(28) Income taxes
This item comprises the income taxes paid or accrued in the individual countries, plus deferred taxes. Income taxes are computed on the basis of local tax rates. Adjustments occasioned by applying the revised version of IAS 19 are explained in the section headed “Financial reporting standards and interpretations applied.”
The breakdown of income taxes by origin is as follows:
The actual tax income of €71 million for 2013 was €5 million less than the expected tax income of €76 million. (In 2012, the actual tax expense of €151 million was €57 million less than the expected tax expense of €208 million.)
In calculating the expected tax result for the LANXESS Group, an overall tax rate of 31.8% (2012: 31.5%) was applied to the German companies. This comprises a corporation tax rate of 15.0%, plus a solidarity surcharge (5.5% of corporation tax) and trade tax.
The reconciliation of the expected tax result to the actual tax result is as follows:
|Reconciliation to Reported Tax Income|
|Income (loss) before income taxes||660||(239)|
|Aggregated income tax rate of LANXESS AG||31.5%||31.8%|
|Expected tax expense||(208)||76|
|Tax difference due to differences between local tax rates and the hypothetical tax rate||55||(8)|
|Reduction in taxes due to|
|tax-free income and reduction of tax bases||8||4|
|utilization of unrecognized loss carryforwards||0||0|
|Increase in taxes due to non-tax-deductible expenses||(11)||(7)|
|Other tax effects||5||6|
|Actual tax result||(151)||71|
|Effective tax rate||(22.9)%||29.7%|
|2012 figures restated|
The deferred tax assets and liabilities are allocable to the various items of the statement of financial position as follows:
|€ million||Dec. 31, 2012||Dec. 31, 2013|
|Deferred tax assets||Deferred tax liabilities||Deferred tax assets||Deferred tax liabilities|
|Property, plant and equipment||3||160||32||119|
|Receivables and other assets||2||44||8||24|
|of which non-current||239||237||264||179|
The change in deferred taxes is calculated as follows:
|Changes in Deferred Taxes|
|Deferred taxes as of January 1||121||129|
|Tax income/expense recognized in the income statement||(33)||88|
|Changes in scope of consolidation||(7)||(5)|
|Taxes recognized in other comprehensive income||51||9|
|Deferred taxes as of December 31||129||225|
|2012 figures restated|
Of the deferred taxes recognized in other comprehensive income, €6 million (2012: €69 million) related to remeasurements of the net defined benefit liability for post-employment benefit plans and €3 million (2012: minus €18 million) to financial instruments.
Deferred tax assets of €75 million (2012: €16 million) related to tax jurisdictions in which losses were recorded in 2013 or 2012. In this respect, the LANXESS Group has taken into consideration tax planning calculations and customary and feasible tax strategies.
Based on tax planning calculations and strategies, deferred tax assets of €85 million (2012: €69 million) were recognized on the €292 million (2012: €225 million) in tax loss carryforwards that represent income likely to be realized in the future.
Deferred taxes were not recognized for €192 million (2012: €182 million) of tax loss carryforwards. Of this amount, €147 million (2012: €154 million) can theoretically be used over more than five years. Further, deferred tax assets were not recognized in 2013 for tax-deductible temporary differences of €29 million (2012: €63 million). Accordingly, deferred taxes on loss carryforwards of €52 million (2012: €49 million) and deferred tax assets on tax-deductible temporary differences of €11 million (2012: €22 million) were not recognized.