10 Income tax income/expense

The statutory corporation tax rate in Germany for the 2021 assessment period was 15%. Including trade tax and the solidarity surcharge, this resulted in an aggregate tax rate of 30.0% (previous year: 30.0%).

A tax rate of 30.0% (previous year: 30.0%) was used to measure deferred taxes in the German consolidated tax group.

The local income tax rates applied to companies outside Germany vary between 0% and 50% (previous year: 0% and 45%). In the case of split tax rates, the tax rate applicable to undistributed profits is applied.

The realization of tax benefits from tax loss carryforwards from previous years resulted in a reduction in current income taxes in 2021 of €700 million (previous year: €392 million).

The tax loss carryforwards and the expiry of loss carryforwards that could not be used changed as follows:

The benefit arising from previously unrecognized tax losses or tax credits of a prior period that is used to reduce current tax expense in the current fiscal year amounts to €32 million (previous year: €55 million). Deferred tax expense was reduced by €305 million (previous year: €134 million) because of a benefit arising from previously unrecognized tax losses and tax credits of a prior period. Deferred tax expense resulting from the write-down of a deferred tax asset amounts to €24 million (previous year: €470 million). Deferred tax income resulting from the reversal of a write-down of deferred tax assets amounts to €381 million (previous year: €36 million).

Tax credits granted by various countries amounted to €578 million (previous year: €376 million).

No deferred tax assets were recognized for deductible temporary differences of €2,157 million (previous year: €899 million) and for tax credits of €208 million (previous year: €105 million) that would expire in the next 20 years. The increase in unrecognized deferred tax assets for deductible temporary differences is due to a change in tax laws in Italy.

In accordance with IAS 12.39, deferred tax liabilities of €200 million (previous year: €166 million) for temporary differences and undistributed profits of Volkswagen AG subsidiaries were not recognized because control exists.

Deferred tax expense resulting from changes in tax rates amounted to €42 million at Group level (previous year: €54 million).

Deferred tax assets of €12,044 million (previous year: €12,591 million) were recognized without being offset by deferred tax liabilities in the same amount. In fiscal year 2021, the deferred tax assets of companies within the German tax group recognized due to positive results in the past were included in this analysis. The companies concerned are expecting positive tax income in the future, following losses in the reporting period or the previous year.

€7,281 million (previous year: €7,997 million) of the deferred taxes recognized in the balance sheet was credited to equity and relates to other comprehensive income. €27 million (previous year: €53 million) of this figure is attributable to noncontrolling interests. In fiscal year 2021, deferred tax income of €10 million (previous year: €73 million) from the remeasurement of pension plans directly through equity was reclassified within equity. In the fiscal year under review, there were effects from capital transactions with noncontrolling interests. The classification of changes in deferred taxes is presented in the statement of comprehensive income.

In fiscal year 2021, tax effects of €5 million resulting from equity transaction costs were debited to equity (previous year: credit of €5 million).

DEFERRED TAXES CLASSIFIED By BALANCE SHEET ITEM

The following recognized deferred tax assets and liabilities were attributable to recognition and measurement differences in the individual balance sheet items and to tax loss carryforwards:

In accordance with IAS 12, deferred tax assets and liabilities are offset if, and only if, they relate to income taxes levied by the same taxation authority and relate to the same tax period.

The tax expense reported for 2021 of €4,698 million (previous year: €2,843 million) was €1,340 million lower (previous year: €657 million) than the expected tax expense of €6,038 million that would have resulted from application of a tax rate for the Group of 30.0% (previous year: 30.0%) to the earnings before tax of the Group.