(35) Taxes on income

This item includes both domestic income tax and comparable taxes on income incurred by foreign subsidiaries. Determination of the income tax includes the calculation of deferred taxes. The principles used to recognise deferred taxes are set out in the section entitled “Summary of major accounting policies”. Deferred taxes are established on retained earnings of major affiliated companies in cases where a distribution is specifically planned.

N147 TAXES ON INCOME – ACTUAL AND DEFERRED
  FIGURES IN EUR MILLION
    2013 2012 1)
  Actual tax for the reporting year 332 399
  Actual tax for other periods –24 –17
  Deferred taxes due to temporary differences –49 124
  Deferred taxes from loss carry forwards 44 –84
  Change in deferred taxes due to changes in tax rates –7 –3
  Recognised tax expenditure 296 419
  1) Adjusted on the basis of IAS 8, cf. section “Accounting policies”, subsection “Changes in accounting policies and accounting errors” of the Notes
   
N148 DOMESTIC/FOREIGN BREAKDOWN OF RECOGNISED TAX EXPENDITURE/INCOME
  FIGURES IN EUR MILLION
    2013 2012 1)
  Current taxes 308 382
  Domestic 142 236
  Foreign 166 146
  Deferred taxes –12 37
  Domestic 8 –19
  Foreign –20 56
  Total 296 419
  1) Adjusted on the basis of IAS 8, cf. section “Accounting policies”, subsection “Changes in accounting policies and accounting errors” of the Notes
   

Actual and deferred taxes recognised in the financial year under other comprehensive income and directly in equity – resulting from items charged or credited to other comprehensive income or directly to equity – amounted to EUR 234 (–224) million and EUR 0 (–9) million, respectively.

The following table presents a reconciliation of the expected expense for income taxes that would be incurred upon applying the German income tax rate to the pre-tax profit with the actual expense for taxes:

N149 RECONCILIATION OF EXPECTED AND RECOGNISED INCOME TAX EXPENSES
  FIGURES IN EUR MILLION
    2013 2012 1)
  Profit before income taxes 1,578 1,563
  Expected tax rate 31.6% 31.6%
  Expected expense for income taxes 499 494
  Change in deferred rates of taxation –7 –3
  Difference due to foreign tax rates –99 –89
  Non-deductible expenses 63 81
  Tax-exempt income –206 20
  Value adjustment on deferred tax assets 27 –85
  Tax expense not attributable to the reporting period 18 2
  Other 1 –1
  Recognised tax expenditure 296 419
  1) Adjusted on the basis of IAS 8, cf. section “Accounting policies”, subsection “Changes in accounting policies and accounting errors” of the Notes
   

The calculation of the expected expense for income taxes is based on the German income tax rate of 31.6 (31.6)%. This tax rate is made up of corporate income tax including the German reunification charge and a mixed trade tax rate.

The tax ratio, i.e. the ratio of recognised tax expense to pre-tax profit, stood at 18.8 (26.9)% in the reporting year. The tax rate corresponds to the average income tax load borne by all Group companies.

No deferred taxes were established on taxable temporary differences under assets amounting to EUR 108 (112) million and under liabilities amounting to EUR 84 (130) million in connection with shares in Group companies as the Group is able to direct their reversal, and they will not reverse in the foreseeable future.

The unadjusted deferred tax assets on loss carry forwards totalling EUR 223 (250) million are likely to be realised in the amount of EUR 29 (17) million within a year and in the amount of EUR 194 (233) million after one year.

Availability of uncapitalised loss carry forwards

An impairment of deferred taxes was recorded on loss carry forwards of EUR 381 (376) million and deductible temporary differences of EUR 121 (54) million gross in the People’s Republic of China, Turkey and Germany because their realisation is not sufficiently certain. In addition, in the reporting year there were impaired tax credits in the USA of EUR 13 (0) million gross. The impaired deferred tax assets for these items total EUR 130 (110) million, cf. table N150.

In the reporting year, actual corporate income tax fell by EUR 5 (—) million since loss carry forwards were used but no associated deferred tax claims were made.

The devaluation of deferred tax claims recognised in previous years led to a deferred tax expense of EUR 3 (4) million in the 2013 financial year. On the other hand, the correction of previous devaluations produced deferred taxes of EUR 9 (92) million.

In terms of losses in the reporting or the previous year, excess deferred tax claims are only recognised to the extent it is probable that the given company will generate sufficient taxable profits in the future. Such proof was provided for deferred tax claims amounting to EUR 212 (90) million.

N150 IMPAIRED LOSS CARRY FORWARDS, TEMPORARY DIFFERENCES AND TAX CREDITS
  FIGURES IN EUR MILLION
    1 year
to 5 years
6 years
to 10
years
>10
years
Un-
limited
Total 1 year
to 5 years
6 years
to 10
years
>10
years
Un-
limited
Total
   
    2013 2012
  Loss carry forwards                    
  thereof domestic loss carry forwards                    
  Corporate tax 55 55 26 26
  Trade tax 27 27 20 20
  thereof foreign loss carry forwards                    
  Luxembourg 155 155 151 151
  Turkey 28 28 63 63
  Austria 51 51 51 51
  Other 1 14 50 65 10 1 15 39 65
  Total 28 1 14 338 381 73 1 15 287 376
  Temporary differences 121 121 54 54
  Tax credits 13 13
  Total 28 1 14 472 515 73 1 15 341 430