03 Income Taxes

This item comprises income taxes paid or owed in the individual countries and deferred taxes. In Germany, alongside a corporate tax of 15.0 percent (versus 15.0 percent a year earlier), there is a solidarity surcharge of 5.5 percent (versus 5.5 percent). Trade income tax of 12.2 percent (versus 12.2 percent) must also be paid. It varies depending on the municipality in which a company is located.

Deferred taxes of German companies are therefore measured based on a total tax rate (including solidarity surcharge) of 28.0 percent (versus 28.0 percent in the prior year). The current taxes of foreign subsidiaries are determined according to domestic tax laws and rates valid in the country in which the respective company is based. The respective current income tax rates applied in each country for our foreign companies ranged from 9.0 percent to 39.0 percent (versus 10.0 percent to 39.0 percent).

The change in the US corporate tax rate had no effect on earnings in 2017. In order to calculate future deferred tax effects, the corporate tax rate for the USA was adjusted to 24.5 percent.

Deferred taxes on undistributed profits of subsidiaries were recognized only if distribution is planned. The amount of €297.7 million is available for distribution, compared with €425.0 million in the prior year.

Income taxes include current tax expenses of €18.2 million from earlier years (after €0.1 million in the prior year) and deferred tax income of €2.8 million (after €14.5 million).

Due to the utilization of previously unrecognized temporary differences and previously unrecognized tax losses from earlier periods, the actual income tax expense was reduced by €15.8 million, after €11.7 million in the prior year.

The changes in deferred tax assets and liabilities of €41.2 million were recognized as income in the income statement (versus €26.0 million a year earlier), while € –33.4 million (versus €104.1 million) was recognized directly in equity. This mainly consists of deferred tax assets from variations in actuarial gains and losses stemming from pension provisions. Changes in the scope of consolidation resulted in deferred tax assets of €6.0 million (versus €0.0 million) that were disposed of and not recognized in the income statement, while disposals of deferred tax liabilities totaled €2.5 million (versus €4.1 million). The existing tax loss carryforwards can be utilized as follows:

The total loss carryforwards generated amounted to €106.0 million (versus €326.3 million in the previous year). Of this amount, €79.4 million (versus €304.7 million) is expected to be non-realizable, which is why no deferred tax assets were recognized. If they had been recognized, however, they would have amounted to €19.9 million (versus €85.3 million). Of the loss carryforwards that are not realizable for tax purposes, the amount of €48.9 million (versus €169.7 million) is unlimited as to time and amount. As of December 31, 2017, no deferred tax assets were recognized for tax-deductible temporary differences of €204.6 million (versus €668.9 million). The changes in loss carryforwards and in temporary differences resulted, on the one hand, from the deconsolidation of Siltronic and, on the other, to temporary differences in noncurrent assets.

Discontinued operations include tax expenses of €3.8 million (€7.2 million in the prior year) from the usual business activities of the discontinued division. The tax expense in connection with the sale of discontinued operations amounted to €1.3 million.