Income taxes were distributed as follows:
  2009 2010
Current taxes relating to the period (989) (3,668)
Adjustment of current taxes for prior periods (73) 180
Deferred taxes originated or reversed during the period 6,981 (747)
Recognition and derecognition of deferred tax assets (30) (67)
Total income taxes 5,889 (4,302)
Provisions have been made for estimated tax charges that may arise as a result of prior tax audits in the Volvo Group. Volvo evaluates tax processes on a regular basis and makes provisions for possible outcome when it is probable that Volvo will have to pay more taxes and when it is possible to make a reasonably assessment of the possible outcome. Tax claims for which no provision has been deemed necessary were reported as contingent liabilities.

Deferred taxes relate to income taxes payable or recoverable in future periods in respect of taxable temporary differences, deductible temporary differences, unused tax-loss carry forwards or unused tax credit carryforwards. Deferred tax assets are recognized to the extent that it is probable that the amount can be utilized against future taxable income. At December 31, 2010, the valuation allowance attributable to deductible temporary differences, unused tax-loss carryforwards and unused tax credit carryforwards for which no deferred tax asset was recognized amounted to 339 (296). The major part of the reserve consists of unused loss carryforwards.

Deferred taxes amounting to 93 (neg: 816) have been reported in other comprehensive income, attributable to fair value of derivative instruments.

At year-end 2010, the Group had unused tax-loss carryforwards amounting to 25,000 (30,200). These loss carryforwards expire according to the table below:
Due date  2009 2010
2011 300 100
2012 100 100
2013 100 200
2014 400 400
2015 800 800
2016- 28,500 23,400
Total  30,200 25,000

The Swedish corporate income tax rate is 26.3%. The table below shows the principal reasons for the difference between this rate and the Group's tax rate, based on income after financial items.

  2009, % 2010, %
Swedish corporate income tax rates 26 26
Difference in tax rate in various countries 2 4
Capital gains 0 0
Other non-taxable income 0 (3)
Other non-deductible expenses 0 1
Adjustment of current taxes for prior years 1 (1)
Recognition and derecognition of deferred tax assets 1 1
Other, net (1) 0
Income tax rate for the Group 29 28
     
     
Specification of deferred tax assets and tax liabilities 2009 2010
Deferred tax assets:    
  Unused tax-loss carryforwards 8,939 7,327
  Other unused tax credits 85 121
  Intercompany profit in inventories 459 711
  Allowance for inventory obsolescence 860 439
  Valuation allowance for doubtful receivables 702 587
  Provisions for warranties 1,071 1,722
  Provisions for residual value risks 387 306
  Provisions for    
  post-employment benefits 2,066 2,068
  Provisions for restructuring measures 169 61
  Adjustment to fair value at company acquisitions 0 12
  Fair value of derivative instruments 240 45
  Land 2,377 2,455
  Other deductible temporary differences 4,474 4,594
Deferred tax assets before deduction for valuation allowance 21,829 20,448
     
Valuation allowance (296) (339)
Deferred tax assets after deduction for valuation allowance 21,533 20,109
     
Netting of deferred tax assets/liabilities (8,938) (7,799)
Deferred tax assets, net 12,595 12,310
     
Deferred tax liabilities:    
  Accelerated depreciation on property,    
  plant and equipment 4,046 4,094
  Accelerated depreciation on leasing assets 2,073 2,111
  LIFO valuation of inventories 228 224
  Capitalized product and    
  software development 3,724 3,597
  Untaxed reserves 98 97
  Fair value of derivative instruments 67 20
  Other taxable temporary differences 2,340 2,178
Deferred tax liabilities 12,576 12,321
     
Netting of deferred tax assets/liabilities (8,938) (7,799)
Deferred tax liabilities, net 3,638 4,522
     
Deferred tax assets/liabilities, net (1 8,957 7,788
1) Deferred taxes are partially recognized in the balance sheet on a net basis after taking into account offsetting possibilities. Changes in tax rates during 2010 and 2011 have been considered when measuring deferred tax assets and deferred tax liabilities and have affected the income tax cost of the year. Deferred tax assets and liabilities have been measured to the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.

The significant tax-loss carryforwards are related to countries with long or indefinite periods of utilization, mainly Sweden and France. Of the total deferred tax asset for loss carryforwards 7,327 (8,939), an amount of 3,665 (4,653) in income (loss) for the period and in equity relates to Sweden with indefinite time of utilization. Volvo considers it most probable that the Volvo Group will be able to generate sufficient income in the coming years to utilize the tax loss carryforwards. See note 2

The cumulative amount of undistributed earnings in foreign subsidiaries, which Volvo currently intends to indefinitely reinvest outside of Sweden and upon which deferred income taxes have not been provided is approximately SEK 47 billion (40) at year end. There are different taxation rules depending on country. In some countries dividends are not taxable and in some countries there are withholding taxes. See note 36 about how Volvo handles equity currency risk.