04 Income Taxes

This item comprises income taxes paid or owed in the individual countries as well as deferred taxes. In Germany, in addition to a corporate tax of 15.0 percent (versus 15.0 percent a year earlier), a solidarity surcharge of 5.5 percent applies (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 34.6 percent (versus 9.0 percent to 39.0 percent).

Deferred taxes on undistributed profits of subsidiaries were recognized only if distribution is planned. The amount of €359.5 million is available for distribution, compared with €297.7 million in the prior year.

Income taxes include current tax expenses of €0.8 million from prior years (after €18.2 million a year earlier) and deferred tax income of €0.0 million (after €2.8 million).

One of the consequences of the interpretation of No. 4 adopted by ASCG on September 5, 2018, is that expected interest on uncertain tax positions is no longer reported under income tax expense, but rather under other financial result. The corresponding prior-year figures were adjusted accordingly. In 2017, current tax expenses were lower at €7.6 million and reclassified to other financial result.

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Reconciliation of Actual Tax Result

 

 

 

 

 

€ million

 

2018

 

2017

 

 

 

 

 

Current taxes, Germany

 

-68.6

 

-108.2

Current taxes, international

 

-23.8

 

-10.3

Current taxes

 

-92.4

 

-118.5

 

 

 

 

 

Deferred taxes, Germany

 

25.8

 

29.1

Deferred taxes, international

 

2.3

 

12.1

Deferred taxes

 

28.1

 

41.2

Income taxes

 

-64.3

 

-77.3

 

 

 

 

 

Derivation of the effective tax rate

 

 

 

 

Income before taxes

 

324.4

 

327.4

Income tax rate for Wacker Chemie AG (%)

 

28.0

 

28.0

Expected tax expenses

 

-90.8

 

-91.7

 

 

 

 

 

Tax rate divergences

 

-4.8

 

4.5

Tax effect of non-deductible expenses

 

-31.4

 

-13.8

Tax effect of tax-free income

 

4.2

 

4.3

Taxes relating to other periods (current earnings)

 

-0.8

 

-15.4

Effects of loss carryforwards and temporary differences

 

24.2

 

23.7

Group profit from investments in joint ventures and associates

 

36.9

 

11.7

Other differences

 

-1.8

 

-0.6

Total income tax

 

-64.3

 

-77.3

 

 

 

 

 

Effective tax rate (%)

 

19.8

 

23.6

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 in the prior year. Deferred tax income in the year under review contained an amount of €7.6 million in previously unrecognized temporary differences and previously unrecognized tax losses from earlier periods.

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Allocation of Deferred Taxes

 

 

 

 

 

 

 

 

 

€ million

 

2018

 

2017

 

 

Deferred
tax assets

 

Deferred
tax liabilities

 

Deferred
tax assets

 

Deferred
tax liabilities

 

 

 

 

 

 

 

Intangible assets

 

15.3

 

5.4

 

16.9

 

3.8

Property, plant and equipment

 

87.9

 

24.3

 

75.6

 

22.2

Financial assets

 

 

0.5

 

 

0.8

Sundry assets

 

29.5

 

1.5

 

16.2

 

5.0

Provisions for pensions

 

358.8

 

 

316.2

 

Other provisions

 

33.7

 

 

41.8

 

Liabilities

 

14.5

 

7.8

 

13.8

 

7.0

Loss carryforwards

 

10.9

 

 

6.7

 

Setting off for companies with group taxation

 

 

 

-3.4

 

-3.4

Total

 

550.6

 

39.5

 

483.8

 

35.4

 

 

 

 

 

 

 

 

 

Setoffs

 

-29.7

 

-29.7

 

-31.2

 

-31.2

 

 

 

 

 

 

 

 

 

Amount recorded in Statement of Financial Position

 

520.9

 

9.8

 

452.6

 

4.2

The changes in deferred tax assets and liabilities of €28.1 million were recognized as income in the income statement (versus €41.2 million a year earlier), while €40.6 million (versus €-33.4 million) was recognized directly in equity. This mainly consists of deferred tax assets from variations in actuarial gains and losses in relation to pension provisions. Changes in the scope of consolidation resulted in prior-year deferred tax assets of €6.0 million that were disposed of and not recognized in the income statement, while prior-year disposals of deferred tax liabilities totaled €2.5 million.

The existing tax loss carryforwards can be utilized as follows:

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€ million

 

2018

 

2017

 

 

 

 

 

Within 1 year

 

3.0

 

38.5

Within 2 years

 

1.1

 

15.4

Within 3 years

 

2.1

 

1.1

Within 4 years

 

 

2.1

Within 5 years or later

 

55.9

 

48.9

Total

 

62.1

 

106.0

The total loss carryforwards generated amounted to €62.1 million (versus €106.0 million in the previous year). Of this amount, €14.2 million (versus €79.4 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 €3.5 million (versus €19.9 million). Of the loss carryforwards that are not realizable for tax purposes, the amount of €6.7 million (€48.9 million) is unlimited as to time and amount. As of December 31, 2018, no deferred tax assets were recognized for tax-deductible temporary differences of €191.7 million (€204.6 million).

IFRS
The International Financial Reporting Standards (until 2001 International Accounting Standards, IAS) are compiled and published by the London-based International Accounting Standards Board (IASB). Since 2005, publicly listed EU-based companies have been required to use IFRS in accordance with IAS regulations.

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