30 Income taxes

Income taxes in the consolidated income statement

A tax expense of EUR 1.8 billion was recorded in the 2018 financial year, giving rise to an effective tax rate of 35 percent. The main reason for the comparatively high tax burden was impairment losses on goodwill in the Europe operating segment that had no tax effect.

In the prior year, a tax benefit of EUR 0.6 billion was recorded. This tax benefit is mainly attributable to a high deferred tax benefit following the reduction in the U.S. federal tax rate from 35 percent to 21 percent.

The following table provides a breakdown of income taxes in Germany and internationally:

Deutsche Telekom’s combined income tax rate for 2018 amounts to 31.4 percent (2017: 31.4 percent, 2016: 31.1 percent). It consists of corporate income tax at a rate of 15.0 percent, the solidarity surcharge of 5.5 percent on corporate income tax, and trade tax at an average multiplier of 445 percent (2017: 445 percent, 2016: 436 percent).

Reconciliation of the effective tax rate. Income taxes of EUR -1,824 million (as expense) in the reporting year (2017: EUR 558 million (as benefit), 2016: EUR -1,443 million (as expense)) are derived as follows from the expected income tax expense/benefit that would have arisen had the statutory income tax rate of the parent company (combined income tax rate) been applied to profit/loss before income taxes:

Current income taxes in the consolidated income statement

The following table provides a breakdown of current income taxes:

Deferred taxes in the consolidated income statement

Deferred taxes developed as follows:

Income taxes in the consolidated statement of financial position

Current income taxes in the consolidated statement of financial position:

Deferred taxes in the consolidated statement of financial position:

Development of deferred taxes:

Development of deferred taxes on loss carryforwards:

Deferred taxes relate to the following key items in the statement of financial position, loss carryforwards, and tax credits:

The loss carryforwards amount to:

Loss carryforwards and temporary differences for which no deferred taxes were recorded amount to:

In addition, no deferred taxes are recognized on trade tax loss carryforwards of EUR 20 million (December 31, 2017: EUR 19 million) and on temporary differences for trade tax purposes in the amount of EUR 7 million (December 31, 2017: EUR 5 million). Furthermore, apart from corporate income tax loss carryforwards, no deferred taxes amounting to EUR 164 million (December 31, 2017: EUR 522 million) were recognized for other foreign income tax loss carryforwards and, apart from temporary differences for trade tax purposes, no deferred taxes in the amount of EUR 0 million (December 31, 2017: EUR 6 million) were recognized for other foreign income taxes.

No deferred tax assets were recognized on the aforementioned tax loss carryforwards and temporary differences as it is not probable that taxable profit will be available in the foreseeable future against which these tax loss carryforwards can be utilized.

A positive tax effect in the amount of EUR 31 million (2017: EUR 25 million, 2016: EUR 28 million) attributable to the utilization of tax loss carryforwards on which deferred tax assets had not yet been recognized, was recorded in the reporting year.

No deferred tax liabilities were recognized on temporary differences in connection with equity interests in subsidiaries amounting to EUR 840 million (December 31, 2017: EUR 558 million) as it is unlikely that these differences will be reversed in the near future.

Unrecognized deferred tax assets of EUR 20 million (December 31, 2017: EUR 0 million) arising in connection with company acquisitions in 2013 in the United States operating segment and in 2014 in the Europe operating segment were recognized in 2018, since their future utilization is deemed likely based on current earnings forecasts.

Disclosure of tax effects relating to each component of other comprehensive income: