31 Income taxes

Income taxes in the consolidated income statement

A tax expense of EUR 1.8 billion was recorded in the 2021 financial year. The tax amount essentially reflects the shares of the different countries in profit before income taxes and their respective national tax rates. Tax was furthermore reduced by deferred tax effects for prior years for local taxes in the United States segment of EUR 0.4 billion. In the prior year, a tax expense of EUR 1.9 billion was recognized on the somewhat higher profit/loss before income taxes. 

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

Deutsche Telekom’s combined income tax rate for 2021 amounts to 31.4 % (2020: 31.4 %, 2019: 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 % (2020: 445 %, 2019: 445 %).

Reconciliation of the effective tax rate. Income taxes of EUR -1,815 million (as expense) in the reporting year (2020: EUR -1,929 million (as expense), 2019: EUR -1,993 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 117 million (December 31, 2020: EUR 85 million) and on temporary differences for trade tax purposes in the amount of EUR 6 million (December 31, 2020: EUR 7 million). Furthermore, apart from corporate income tax loss carryforwards, no deferred taxes amounting to EUR 163 million (December 31, 2020: EUR 431 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 7 million (December 31, 2020: EUR 10 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 (2020: EUR 3 million, 2019: EUR 6 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.

The write-up of deferred tax assets resulted in a positive effect of EUR 427 million in the reporting year (2020: EUR 14 million).

Deferred tax assets from the business combination of T‑Mobile US with Sprint were recognized for the first time. Their recognition was mainly attributable to legal entities restructuring, which resulted in the reutilization of loss carryforwards acquired in particular.

No deferred tax liabilities were recognized on temporary differences in connection with equity interests in subsidiaries amounting to EUR 721 million (December 31, 2020: EUR 817 million) as it is unlikely that these differences will be recognized in the near future.