9. Income Taxes
Income tax expense including deferred taxes can be broken down as follows:
|
|
2021 |
|
2022 |
|---|---|---|---|---|
Current income taxes |
|
|
|
|
Germany |
|
76 |
|
65 |
International |
|
193 |
|
272 |
|
|
269 |
|
337 |
Deferred taxes |
|
–17 |
|
–12 |
|
|
252 |
|
325 |
Reconciliation to effective income tax expense
Given an effective tax rate of 29.6% (previous year: 27.8%), the effective income tax expense is €59 million (previous year: €40 million) higher than the expected income tax expense. The expected tax rate is calculated as the weighted average of the tax rates of the individual Group companies and amounts to 24.3% (previous year: 23.3%).
The following table shows the reconciliation of expected to effective income tax expense:
|
|
2021 |
|
2022 |
|---|---|---|---|---|
Expected income tax expense given a tax rate of 24.3% |
|
212 |
|
266 |
Prior-year taxes |
|
–14 |
|
–4 |
Decrease in tax expense due to changes in tax-free income |
|
–18 |
|
–19 |
Increase in tax expense due to non-tax-deductible impairment of goodwill |
|
2 |
|
2 |
Increase in tax expense due to other non-deductible expenses |
|
53 |
|
55 |
Decrease in tax expense due to the utilization/recognition of previously unrecognized tax loss carryforwards |
|
–9 |
|
–5 |
Increase in tax expense due to non-recognition of tax loss carryforwards |
|
16 |
|
11 |
Other tax effects |
|
10 |
|
19 |
Effective income tax expense |
|
252 |
|
325 |
No deferred tax assets have been recognized for tax loss carryforwards and unused tax credits of €148 million (previous year: €255 million), whose expiration dates are given below.
Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits. Given the positive assessments of future business development, it is assumed there is a reasonable probability that future taxable income will be sufficient to allow utilization of the deferred tax assets.
|
|
Dec. 31, 2021 |
|
Dec. 31, 2022 |
|---|---|---|---|---|
Expiration date within |
|
|
|
|
1 year |
|
1 |
|
1 |
2 years |
|
1 |
|
4 |
3 years |
|
6 |
|
6 |
more than 3 years |
|
170 |
|
54 |
Unlimited carryforward period |
|
77 |
|
83 |
|
|
255 |
|
148 |
Deferred taxes relate to the following balance sheet items and matters:
|
|
Deferred tax assets |
|
Deferred tax liabilities |
||||
|---|---|---|---|---|---|---|---|---|
|
|
Dec. 31, 2021 |
|
Dec. 31, 2022 |
|
Dec. 31, 2021 |
|
Dec. 31, 2022 |
Non-current assets |
|
15 |
|
19 |
|
90 |
|
104 |
Inventories |
|
33 |
|
44 |
|
— |
|
— |
Receivables and other current assets |
|
15 |
|
17 |
|
17 |
|
25 |
Provisions for pensions and other post-employment benefits |
|
119 |
|
40 |
|
1 |
|
54 |
Other provisions |
|
75 |
|
66 |
|
28 |
|
36 |
Liabilities |
|
121 |
|
145 |
|
3 |
|
3 |
Retained earnings |
|
— |
|
— |
|
30 |
|
24 |
Loss carryforwards |
|
45 |
|
36 |
|
— |
|
— |
|
|
423 |
|
367 |
|
169 |
|
246 |
Offset deferred taxes |
|
–131 |
|
–109 |
|
–131 |
|
–109 |
Deferred taxes recognized in the balance sheet |
|
292 |
|
258 |
|
38 |
|
137 |
Total net deferred tax assets amounted to €121 million for the year under review (previous year: €254 million). Of the year-on-year decrease of €133 million (previous year: €22 million), €148 million was recognized directly in other comprehensive income, decreasing equity (previous year: decrease in equity of €41 million). €12 million (previous year: €17 million) was recognized in profit or loss. Currency effects increased this item by €3 million (previous year: increase of €2 million).
Deferred taxes are not recognized for retained earnings at foreign affiliates, as these profits are intended to be reinvested indefinitely in those operations from today’s perspective. Where distributions are planned, their tax consequences are deferred. The liability is calculated based on the withholding tax rates applicable in each case, taking into account the German tax rate applicable to distributed corporate dividends, where appropriate. Deferred tax liabilities of €24 million (previous year: €30 million) were recognized for this in the reporting period.
Income tax receivables at the balance sheet date are the result of refund claims and receivables recorded in connection with uncertain tax positions in accordance with IFRIC 23.