35 – Income Taxes


in € m.

2012

2011

2010

1

Adjustments for prior years include a current tax benefit of € 435 million with an offsetting equal amount in deferred tax expense.

Current tax expense (benefit):

 

 

 

Tax expense (benefit) for current year

728

1,683

1,339

Adjustments for prior years1

(955)

(232)

(9)

Total current tax expense (benefit)

(227)

1,451

1,330

Deferred tax expense (benefit):

 

 

 

Origination and reversal of temporary difference, unused tax losses and tax credits

574

(143)

700

Effect of changes in tax law and/or tax rate

10

110

7

Adjustments for prior years1

136

(354)

(392)

Total deferred tax expense (benefit)

720

(387)

315

Total income tax expense (benefit)

493

1,064

1,645

Income tax expense includes policyholder tax attributable to policyholder earnings, amounting to an income tax expense of € 12 million in 2012, an income tax benefit of € 28 million in 2011 and an income tax expense of € 37 million in 2010.

Total current tax benefit includes benefits from previously unrecognized tax losses, tax credits and deductible temporary differences, which increased the current tax benefit by € 94 million in 2012. These effects reduced the current tax expense by € 35 million and by € 6 million in 2011 and 2010, respectively.

Total deferred tax expense includes benefits from previously unrecognized tax losses (tax credits/deductible temporary differences) and the reversal of previous write-downs of deferred tax assets and expenses arising from write-downs of deferred tax assets, which increased the deferred tax expense by € 92 million in 2012. In 2011 these effects increased the deferred tax benefit by € 262 million and increased the deferred tax expense by € 173 million in 2010.

Difference between applying German statutory (domestic) income tax rate and actual income tax expense

in € m.

2012

2011

2010

Expected tax expense at domestic income tax rate of 31 % (30.8 % for 2011 and 30.7 % for 2010)

243

1,657

1,219

Foreign rate differential

34

(28)

63

Tax-exempt gains on securities and other income

(495)

(467)

(556)

Loss (income) on equity method investments

(73)

(39)

(87)

Nondeductible expenses

563

297

335

Impairments of goodwill

630

Deutsche Postbank AG related charge with no tax benefit

668

Changes in recognition and measurement of deferred tax assets

(2)

(297)

167

Effect of changes in tax law and/or tax rate

10

110

7

Effect related to share-based payments

(17)

90

48

Effect of policyholder tax

12

(28)

37

Other

(412)

(231)

(256)

Actual income tax expense (benefit)

493

1,064

1,645

The Group is under continuous examinations by tax authorities in various jurisdictions. In 2012 and 2011 “Other” in the preceding table mainly includes the effects of settling these examinations by the tax authorities.

The domestic income tax rate, including corporate tax, solidarity surcharge, and trade tax, used for calculating deferred tax assets and liabilities was 31 % for the year ended December 31, 2012. For 2011 the domestic income tax rate was 30.8 % and for 2010 30.7 %.

Income taxes charged or credited to equity (other comprehensive income/additional paid in capital)

in € m.

2012

2011

2010

1

Starting in 2011 actuarial gains/losses related to defined benefit plans are presented as part of other comprehensive income. Prior period numbers were adjusted accordingly.

Actuarial gains/losses related to defined benefit plans

399

(50)

(29)

Financial assets available for sale:

 

 

 

Unrealized net gains/losses arising during the period

(537)

173

(59)

Net gains/losses reclassified to profit or loss

6

(11)

(47)

Derivatives hedging variability of cash flows:

 

 

 

Unrealized net gains/losses arising during the period

(6)

92

30

Net gains/losses reclassified to profit or loss

(13)

(1)

(1)

Other equity movement:

 

 

 

Unrealized net gains/losses arising during the period

104

(129)

320

Net gains/losses reclassified to profit or loss

1

(3)

Income taxes (charged) credited to other comprehensive income1

(47)

75

211

Other income taxes (charged) credited to equity

34

46

30

Major components of the Group’s gross deferred income tax assets and liabilities

in € m.

Dec 31, 2012

Dec 31, 2011

Deferred tax assets:

 

 

Unused tax losses

1,802

2,375

Unused tax credits

166

185

Deductible temporary differences:

 

 

Trading activities

12,108

10,686

Property and equipment

830

806

Other assets

2,758

2,560

Securities valuation

524

1,209

Allowance for loan losses

750

525

Other provisions

1,504

1,178

Other liabilities

890

775

Total deferred tax assets pre offsetting

21,332

20,299

Deferred tax liabilities:

 

 

Taxable temporary differences:

 

 

Trading activities

11,111

9,370

Property and equipment

48

49

Other assets

1,037

1,103

Securities valuation

1,215

790

Allowance for loan losses

108

348

Other provisions

451

414

Other liabilities

1,099

1,277

Total deferred tax liabilities pre offsetting

15,069

13,351

Deferred tax assets and liabilities, after offsetting

in € m.

Dec 31, 2012

Dec 31, 2011

Presented as deferred tax assets

7,718

8,737

Presented as deferred tax liabilities

1,455

1,789

Net deferred tax assets

6,263

6,948

The change in the balance of deferred tax assets and deferred tax liabilities does not equal the deferred tax expense/(benefit). This is due to (1) deferred taxes that are booked directly to equity, (2) the effects of exchange rate changes on tax assets and liabilities denominated in currencies other than euro, (3) the acquisition and disposal of entities as part of ordinary activities and (4) the reclassification of deferred tax assets and liabilities which are presented on the face of the balance sheet as components of other assets and liabilities.

Items for which no deferred tax assets were recognized

in € m.

Dec 31, 20121

Dec 31, 20111

1

Amounts in the table refer to deductible temporary differences, unused tax losses and tax credits for federal income tax purposes.

Deductible temporary differences

(332)

(296)

Not expiring

(3,069)

(3,342)

Expiring in subsequent period

(10)

(45)

Expiring after subsequent period

(2,227)

(2,143)

Unused tax losses

(5,306)

(5,530)

Expiring in subsequent period

Expiring after subsequent period

(287)

(101)

Unused tax credits

(287)

(101)

Deferred tax assets were not recognized on these items because it is not probable that future taxable profit will be available against which the unused tax losses, unused tax credits and deductible temporary differences can be utilized.

As of December 31, 2012 and December 31, 2011, the Group recognized deferred tax assets of € 1.3 billion and € 1.5 billion, respectively that exceed deferred tax liabilities in entities which have suffered a loss in either the current or preceding period. This is based on management’s assessment that it is probable that the respective entities will have taxable profits against which the unused tax losses, unused tax credits and deductible temporary differences can be utilized. Generally, in determining the amounts of deferred tax assets to be recognized, management uses historical profitability information and, if relevant, forecasted operating results, based upon approved business plans, including a review of the eligible carry-forward periods, tax planning opportunities and other relevant considerations.

As of December 31, 2012 and December 31, 2011, the Group had temporary differences associated with the Group’s parent company’s investments in subsidiaries, branches and associates and interests in joint ventures of € 138 million and € 135 million respectively, in respect of which no deferred tax liabilities were recognized.

Key figures comparison

Compare key figures of the past years. more