36 – Income Taxes

in € m.

2014

2013

2012

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

764

913

731

Adjustments for prior years1

(12)

41

(956)

Total current tax expense (benefit)

752

954

(225)

Deferred tax expense (benefit):

 

 

 

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

644

7

579

Effect of changes in tax law and/or tax rate

44

35

9

Adjustments for prior years1

(15)

(221)

135

Total deferred tax expense (benefit)

673

(179)

723

Total income tax expense (benefit)

1,425

775

498

Income tax expense includes policyholder tax attributable to policyholder earnings, amounting to an income tax expense of € 2 million in 2014, an income tax expense of € 23 million in 2013 and an income tax expense of € 12 million in 2012.

Total current tax expense includes benefits from previously unrecognized tax losses, tax credits and deductible temporary differences, which reduced the current tax expense by € 5 million in 2014. In 2013 these effects decreased the current tax expense by € 3 million and increased the current tax benefit by € 94 million in 2012.

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 reduced the deferred tax expense by € 303 million in 2014. In 2013 these effects increased the deferred tax benefit by € 237 million and increased the deferred tax expense by € 91 million in 2012.

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

in € m.

2014

2013

2012

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 2013 and 2012)

966

451

252

Foreign rate differential

88

154

36

Tax-exempt gains on securities and other income

(371)

(337)

(497)

Loss (income) on equity method investments

(93)

(84)

(74)

Nondeductible expenses

649

571

563

Impairments of goodwill

0

0

630

Changes in recognition and measurement of deferred tax assets1

(308)

(240)

(3)

Effect of changes in tax law and/or tax rate

44

35

9

Effect related to share-based payments

78

(5)

(17)

Effect of policyholder tax

(2)

23

12

Other1

374

207

(413)

Actual income tax expense (benefit)

1,425

775

498

The Group is under continuous examinations by tax authorities in various jurisdictions. In 2014, 2013 and 2012 “Other” in the preceding table mainly includes the effects of 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 years 2014, 2013 and 2012.

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

in € m.

2014

2013

2012

Actuarial gains/losses related to defined benefit plans

407

58

407

Financial assets available for sale:

 

 

 

Unrealized net gains/losses arising during the period

(457)

(21)

(539)

Net gains/losses reclassified to profit or loss

5

103

6

Derivatives hedging variability of cash flows:

 

 

 

Unrealized net gains/losses arising during the period

(7)

(58)

(5)

Net gains/losses reclassified to profit or loss

(146)

(10)

(13)

Other equity movement:

 

 

 

Unrealized net gains/losses arising during the period

(68)

(175)

104

Net gains/losses reclassified to profit or loss

1

1

0

Income taxes (charged) credited to other comprehensive income

(265)

(102)

(40)

Other income taxes (charged) credited to equity

(21)

65

34

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

in € m.

Dec 31, 2014

Dec 31, 2013

Deferred tax assets:

 

 

Unused tax losses

2,785

2,300

Unused tax credits

192

191

Deductible temporary differences:

 

 

Trading activities

8,454

8,719

Property and equipment

459

796

Other assets

2,382

2,355

Securities valuation

93

280

Allowance for loan losses

1,020

814

Other provisions

811

952

Other liabilities

838

1,103

Total deferred tax assets pre offsetting

17,034

17,510

Deferred tax liabilities:

 

 

Taxable temporary differences:

 

 

Trading activities

7,746

8,024

Property and equipment

52

49

Other assets

832

843

Securities valuation

1,628

1,123

Allowance for loan losses

71

97

Other provisions

233

298

Other liabilities

782

1,106

Total deferred tax liabilities pre offsetting

11,344

11,540

Deferred tax assets and liabilities, after offsetting

in € m.

Dec 31, 2014

Dec 31, 2013

Presented as deferred tax assets

6,865

7,071

Presented as deferred tax liabilities

1,175

1,101

Net deferred tax assets

5,690

5,970

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, 20141

Dec 31, 20131

1

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

Deductible temporary differences

(314)

(341)

Not expiring

(3,745)

(3,720)

Expiring in subsequent period

(4)

(1)

Expiring after subsequent period

(1,334)

(1,671)

Unused tax losses

(5,083)

(5,392)

Expiring after subsequent period

(88)

(224)

Unused tax credits

(88)

(224)

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, 2014 and December 31, 2013, the Group recognized deferred tax assets of € 5.5 billion and € 5.4 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, 2014 and December 31, 2013, 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 € 134 million and € 120 million respectively, in respect of which no deferred tax liabilities were recognized.


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