03 Income Taxes

Income taxes are calculated on the basis of applicable or anticipated tax rates according to the prevailing legal situation in the individual countries as of the realization date. These tax rates are generally based on the legal statutes valid or adopted as of the balance sheet date. In Germany, a solidarity surcharge is added to corporate tax. Trade income tax, which varies depending on the municipality in which a company is located, must also be paid.

Tax Rates in Germany

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%

 

2013

 

2012

 

 

 

 

 

Weighted average trade income tax rate

 

12.3

 

11.6

Corporate tax rate

 

15.0

 

15.0

Solidarity surcharge on corporate tax

 

5.5

 

5.5

 

 

 

 

 

Deferred taxes of German companies are therefore measured based on a total tax rate (including solidarity surcharge) of 28.2 percent (2012: 27.5 percent). The income from foreign Group companies is subject to taxation at the tax rates valid in the country in which the respective company is based. The respective local income tax rates applicable in each country for foreign companies range from 10.0 percent to 39.0 percent (2012: from 10.0 percent to 40.5 percent).

Deferred taxes on undistributed profits of subsidiaries were recognized only if distribution is planned. The amount of € 537.1 million (2012: € 492.5 million) is available for distribution.

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€ million

 

2013

 

2012

 

 

 

 

 

Current taxes, domestic

 

-52.9

 

-84.0

Current taxes, foreign

 

-12.8

 

-26.8

Current taxes

 

-65.7

 

-110.8

 

 

 

 

 

Deferred taxes, domestic

 

47.0

 

20.6

Deferred taxes, foreign

 

-6.0

 

1.0

Deferred taxes

 

41.0

 

21.6

Income taxes

 

-24.7

 

-89.2

 

 

 

 

 

Derivation of the effective tax rate

 

 

 

 

Income before taxes

 

31.0

 

203.9

Income tax rate for Wacker Chemie AG (%)

 

28.2

 

27.5

 

 

 

 

 

Expected tax expenses

 

-8.7

 

-56.1

Tax rate divergences

 

5.1

 

-2.5

Tax effect of non-deductible expenses

 

-21.3

 

-9.7

Tax effect of tax-free income

 

10.1

 

5.2

Taxes relating to other periods (current earnings)

 

6.2

 

1.8

Effects of loss carryforwards and temporary differences

 

-5.3

 

-4.1

Group equity result

 

-11.1

 

-22.9

Other divergences

 

0.3

 

-0.9

Total income tax

 

-24.7

 

-89.2

 

 

 

 

 

Effective tax rate (%)

 

79.7

 

43.7

 

 

 

 

 

The tax expenses of € 24.7 million reported for fiscal 2013 were € 16.0 million higher than the expected tax expenses of € 8.7 million that would have resulted from the application of the total tax rate for Germany of 28.2 percent.

Income taxes include current tax income for prior years of € 1.2 million (2012: tax expenses of € 2.9 million) and deferred tax income from other periods of € 5.0 million (2012: € 4.7 million).

Allocation of Deferred Taxes

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€ million

 

2013

 

2012

 

 

Deferred tax assets

 

Deferred tax liabilities

 

Deferred tax assets

 

Deferred tax liabilities

 

 

 

 

 

 

 

 

 

Intangible assets

 

11.6

 

 

12.3

 

Property, plant and equipment

 

5.9

 

63.7

 

3.7

 

94.4

Financial assets

 

0.5

 

 

0.8

 

Current assets

 

11.1

 

5.1

 

10.6

 

4.1

Provisions for pensions

 

165.5

 

 

207.0

 

Other provisions

 

32.8

 

4.2

 

28.5

 

0.6

Liabilities

 

9.7

 

0.1

 

14.0

 

0.1

Loss carryforwards

 

0.2

 

 

1.5

 

Setting off for companies with profit and loss transfer agreement

 

-0.6

 

-0.6

 

-0.6

 

-0.6

Total

 

236.7

 

72.5

 

277.8

 

98.6

 

 

 

 

 

 

 

 

 

Setoffs

 

-71.0

 

-71.0

 

-95.8

 

-95.8

 

 

 

 

 

 

 

 

 

Amount recorded in Statement of Financial Position

 

165.7

 

1.5

 

182.0

 

2.8

 

 

 

 

 

 

 

Deferred tax assets and liabilities are offset whenever there are future tax amounts imposed on, or credited to, the same taxpayer by the same tax authority. In addition, deferred tax assets are recognized only if it is probable that these tax benefits will be realized.

The substantial changes of € 41.0 million in deferred tax assets and liabilities were recognized in profit or loss (2012: € 21.6 million), while € –55.1 million was recognized directly in equity (2012: € 102.7 million). The existing tax loss carryforwards can be used as follows:

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€ million

 

2013

 

2012

 

 

 

 

 

Within 1 year

 

13.0

 

Within 2 years

 

18.7

 

13.3

Within 3 years

 

73.1

 

20.5

Within 4 years

 

76.9

 

74.5

Within 5 years or later

 

98.1

 

152.1

Total

 

279.8

 

260.4

 

 

 

 

 

Of which loss carryforwards not expected to be realizable

 

-279.4

 

-255.1

 

 

 

 

 

Of which loss carryforwards expected to be realizable

 

0.4

 

5.3

 

 

 

 

 

Tax loss carryforwards generated outside Germany amount to a total of € 279.8 million (2012: € 260.4 million). A total of € 0.4 million (2012: € 5.3 million) relates to realizable loss carryforwards. Associated deferred tax assets for 2013 amounted to € 0.2 million (2012: € 1.5 million). Deferred taxes are not recognized on losses that are not realizable. In theory, however, an amount of € 78.7 million (2012: € 70.2 million) would have resulted from such recognition. Of the loss carryforwards that are not realizable for tax purposes, the amount of € 55.7 million (2012: € 8.4 million) is unlimited as to time and amount. As of December 31, 2013, no deferred tax assets were recognized for tax-deductible temporary differences of € 267.7 million (2012: € 325.4 million).