31 Income taxes

Income taxes in the consolidated income statement

A tax expense of EUR 1.9 billion was recorded in the 2020 financial year. In addition to the shares of the different countries in profit before income taxes with their respective national tax rates, the effective tax rate of 22 % reflects actual and deferred tax benefits of EUR 0.2 billion each from the Europe and United States operating segments, mainly from changes in tax rates, inorganic developments, and taxes from previous years.

In the prior-year period, a tax expense of EUR 2.0 billion had been recorded. A higher effective tax rate in combination with lower profit before income taxes meant that the tax expense remained more or less at this level.

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

Deutsche Telekom’s combined income tax rate for 2020 amounts to 31.4 % (2019: 31.4 %, 2018: 31.4 %). It consists of corporate income tax at a rate of 15.0 %, the solidarity surcharge of 5.5 % on corporate income tax, and trade tax at an average multiplier of 445 % (2019: 445 %, 2018: 445 %).

Reconciliation of the effective tax rate. Income taxes of EUR -1,929 million (as expense) in the reporting year (2019: EUR -1,993 million (as expense), 2018: EUR -1,824 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

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 85 million (December 31, 2019: EUR 58 million) and on temporary differences for trade tax purposes in the amount of EUR 7 million (December 31, 2019: EUR 0 million). Furthermore, apart from corporate income tax loss carryforwards, no deferred taxes amounting to EUR 431 million (December 31, 2019: EUR 112 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 10 million (December 31, 2019: 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 3 million (2019: EUR 6 million, 2018: EUR 31 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 817 million (December 31, 2019: EUR 920 million) as it is unlikely that these differences will be recognized in the near future.