Engineering

3.6 Consolidated financial statements Notes to the consolidated financial statements
31 Income taxes
Income tax expense/(benefit) for the year ended September 30, 2011
and the previous year consists of the following:
million €
Year ended
Sept. 30,
2010
Year ended
Sept. 30,
2011
Current income tax expense for the reporting period
Deferred income tax expense/(benefit) for the reporting
200 505
period 96 (268)
Current income tax expense/(benefit) for prior periods (156) 2
Deferred income tax expense/(benefit) for prior periods 45 (36)
Total
This total breaks down to:
185 203
Current income tax expense/(benefit) Germany (41) 96
Current income tax expense foreign 86 411
Deferred income tax expense/(benefit) Germany (16) 140
Deferred income tax expense/(benefit) foreign 156 (444)
The German corporate income tax law applicable for 2010/2011 sets a
statutory income tax rate of 15% (2009/2010: 15%) plus a solidarity
surcharge of 5.5%. On average, the Group’s German companies are
subject to a trade tax rate of 15.5% (2009/2010: 15.3%). Therefore, at
year-end September 30, 2011, deferred taxes of German companies
are calculated with a combined income tax rate (including solidarity
surcharge) of 31.3% (2009/2010: 31.1%). The applicable tax rates for
companies outside Germany range from 5.7% to 40.4% (2009/2010:
5.7% to 40.4%). In fiscal year 2010/2011, changes in the domestic
trade tax rate resulted in deferred tax expense in the amount of €4
million (2009/2010: €1 million) and changes in foreign tax rates
resulted in deferred tax benefit in the amount of €11 million
(2009/2010: €7 million deferred tax expense).
The components of income taxes recognized in total equity are as
follows:
million €
Year ended
Sept. 30,
2010
Year ended
Sept. 30,
2011
Income tax expense as presented on the statement of
income 185 203
Income tax expense on discontinued operations
Income non-effective tax effect on other comprehensive
income
23 2
Continuing operations (204) 135
Discontinued operations (11) 2
Other income non-effective changes (93) 10
Total (100) 352
Consolidated financial statements
194 | 195
As of September 30, 2011, domestic corporate tax loss carryforwards
amount to €387 million (2010: €794 million), domestic trade tax loss
carryforwards amount to €46 million (2010: €237 million), and interest
carryforwards amount to €257 million (2010: €151 million). In
addition, foreign tax loss carryforwards amount to €2,922 million
(2010: €1,704 million), in particular €994 million (2010: €192 million)
in the USA, €876 million (2010: €164 million) in Brazil, and €452
million (2010: €385 million) in Canada, and foreign tax credits amount
to €44 million (2010: €28 million). In fiscal year 2009/2010, foreign
interest carryforwards amounted to €13 million. In fiscal year
2010/2011, deferred tax benefit in the amount of €243 million
(2009/2010: €88 million) is attributable to tax loss carryforwards,
interest carryforwards and foreign tax credits.
Deferred tax assets are recognized only to the extent that the realization
of such tax benefits is probable. In determining the related valuation
allowance, all positive and negative factors, including prospective
results, are taken into consideration in estimating whether sufficient
taxable income will be generated to realize deferred tax assets. These
estimates can change depending on the future course of events. As of
September 30, 2011, tax loss carryforwards for which no deferred tax
asset is recognized amount to €1,334 million (2010: €984 million).
According to tax legislation as of September 30, 2011, an amount of
€1,134 million (2010: €306 million) of these tax losses may be carried
forward indefinitely and in unlimited amounts whereas an amount of
€200 million (2010: €678 million) of these tax loss carryforwards will
expire over the next 20 years if not utilized. Unrecognized deferred tax
assets relating to tax loss carryforwards amount to €398 million as of
September 30, 2011 (2010: €251 million). In addition, as of
September 30, 2011, no deferred tax asset is recognized for deductible
temporary differences in the amount of €1,660 million (2010: €419
million). As of September 30, 2011, deferred tax assets for tax loss
carryforwards and deductible temporary differences at ThyssenKrupp
Companhia Siderúrgica do Atlântico are not recognized anymore as the
realization of such tax benefits is no longer deemed sufficiently
probable. In fiscal year 2010/2011, the benefit arising from previously
unrecognized tax losses, foreign tax credits and temporary differences
that are used to reduce the Group’s tax expense amounts to €13
million (2009/2010: €12 million).