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 provisions 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

Deferred taxes of German companies are therefore measured based on a total tax rate (including solidarity surcharge) of 28.0 percent (2014: 28.2 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. As in the prior year, the respective income tax rates for foreign companies applicable in each country ranged from 10.0 percent to 39.0 percent.

Deferred taxes on undistributed profits of subsidiaries were recognized only if distribution is planned. The amount of € 323.5 million (2014: € 254.1 million) is available for distribution.

The tax expenses of € 164.9 million reported for the fiscal year were € 51.0 million higher than the expected tax expenses of € 113.9 million that would have resulted from application of the total tax rate for Germany of 28.0 percent.

Income taxes include current tax expenses for prior years of € 0.3 million (2014: tax expenses of € 16.3 million) and deferred tax income from other periods of € 0.0 million (2014: tax income of € 20.6 million).

Allocation of Deferred Taxes

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 changes in deferred tax assets and liabilities of € 37.3 million were recognized in profit or loss (2014: € 40.7 million), while € –49.9 million was recognized directly in equity (2014: € 126.7 million). The existing tax loss carryforwards can be used as follows:

Loss carryforwards generated totaled € 378.9 million (2014: € 316.3 million). Of this amount, € 360.4 million (2014: € 316.3 million) was non-realizable, which is why no deferred tax assets were recognized. If they had been recognized, however, they would have amounted to € 100.9 million (2014: € 89.0 million). Of the loss carryforwards that are not realizable for tax purposes, the amount of € 139.3 million (2014: € 67.9 million) is unlimited as to time and amount. As of December 31, 2015, no deferred tax assets were recognized for tax-deductible temporary differences of € 712.1 million (2014: € 628.6 million). The change mainly concerns parts of the actuarial losses from the measurement of pension obligations recognized in other equity items in equity as well as of start-up costs for the plant in Charleston, Tennessee (USA) that are not immediately deductible.