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COMPONENTS OF TAX INCOME AND EXPENSE |
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|---|---|---|---|---|
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€ million |
2009 |
2008 | ||
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Current tax expense, Germany |
508 |
1,355 | ||
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Current tax expense, abroad |
812 |
1,087 | ||
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Current tax expense |
1,321 |
2,442 | ||
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of which prior-period income |
(–32) |
(–41) | ||
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Income from reversal of tax provisions |
–176 |
–104 | ||
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Current income tax expense |
1,145 |
2,338 | ||
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Deferred tax income/expense, Germany |
–360 |
–86 | ||
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Deferred tax income/expense, abroad |
–436 |
–332 | ||
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Deferred tax income |
–796 |
–418 | ||
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Income tax income/expense |
349 |
1,920 | ||
In Germany, current tax expense is calculated on the basis of a uniform corporation tax rate of 15% (previous year: 15%) plus a solidarity surcharge of 5.5%. In addition to corporation tax, trade tax is levied on profits generated in Germany. Due to the non-deductibility of trade tax as a business expense from fiscal year 2008, the average trade tax rate is 13.7%, which results in a total domestic tax rate of 29.5% (previous year: 29.5%).
The local income tax rates applied for companies outside Germany vary between 0% and 42%. In the case of split tax rates, the tax rate applicable to undistributed profits is applied.
The realization of tax benefits from tax loss carryforwards from previous years resulted in a reduction in current income taxes in 2009 by €65 million (previous year: €77 million).
Previously unused tax loss carryforwards amounted to €3,141 million (previous year: €2,172 million). Tax loss carryforwards amounting to €799 million (previous year: €808 million) can be used indefinitely, while €828 million (previous year: €95 million) must be used within the next ten years. There are additional tax loss carryforwards amounting to €1,518 million (previous year: €1,268 million) that can be used within a period of 15 to 20 years. Tax loss carryforwards of €198 million (previous year: €112 million) are estimated not to be usable.
The increase in tax loss carryforwards estimated not to be usable amounting to €86 million resulted primarily from the tax position of the Indian and Italian companies.
Deferred taxes are recognized where income from subsidiaries was tax-exempt in the past due to specific local regulations, but the tax effects on discontinuation of the temporary tax exemption are foreseeable. Tax benefits amounting to €55 million (previous year: €73 million) were recognized because of tax credits granted by various countries to compensate for the loss of tax relief where the amounts involved were unlimited. Tax credits granted for other reasons amounted to €67 million (previous year: €69 million)
No deferred tax assets were recognized for deductible temporary differences of €2 million (previous year: €2 million) and for tax credits of €562 million (previous year: €371 million) that would expire in the period from 2011 to 2023.
Due to the change in the statutory provisions in Germany, a refund claim for corporation tax was recognized as a current tax asset for the first time in fiscal year 2006. It was recognized in the balance sheet under current tax receivables at a present value of €951 million. The present value of the refund claim was €783 million at the balance sheet date.
Deferred tax expenses resulting from changes in tax rates amounted to €1 million (previous year: deferred tax income of €54 million).
Deferred taxes of €453 million were recognized without being offset by deferred tax liabilities in the same amount. The companies concerned expect positive tax income in future following losses in fiscal year 2009 or in the previous year.
As of the reporting date, €207 million of the deferred taxes recognized in the balance sheet was credited to equity (previous year: €1 million charged to equity) and relates to other comprehensive income. €4 million of this figure (previous year: €44 million) is attributable to minority interests. In fiscal year 2009, there was a €6 million (previous year: €2 million) reduction in deferred taxes resulting from changes in the consolidated Group.
