32 Income taxes

Income taxes in the consolidated income statement

A tax expense of EUR 1.9 billion was recorded in the 2022 financial year. The tax amount reflects the shares of the different countries in profit before income taxes and their respective national tax rates. However, the effective tax rate was reduced by the realization of tax-free income from the sale of T‑Mobile Netherlands and the shares in GlasfaserPlus. Taxes were furthermore reduced by deferred tax effects in the United States operating segment. In the prior-year period, a tax expense of EUR 1.7 billion had been recorded despite substantially lower 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 2022 amounts to 31.4 % (2021: 31.4 %, 2020: 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 % (2021: 445 %, 2020: 445 %).

Reconciliation of the effective tax rate. Income taxes of EUR -1,937 million (as expense) in the reporting year (2021: EUR -1,732 million (as expense), 2020: EUR ‑1,858 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 145 million (December 31, 2021: EUR 117 million) and on temporary differences for trade tax purposes in the amount of EUR 3 million (December 31, 2021: EUR 6 million). Furthermore, apart from corporate income tax loss carryforwards, no deferred taxes amounting to EUR 140 million (December 31, 2021: EUR 163 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 5 million (December 31, 2021: EUR 7 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 (2021: EUR 3 million, 2020: EUR 3 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 47 million in the reporting year (2021: EUR 427 million).

The increase in tax loss carryforwards is attributable to the utilization of accelerated tax depreciation allowances in the United States. The increase in deferred tax assets to be recognized on these additional tax loss carryforwards is offset by a corresponding increase in deferred tax liabilities recognized for temporary differences in property, plant and equipment at T‑Mobile US.

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 543 million (December 31, 2021: EUR 721 million) as it is unlikely that these differences will be recognized in the near future.