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€ million |
2008 |
2007 |
Current taxes on income |
655 |
1,455 |
Deferred taxes |
768 |
626 |
|
1,423 |
2,081 |
Current taxes on income contain €332 million in net tax income (previous year: €65 million) relating to prior periods.
In the previous year, an increase of €190 million in deferred taxes was recognized as an expense due to changes in tax rates, in particular due to the German Corporate Tax Reform Act of 2008.
Due to the utilization of tax loss carryforwards unrecognized in prior years, current taxes on income were reduced by €24 million (previous year: €11 million). Deferred tax expenses decreased by €0 million (previous year: €26 million), due to previously unrecognized tax loss carryforwards that are to be reassessed.
The income tax expense is derived from the theoretical tax expense. A tax rate of 30.9 % (previous year: 39.4 %) was applied to income from continuing operations before tax. The significant decline in the tax rate results from the German Corporate Tax Reform Act of 2008.
Tax reconciliation |
2008 |
2007 |
Income from continuing operations before tax |
4,866 |
5,246 |
Theoretical tax expense |
1,503 |
2,067 |
Differences from foreign tax rates |
-112 |
-377 |
Tax effects on |
|
|
Tax-free domestic dividend income |
-88 |
-118 |
Tax-free foreign dividend income |
-28 |
-24 |
Other tax-free income |
-48 |
-26 |
Expenses not deductible for tax purposes |
137 |
150 |
Accounting for associates using the equity method Glossary (including impairment losses on associates’ goodwill) |
-11 |
-57 |
Unutilizable loss carryforwards and/or utilization of unrecognized loss carryforwards and write-downs on loss carryforwards |
77 |
34 |
Income on the disposal of investments |
21 |
-185 |
Changes in domestic tax rates |
|
256 |
Changes in foreign tax rates |
|
-66 |
Other |
-28 |
427 |
Effective tax expense |
1,423 |
2,081 |
Effective tax rate in % |
29.2 |
39.7 |
