are yet to be paid.