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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:

millions of €

 

 

 

 

2021

2020

2019

Current taxes

977

924

883

Germany

286

391

488

International

691

533

395

Deferred taxes

838

1,005

1,110

Germany

593

145

314

International

245

860

796

 

1,815

1,929

1,993

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:

millions of €

 

 

 

 

 

 

2021

2020

2019

Profit (loss) before income taxes

 

7,918

8,677

7,260

Expected income tax expense (benefit) (Income tax rate applicable to Deutsche Telekom AG: 2021: 31.4 %; 2020: 31.4 %; 2019: 31.4 %)

 

2,486

2,724

2,280

Adjustments to expected tax expense (benefit)

 

 

 

 

Effect of changes in statutory tax rates

 

(39)

(139)

(41)

Tax effects from prior years

 

(51)

36

(18)

Tax effects from other income taxes

 

(178)

297

258

Non-taxable income

 

(106)

(32)

(26)

Tax effects from equity investments

 

27

8

(46)

Non-deductible expenses

 

153

192

140

Permanent differences

 

73

(457)

(23)

Goodwill impairment losses

 

0

(6)

(14)

Tax effects from loss carryforwards

 

(36)

1

43

Tax effects from additions to and reductions of local taxes

 

56

62

71

Adjustment of taxes to different foreign tax rates

 

(570)

(755)

(633)

Other tax effects

 

0

(2)

2

Income tax expense (benefit) according to the consolidated income statement

 

1,815

1,929

1,993

Effective income tax rate

%

23

22

27

Current income taxes in the consolidated income statement

The following table provides a breakdown of current income taxes:

millions of €

 

 

 

 

2021

2020

2019

Current income taxes

977

924

883

Of which: current tax expense

982

729

803

Of which: prior-period tax expense

(5)

195

80

Deferred taxes in the consolidated income statement

Deferred taxes developed as follows:

millions of €

 

 

 

 

2021

2020

2019

Deferred tax expense (benefit)

838

1,005

1,110

Of which: from temporary differences

1,158

2,819

446

Of which: from loss carryforwards

(337)

(1,891)

654

Of which: from tax credits

17

77

10

Income taxes in the consolidated statement of financial position

Current income taxes in the consolidated statement of financial position

millions of €

 

 

 

Dec. 31, 2021

Dec. 31, 2020

Recoverable taxes

321

349

Tax liabilities

(549)

(690)

Current taxes recognized in other comprehensive income:

 

 

Hedging instruments

(252)

(252)

Deferred taxes in the consolidated statement of financial position

millions of €

 

 

 

Dec. 31, 2021

Dec. 31, 2020

Deferred tax assets

7,906

7,972

Deferred tax liabilities

(19,809)

(17,260)

 

(11,903)

(9,288)

Of which: recognized in other comprehensive income:

 

 

Gains (losses) from the remeasurement of defined benefit plans

1,328

1,582

Revaluation surplus

120

241

Hedging instruments

502

581

Recognized in other comprehensive income before non-controlling interests

1,950

2,404

Non-controlling interests

(250)

(286)

 

1,700

2,118

Development of deferred taxes

millions of €

 

 

 

Dec. 31, 2021

Dec. 31, 2020

Deferred taxes recognized in the statement of financial position

(11,903)

(9,288)

Difference to prior year

(2,615)

(3,039)

Of which: recognized in income statement

(838)

(1,005)

Of which: recognized in other comprehensive income

(474)

507

Of which: recognized in capital reserves

(121)

74

Of which: acquisitions (disposals) (including assets and disposal groups held for sale)

(325)

(3,211)

Of which: currency differences

(857)

596

Development of deferred taxes on loss carryforwards

millions of €

 

 

 

Dec. 31, 2021

Dec. 31, 2020

Deferred taxes on loss carryforwards before allowances

4,190

4,108

Difference to prior year

82

2,817

Of which: recognition (derecognition)

(153)

1,869

Of which: acquisitions (disposals) (including assets and disposal groups held for sale)

(42)

1,071

Of which: currency differences

277

(123)

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

millions of €

 

 

 

 

 

Dec. 31, 2021

Dec. 31, 2020

 

 

 

 

 

 

Deferred tax assets

Deferred tax liabilities

Deferred tax assets

Deferred tax liabilities

Current assets

2,199

(1,438)

1,726

(1,116)

Trade receivables

1,362

(235)

791

(116)

Inventories

89

0

120

0

Other assets

742

(391)

808

(287)

Contract assets

6

(812)

7

(713)

Non-current assets

3,388

(31,692)

3,636

(29,780)

Intangible assets

392

(20,690)

675

(18,369)

Property, plant and equipment

1,338

(1,991)

1,379

(1,899)

Other financial assets

1,656

(8,634)

1,580

(9,157)

Capitalized contract costs

2

(377)

2

(355)

Current liabilities

2,495

(1,355)

