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 25.5% for 31^st December 2007 (for 2006: 29.6% and for 2005: 31.5%). In 2006, a new tax law was enacted reducing the income tax rates from 2007 onwards to 25.5%.

Deferred tax assets and liabilities for the Group’s French subsidiaries were calculated at 31^st December 2007 and 2006 using the enacted tax rate of 34.43% for temporary differences. In 2004, the French corporate tax rate in effect 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 from 2006 onwards. Accordingly, the applied tax rate for 2007 and 2006 in France is 34.43% (2005: 34.93%).

In 2007, the German government enacted new tax legislation (“Unternehmensteuerreformgesetz 2008”) which decreased the federal corporate tax rate from 25% to 15%, being effective as of 1^st January 2008. In addition there is a surcharge (“Solidaritätszuschlag”) of 5.5% on the amount of federal corporate taxes. For trade taxes, the basic measurement rate has been reduced from 5% to 3.5%, but the tax deductibility of trade tax has been abolished. In aggregate, the enacted tax rate which has been applied to German deferred taxes as of 1^st January 2007 amounts to 30% (2006 and 2005: 38.5%).

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

All other foreign subsidiaries apply their national tax rates, among others United Kingdom 28% (in 2006: 30%).

The following table shows a reconciliation from the theoretical income tax benefit (expense) – using the Dutch corporate tax rate of 25.5% as at 31^st December 2007, 29.6% as at 31^st December 2006 and 31.5% at 31^st December 2005 – 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. Furthermore in 2006, a tax audit of DASA for the years 1994 until 1999 was finalised. According to the EADS shareholders agreement the related tax expense was reimbursed by Daimler AG. Thus deferred tax assets have been adjusted resulting in a reconciling item of €39 million and included in “other”.

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. The Group has various unresolved issues concerning open income tax years with the tax authorities in a number of jurisdictions. EADS believes that it has recorded adequate provisions for future income taxes that may be owed for all open tax years. Companies in deficit situations in two or more subsequent years recorded a total deferred tax asset balance of €35 million (in 2006: €102 million). 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 million) will expire in 2014. In the Netherlands NOLs and tax credit carry forwards expire after 9 years.

Roll forward of deferred taxes:

Details of deferred taxes recognised in equity are as follows: