31 Income taxes

Income taxes in the consolidated income statement

A tax expense of EUR 2.0 billion was recorded in the 2019 financial year. The effective tax rate of 27 percent essentially reflects the shares of the different countries in profit before income taxes and their respective national tax rates. Impairment losses on non-current assets in the Europe operating segment that had no tax effect were offset by factors including positive effects from changes in tax law in the Europe operating segment.

In the prior year, a tax expense of EUR 1.8 billion was recorded, 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.

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

Deutsche Telekom’s combined income tax rate for 2019 amounts to 31.4 percent (2018: 31.4 percent, 2017: 31.4 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 (2018: 445 percent, 2017: 445 percent).

Reconciliation of the effective tax rate. Income taxes of EUR -1,993 million (as expense) in the reporting year (2018: EUR -1,824 million (as expense), 2017: EUR 558 million (as benefit)) 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

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 58 million (December 31, 2018: EUR 20 million) and on temporary differences for trade tax purposes in the amount of EUR 0 million (December 31, 2018: EUR 7 million). Furthermore, apart from corporate income tax loss carryforwards, no deferred taxes amounting to EUR 112 million (December 31, 2018: EUR 164 million) were recognized for other foreign income tax loss carryforwards and, apart from temporary differences for trade tax purposes, no deferred taxes amounting to EUR 0 million (December 31, 2018: EUR 0 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 6 million (2018: EUR 31 million, 2017: EUR 25 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 920 million (December 31, 2018: EUR 840 million) as it is unlikely that these differences will be recognized in the near future.