32 Income taxes

Income taxes in the consolidated income statement

A tax expense of EUR 3.7 billion was recorded in the 2023 financial year. The amount of tax expense essentially reflects the shares of the different countries in profit before income taxes and their respective national tax rates. However, the effective tax rate was increased in particular by an impairment loss on the carrying amounts of the stake in the GD tower companies that had no effect on tax. In the prior-year period, a tax expense of EUR 1.9 billion was recognized on the lower profit/loss before income taxes, which also essentially reflected the respective national tax rates. However, the tax rate was reduced by the realization of non-taxable income from the sale of T‑Mobile Netherlands and the shares in GlasfaserPlus.

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

Deutsche Telekom’s combined income tax rate for 2023 amounts to 31.4 % (2022: 31.4 %, 2021: 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 % (2022: 445 %, 2021: 445 %).

Reconciliation of the effective tax rate. Income taxes of EUR -3,672 million (as expense) in the reporting year (2022: EUR -1,937 million (as expense), 2021: EUR ‑1,732 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, 2022: EUR 145 million) and on temporary differences for trade tax purposes in the amount of EUR 5 million (December 31, 2022: EUR 3 million). Furthermore, apart from corporate income tax loss carryforwards, no deferred taxes amounting to EUR 152 million (December 31, 2022: EUR 140 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 1 million (December 31, 2022: EUR 5 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 (2022: EUR 3 million, 2021: 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 24 million in the reporting year (2022: EUR 47 million).

No deferred tax liabilities were recognized on temporary differences in connection with equity interests in subsidiaries amounting to EUR 685 million (December 31, 2022: EUR 543 million) as it is unlikely that these differences will be recognized in the near future.

Deferred tax assets on temporary differences of EUR 170 million, attributable to accumulated allowances on equity investments in the Europe operating segment, were recognized, of which EUR 130 million related to potential sales of equity investments. These deferred tax assets were written off in full (measurement adjustment), since the probability of the temporary differences being reversed in the near future cannot be reliably determined.

Disclosures on global minimum level of taxation

In Germany, the Act implementing the Directive (EU) 2022/2523 on ensuring a global minimum level of taxation and further accompanying measures enacted legal regulations to ensure a global minimum level of taxation (Mindeststeuergesetz – MinStG, OECD Pillar Two Model Rules). In other countries in which Deutsche Telekom operates, in particular in the European Union, corresponding laws on global minimum taxation have also either already been enacted or are in the process of being implemented.

Deutsche Telekom will fall within the scope of the MinStG (German Minimum Tax Act) from the 2024 financial year, which is why there was no actual tax expense under this Act as of the reporting date. Furthermore, Deutsche Telekom is making use of the exemption provided in IAS 12.4A, under which no deferred taxes are to be recognized in connection with the global minimum level of taxation.

Owing to the complexity of the regulations and the fact that many states have yet to complete the legislative process, it is not possible at the present time to reliably determine the exact amount of the future tax burden. The expected future burden from minimum taxation was therefore evaluated based on the information available at the reporting date (historical data and projections). Deutsche Telekom expects an additional burden for the Group in 2024 due to subsequent taxation (e.g., on earnings from operations in North Macedonia) under the provisions of the Minimum Tax Act or the local minimum taxation laws of other countries to amount to less than EUR 1 million.