9. Income Taxes
Income tax expense including deferred taxes can be broken down as follows:
|
|
2022 |
|
2023 |
|---|---|---|---|---|
Current income taxes |
|
|
|
|
Germany |
|
65 |
|
109 |
International |
|
272 |
|
307 |
|
|
337 |
|
416 |
Deferred taxes |
|
–12 |
|
–60 |
|
|
325 |
|
356 |
Reconciliation to effective income tax expense
Given an effective tax rate of 32.2% (previous year: 29.6%), the effective income tax expense is €106 million (previous year: €59 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 22.6% (previous year: 24.3%).
The following table shows the reconciliation of expected to effective income tax expense:
|
|
2022 |
|
2023 |
|---|---|---|---|---|
Expected income tax expense given a tax rate of 22.6% (previous year: 24.3%) |
|
266 |
|
250 |
Prior-year taxes |
|
–4 |
|
12 |
Decrease in tax expense due to changes in tax-free income |
|
–19 |
|
–24 |
Increase in tax expense due to non-tax-deductible impairment of goodwill |
|
2 |
|
9 |
Increase in tax expense due to other non-deductible expenses |
|
55 |
|
65 |
Decrease in tax expense due to the utilization/recognition of previously unrecognized tax loss carryforwards |
|
–5 |
|
–17 |
Increase in tax expense due to non-recognition of tax loss carryforwards |
|
11 |
|
19 |
Other tax effects |
|
19 |
|
42 |
Effective income tax expense |
|
325 |
|
356 |
The decrease in the expected income tax expense and the simultaneous increase in withholding taxes under other tax effects are both related to the introduction of our new business model.
No deferred tax assets have been recognized for tax loss carryforwards and unused tax credits of €271 million (previous year: €272 million), whose expiration dates are given below.
|
|
Dec. 31, 2022 |
|
Dec. 31, 2023 |
|||
|---|---|---|---|---|---|---|---|
Expiration date within |
|
|
|
|
|||
1 year |
|
1 |
|
— |
|||
2 years |
|
4 |
|
9 |
|||
3 years |
|
6 |
|
12 |
|||
more than 3 years |
|
54 |
|
90 |
|||
Unlimited carryforward period1 |
|
207 |
|
160 |
|||
|
|
272 |
|
271 |
|||
|
|||||||
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.
Deferred taxes relate to the following balance sheet items and matters:
|
|
Deferred tax assets |
|
Deferred tax liabilities |
||||
|---|---|---|---|---|---|---|---|---|
|
|
Dec. 31, 2022 |
|
Dec. 31, 2023 |
|
Dec. 31, 2022 |
|
Dec. 31, 2023 |
Non-current assets |
|
19 |
|
37 |
|
104 |
|
112 |
Inventories |
|
44 |
|
42 |
|
— |
|
— |
Receivables and other current assets |
|
17 |
|
31 |
|
25 |
|
52 |
Provisions for pensions and other post-employment benefits |
|
40 |
|
39 |
|
54 |
|
67 |
Other provisions |
|
66 |
|
75 |
|
36 |
|
26 |
Liabilities |
|
145 |
|
198 |
|
3 |
|
9 |
Retained earnings |
|
— |
|
— |
|
24 |
|
29 |
Loss carryforwards |
|
36 |
|
44 |
|
— |
|
— |
|
|
367 |
|
466 |
|
246 |
|
295 |
Offset deferred taxes |
|
–109 |
|
–162 |
|
–109 |
|
–162 |
Deferred taxes recognized in the balance sheet |
|
258 |
|
304 |
|
137 |
|
133 |
Total net deferred tax assets amounted to €171 million for the year under review (previous year: €121 million). Of the year-on-year increase of €50 million (previous year: decrease of €133 million), €4 million was recognized directly in other comprehensive income, decreasing equity (previous year: decrease in equity of €148 million). Income of €60 million (previous year: €12 million) was recognized in profit or loss. Currency effects decreased this item by €6 million (previous year: €3 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 €29 million (previous year: €24 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.