36 – Income Taxes

in € m.

2013

2012

2011

1

In 2012, 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

913

731

1,683

Adjustments for prior years1

41

(956)

(232)

Total current tax expense (benefit)

954

(225)

1,451

Deferred tax expense (benefit):

 

 

 

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

7

579

(143)

Effect of changes in tax law and/or tax rate

35

9

110

Adjustments for prior years1

(221)

135

(354)

Total deferred tax expense (benefit)

(179)

723

(387)

Total income tax expense (benefit)

775

498

1,064

Income tax expense includes policyholder tax attributable to policyholder earnings, amounting to an income tax expense of € 23 million in 2013, an income tax expense of € 12 million in 2012 and an income tax benefit of € 28 million in 2011.

Total current tax expense includes benefits from previously unrecognized tax losses, tax credits and deductible temporary differences, which reduced the current tax expense by € 3 million in 2013. In 2012 these effects increased the current tax benefit by € 94 million and reduced the current tax expense by € 35 million in 2011.

Total deferred tax benefit 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 benefit by € 237 million in 2013. In 2012 these effects increased the deferred tax expense by € 91 million and increased the deferred tax benefit by € 262 million in 2011.

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

in € m.

2013

2012

2011

1

Current and deferred tax expense/(benefit) relating to prior years are mainly reflected in the line items “Changes in recognition and measurement of deferred tax assets” and “Other”.

Expected tax expense at domestic income tax rate of 31 % (31 % for 2012 and 30.8 % for 2011)

451

252

1,657

Foreign rate differential

154

36

(28)

Tax-exempt gains on securities and other income

(337)

(497)

(467)

Loss (income) on equity method investments

(84)

(74)

(39)

Nondeductible expenses

571

563

297

Impairments of goodwill

0

630

0

Changes in recognition and measurement of deferred tax assets1

(240)

(3)

(297)

Effect of changes in tax law and/or tax rate

35

9

110

Effect related to share-based payments

(5)

(17)

90

Effect of policyholder tax

23

12

(28)

Other1

207

(413)

(231)

Actual income tax expense (benefit)

775

498

1,064

The Group is under continuous examinations by tax authorities in various jurisdictions. In 2013 and 2012 “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, 2013. For 2012 the domestic income tax rate was 31 % and for 2011 30.8 %.

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

in € m.

2013

2012

2011

Actuarial gains/losses related to defined benefit plans

58

407

(50)

Financial assets available for sale:

 

 

 

Unrealized net gains/losses arising during the period

(21)

(539)

173

Net gains/losses reclassified to profit or loss

103

6

(11)

Derivatives hedging variability of cash flows:

 

 

 

Unrealized net gains/losses arising during the period

(58)

(5)

92

Net gains/losses reclassified to profit or loss

(10)

(13)

(1)

Other equity movement:

 

 

 

Unrealized net gains/losses arising during the period

(175)

104

(129)

Net gains/losses reclassified to profit or loss

1

0

1

Income taxes (charged) credited to other comprehensive income

(102)

(40)

75

Other income taxes (charged) credited to equity

65

34

46

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

in € m.

Dec 31, 2013

Dec 31, 2012

Deferred tax assets:

 

 

Unused tax losses

2,300

1,800

Unused tax credits

191

166

Deductible temporary differences:

 

 

Trading activities

8,719

12,114

Property and equipment

796

829

Other assets

2,355

2,758

Securities valuation

280

524

Allowance for loan losses

814

750

Other provisions

952

1,503

Other liabilities

1,103

890

Total deferred tax assets pre offsetting

17,510

21,334

Deferred tax liabilities:

 

 

Taxable temporary differences:

 

 

Trading activities

8,024

11,105

Property and equipment

49

48

Other assets

843

1,037

Securities valuation

1,123

1,217

Allowance for loan losses

97

108

Other provisions

298

455

Other liabilities

1,106

1,099

Total deferred tax liabilities pre offsetting

11,540

15,069

Deferred tax assets and liabilities, after offsetting

in € m.

Dec 31, 2013

Dec 31, 2012

Presented as deferred tax assets

7,071

7,712

Presented as deferred tax liabilities

1,101

1,447

Net deferred tax assets

5,970

6,265

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, 20131

Dec 31, 20121

1

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

Deductible temporary differences

(341)

(332)

Not expiring

(3,720)

(3,064)

Expiring in subsequent period

(1)

(10)

Expiring after subsequent period

(1,671)

(2,227)

Unused tax losses

(5,392)

(5,301)

Expiring after subsequent period

(224)

(287)

Unused tax credits

(224)

(287)

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, 2013 and December 31, 2012, the Group recognized deferred tax assets of € 5.4 billion and € 1.3 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, 2013 and December 31, 2012, 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 € 120 million and € 138 million respectively, in respect of which no deferred tax liabilities were recognized.


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