The benefit from (expense for) income taxes is comprised of the following:

The Group’s parent company, EADS N.V., legally seated in Amsterdam, The Netherlands, applies Dutch tax law using an income tax rate of 29.6% for December 31^st, 2006 (for 2005: 31.5% and for 2004: 34.5%). In 2006, a new tax law was enacted reducing the income tax rates from 2007 onwards to 25.5%. Accordingly, deferred tax assets and liabilities for the Group’s Dutch entities were calculated using the respective enacted rates. All foreign subsidiaries however apply their national tax rates, among others Great Britain 30%.

In France, the corporate tax rate in effect for 2004 was 33 1/3% plus surcharges of 3% (“contribution additionelle”) and 3.3% (“contribution sociale”). In 2004, the French Finance Law (FFL) for 2005 was enacted resulting in a reduction of the “contribution additionelle” to 1.5% in 2005 and nil for 2006 onwards. Accordingly, the applied tax rate for 2006 in France is 34.43% (2005: 34.93%; in 2004: 35.43%). Deferred tax assets and liabilities for the Group’s French subsidiaries were calculated at December 31^st, 2006 and 2005 using the enacted tax rate of 34.43% for temporary differences.

For the Group’s German subsidiaries, income taxes are calculated using a federal corporate tax rate of 25.0% for December 31^st, 2006, plus (i) an annual solidarity surcharge of 5.5% on the amount of federal corporate taxes payable and (ii) the after federal tax benefit rate for trade tax of 12.125% for 2006. In aggregate, the tax rate applied to German income taxes amounts to 38.5% in 2006, 2005 and 2004.

With respect to the Spanish subsidiaries, the Spanish government enacted on November 28^th, 2006 a change in the corporate income tax rate for the years 2007 and 2008. As of January 1^st, 2007 the corporate income tax rate in Spain will decrease from 35% to 32.5% and from 2008 onwards to 30%. Accordingly, deferred tax assets and liabilities of the Group’s Spanish entities were calculated using the enacted tax rate of 32.5% for temporary differences that reverse in 2007 and 30.0% for temporary differences with a reversal scheduled in 2008 or later.

The following table shows a reconciliation from the theoretical income tax expense – using the Dutch corporate tax rate of 29.6% as at December 31^st, 2006, 31.5% at December 31^st, 2005 and 34.5% at December 31^st, 2004 – to the reported tax expense. The reconciling items represent, besides the impact of tax rate differentials and changes, non-taxable benefits or non-deductible expenses arising from permanent differences between the local tax base and the reported financial statements according to IFRS rules.

The change in valuation allowances reflects the updated assessment regarding the recoverability of the deferred tax assets for a tax paying entity in the foreseeable future. In 2006, valuation allowances have increased for Airbus while some were partly released in Astrium.

Deferred income taxes are the result of temporary differences between the carrying amounts of certain assets and liabilities in the financial statements and their tax bases. Future tax impacts from net operating losses and tax credit carry forwards are also considered in the deferred income tax calculation. Deferred income taxes are related to the following assets and liabilities:

The amount of the Group’s deferred tax assets’ allowances is based upon management’s estimate of the level of deferred tax assets that will be realised in the foreseeable future. In future periods, depending upon the Group’s financial results, management’s estimate of the amount of the deferred tax assets considered realisable may change, and hence the write-down of deferred tax assets may increase or decrease. Companies in deficit situations in two or more subsequent years recorded a total deferred tax asset balance of 102 M € (in 2005: 83 M €). Assessments show that these deferred tax assets will be recovered in future through either (i) own projected profits, or (ii) profits of other companies integrated in the same fiscal group (“regime integration fiscal” in France, “steuerliche Organschaft” in Germany) or (iii) via the “loss surrender-agreement” in Great Britain.

Deferred taxes on Net Operating Losses and Tax Credit carry forwards:

NOLs, capital losses and trade tax loss carry forwards are indefinitely usable in France, Germany and in Great Britain. In Spain, NOLs and tax credit carry forwards expire after 15 years. The first tranche of tax credit carry forwards (2 M €) will expire in 2014.

Roll forward of deferred taxes:

The deferred tax recognised directly in equity is as follows: