The calculation is based on the current legal position in the individual countries regarding applicable or anticipated tax rates as of the realization date. These are generally based on the legal stipulations valid or adopted as of the balance sheet date.
In Germany, a solidarity surcharge is added to corporation tax. In addition, there is trade income tax to be paid. This varies depending on the municipality in which the company is located. Trade income tax was a deductible operating expense up to and including the 2007 taxable period.
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Tax Rates in Germany | ||
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2008 |
2007 |
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Weighted average trade income tax rate |
12.0 |
14.7 |
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Corporation tax rate |
15.0 |
25.0 |
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Solidarity surcharge |
5.5 |
5.5 |
The income from foreign Group companies is subject to taxation at the tax rates valid in the country where the respective company is located. No deferred taxes on undistributed profits of subsidiaries were recognized. It was decided not to determine the possible resulting tax effects as the time and expense involved was unreasonably high. €596.2 million (2007: €567.5 million) is available for distribution.
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€ million |
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2008 |
2007 |
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Current taxes |
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–200.3 |
–192.8 |
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Deferred taxes |
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–3.2 |
–17.1 |
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Income taxes |
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–203.5 |
–209.9 |
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Derivation of the effective tax rate |
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Earnings before taxes |
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641.8 |
632.1 |
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Income tax rate for Wacker Chemie AG |
% |
28.5 |
38.0 |
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Expected tax expenses |
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–182.9 |
–240.2 |
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Tax rate divergences |
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–12.8 |
5.2 |
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Tax effect of non-deductible expenses |
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–2.3 |
–5.7 |
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Tax effect of tax-free income |
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8.8 |
11.8 |
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Taxes relating to other periods (current earnings) |
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–10.2 |
–10.4 |
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Change in the valuation allowances for deferred tax assets |
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–7.0 |
30.6 |
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Taxes attributable to minority shareholders |
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–0.3 |
–5.8 |
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Effect of changes in tax legislation |
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–3.9 |
10.6 |
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Group equity result |
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–10.1 |
–3.8 |
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Effect from supplementary tax balance sheets |
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18.5 |
– |
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Other divergences |
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–1.3 |
–2.2 |
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Total income tax |
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–203.5 |
–209.9 |
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Effective tax rate |
% |
31.7 |
33.2 |
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The effect from the supplementary tax balance sheets results from the acquisition of the remaining shares in the WPS partnerships.
When deferred taxes were calculated for the Group’s German-based corporate entities, the change in German tax legislation effective from 2008 was taken into account. The result of this change is to reduce the German income tax rate to around 30%.
In 2007, the change in valuation allowances for deferred tax assets mainly impacts the tax effect from the sale of Wacker NSCE Malaysia at Siltronic Japan Corporation. This made it possible to realize the temporary difference arising from the valuation principles.
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Allocation of Deferred Taxes | ||||
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€ million |
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2008 |
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2007 |
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Deferred |
Deferred |
Deferred |
Deferred |
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Intangible assets |
14.4 |
– |
1.9 |
– |
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Property, plant, and equipment |
4.2 |
94.8 |
1.9 |
84.2 |
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Current assets |
9.7 |
13.6 |
7.4 |
10.2 |
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Pension provisions |
7.9 |
2.0 |
10.3 |
– |
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Other provisions |
44.0 |
20.9 |
36.5 |
12.4 |
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Liabilities |
31.7 |
0.1 |
21.3 |
– |
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Loss carryforwards |
0.1 |
– |
0.1 |
– |
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Tax credits |
0.2 |
1.1 |
– |
– |
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112.2 |
132.5 |
79.4 |
106.8 |
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Setoffs |
–81.0 |
–81.0 |
–66.4 |
–66.4 |
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Balance sheet item |
31.2 |
51.5 |
13.0 |
40.4 |
The change in deferred tax assets and liabilities has been recognized in profit or loss with €–3.2 million (previous year €–17.1 million) and charged or credited directly to equity with €10.3 million (previous year €–4.5 million).
The existing tax loss carryforwards can still be used as follows:
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€ million |
2008 |
2007 |
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Within 1 year |
0.9 |
0.8 |
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Within 2 years |
1.3 |
1.0 |
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Within 3 years |
2.4 |
1.1 |
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Within 4 years |
6.9 |
2.2 |
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Within 5 years or later |
15.9 |
7.1 |
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27.4 |
12.2 |
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Of which loss carryforwards not expected to be realizable |
–27.1 |
–10.9 |
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Of which loss carryforwards expected to be realizable |
0.3 |
1.3 |