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CHANGE IN TAX EFFECTS ON OTHER COMPREHENSIVE INCOME |
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€ million |
Amount before taxes |
Taxes |
Amount after taxes |
Amount before taxes |
Taxes |
Amount after taxes | ||||||
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2009 |
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2008 | |||||||
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Exchange differences on translating foreign operations |
975 |
– |
975 |
–1,445 |
– |
–1,445 | ||||||
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Actuarial gains/losses |
–860 |
249 |
–611 |
190 |
–57 |
133 | ||||||
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Cash flow hedges |
–225 |
46 |
–179 |
–373 |
134 |
–239 | ||||||
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Available-for-sale financial instruments |
271 |
–80 |
191 |
–230 |
68 |
–162 | ||||||
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Share of other comprehensive income of equity-accounted investments, net of tax |
30 |
– |
30 |
–188 |
– |
–188 | ||||||
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Other comprehensive income |
191 |
216 |
406 |
–2,046 |
145 |
–1,901 | ||||||
DEFERRED TAXES CLASSIFIED BY BALANCE SHEET ITEM
The following recognized deferred tax assets and liabilities were attributable to recognition and measurement differences in the individual balance sheet items and to tax loss carryforwards:
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Deferred tax assets |
Deferred tax liabilities | ||||||||
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€ million |
Dec. 31, 2009 |
Dec. 31, 2008 |
Dec. 31, 2009 |
Dec. 31, 2008 | ||||||
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Intangible assets |
197 |
235 |
2,388 |
2,271 | ||||||
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Property, plant and equipment, and leasing and rental assets |
3,699 |
4,123 |
2,580 |
2,729 | ||||||
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Noncurrent financial assets |
756 |
1,059 |
4 |
2 | ||||||
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Inventories |
304 |
335 |
324 |
321 | ||||||
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Receivables and other assets |
622 |
822 |
5,931 |
7,103 | ||||||
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Other current assets |
82 |
129 |
20 |
41 | ||||||
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Pension provisions |
1,303 |
1,050 |
3 |
8 | ||||||
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Other provisions |
2,885 |
2,723 |
61 |
530 | ||||||
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Liabilities* |
1,309 |
1,657 |
245 |
499 | ||||||
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Tax loss carryforwards |
929 |
663 |
– |
0 | ||||||
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Valuation allowances on deferred tax assets |
– |
0 |
– |
0 | ||||||
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Gross value |
12,084 |
12,796 |
11,558 |
13,504 | ||||||
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of which noncurrent |
(8,544) |
(8,871) |
(8,070) |
(8,941) | ||||||
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Offset |
9,185 |
9,885 |
9,185 |
9,885 | ||||||
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Consolidation |
113 |
433 |
–149 |
35 | ||||||
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Amount recognized |
3,013 |
3,344 |
2,224 |
3,654 | ||||||
In accordance with IAS 12, deferred tax assets and liabilities are offset if, and only if, they relate to income taxes levied by the same taxation authority and relate to the same tax period.
The tax expense of €349 million reported for 2009 (previous year: expense of €1,920 million) was €23 million lower (previous year: €29 million lower) than the expected tax expense of €372 million that would have resulted from application of a tax rate applicable to undistributed profits of 29.5% to the profit before tax of the Group.
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RECONCILIATION OF EXPECTED TO EFFECTIVE INCOME TAX |
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€ million |
2009 |
2008 | ||
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Profit before tax |
1,261 |
6,608 | ||
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Expected income tax expense |
372 |
1,949 | ||
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Reconciliation: |
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Effect of different tax rates outside Germany |
–58 |
–141 | ||
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Proportion of taxation relating to: |
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tax-exempt income |
–476 |
–286 | ||
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expenses not deductible for tax purposes |
162 |
183 | ||
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effects of loss carryforwards and tax credits |
52 |
–47 | ||
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temporary differences for which no deferred taxes were recognized |
349 |
422 | ||
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Tax credits |
–47 |
–23 | ||
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Prior-period tax expense |
–33 |
–41 | ||
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Effect of tax rate changes |
1 |
–54 | ||
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Other taxation changes |
27 |
–42 | ||
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Effective income tax income/expense |
349 |
1,920 | ||
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Effective tax rate (%) |
27.7 |
29.1 | ||