1,974

(733)

Financial liabilities

603

(105)

698

(208)

Trade and other payables

167

(99)

60

(16)

Other provisions

371

(115)

346

(91)

Other liabilities

1,097

(958)

623

(337)

Contract liabilities

257

(78)

247

(81)

Non-current liabilities

13,328

(3,169)

13,986

(2,953)

Financial liabilities

2,946

(1,086)

3,301

(1,051)

Provisions for pensions and other employee benefits

1,919

(1,758)

2,159

(1,531)

Other provisions

1,089

(251)

992

(231)

Other liabilities

7,269

(20)

7,397

(111)

Contract liabilities

105

(54)

137

(29)

Retained earnings

0

0

1

(67)

Tax credits

334

0

310

0

Loss carryforwards

3,741

0

3,404

0

Interest and other carryforwards

265

0

324

0

Total

25,750

(37,654)

25,361

(34,649)

Of which: non-current

21,709

(34,807)

22,956

(33,247)

Netting

(17,844)

17,844

(17,389)

17,389

Recognition

7,906

(19,809)

7,972

(17,260)

The loss carryforwards amount to:

millions of €

 

 

 

Dec. 31, 2021

Dec. 31, 2020

Loss carryforwards for corporate income tax purposes

15,312

14,954

Expiry within

 

 

1 year

0

179

2 years

3

18

3 years

3

8

4 years

7

11

5 years

3

176

After 5 years

1,449

1,538

Unlimited carryforward period

13,847

13,023

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

millions of €

 

 

 

Dec. 31, 2021

Dec. 31, 2020

Loss carryforwards for corporate income tax purposes

1,769

1,757

Expiry within

 

 

1 year

0

7

2 years

2

6

3 years

0

0

4 years

5

6

5 years

2

2

After 5 years

1,018

950

Unlimited carryforward period

742

786

Temporary differences in corporate income tax

429

595

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.

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

millions of €

 

 

 

 

 

 

 

 

 

 

2021

2020

2019

 

 

 

 

 

 

 

 

 

 

 

Before tax amount

Tax (expense) benefit

Net of tax amount

Before tax amount

Tax (expense) benefit

Net of tax amount

Before tax amount

Tax (expense) benefit

Net of tax amount

Items not subsequently reclassified to profit or loss (not recycled)

 

 

 

 

 

 

 

 

 

Gains (losses) from the remeasurement of defined benefit plans

1,426

(256)

1,170

(1,358)

142

(1,216)

(603)

134

(469)

Gains (losses) from the remeasurement of equity instruments

112

(5)

107

62

0

62

99

0

99

Share of profit (loss) of investments accounted for using the equity method

0

0

0

0

0

0

0

0

0

 

1,538

(261)

1,278

(1,296)

142

(1,154)

(504)

134

(369)

Items subsequently reclassified to profit or loss (recycled), if certain reasons are given

 

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

 

 

 

 

 

 

 

 

 

Recognition of other comprehensive income in income statement

61

0

61

0

0

0

(8)

0

(8)

Change in other comprehensive income (not recognized in income statement)

5,142

0

5,142

(6,578)

0

(6,578)

463

0

463

Gains (losses) from the remeasurement of debt instruments

 

 

 

 

 

 

 

 

 

Recognition of other comprehensive income in income statement

417

(36)

381

491

(26)

465

(47)

0

(47)

Change in other comprehensive income (not recognized in income statement)

(497)

64

(433)

(481)

30

(451)

34

(9)

25

Gains (losses) from hedging instruments (IAS 39 until December 2017, designated risk component)

 

 

 

 

 

 

 

 

 

Recognition of other comprehensive income in income statement

17

3

20

431

(130)

301

(148)

46

(102)

Change in other comprehensive income (not recognized in income statement)

296

(92)

204

(1,446)

400

(1,046)

(483)

115

(368)

Gains (losses) from hedging instruments (IFRS 9 from January 2018, hedging costs)

 

 

 

 

 

 

 

 

 

Recognition of other comprehensive income in income statement

2

(1)

1

2

(1)

1

2

(1)

1

Change in other comprehensive income (not recognized in income statement)

60

(19)

41

(30)

10

(20)

(9)

3

(6)

Share of profit (loss) of investments accounted for using the equity method

 

 

 

 

 

 

 

 

 

Recognition of other comprehensive income in income statement

0

0

0

0

0

0

(7)

0

(7)

Change in other comprehensive income (not recognized in income statement)

0

0

0

1

0

1

11

0

11

 

5,498

(81)

5,417

(7,610)

283

(7,327)

(192)

154

(38)

Other comprehensive income

7,036

(342)

6,694

(8,906)

425

(8,481)

(696)

289

(407)

Profit (loss)

 

 

6,103

 

 

6,747

 

 

5,268

Total comprehensive income

 

 

12,798

 

 

(1,734)

 

 

4,861