10 Income tax income/expense

The statutory corporation tax rate in Germany for the 2014 assessment period was 15%. Including trade tax and the solidarity surcharge, this resulted in an aggregate tax rate of 29.8%.

A tax rate of 29.8% (previous year: 29.8%) was used to measure deferred taxes in the German consolidated tax group.

The local income tax rates applied for companies outside Germany vary between 0% and 44.6%. 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 2014 of €136 million (previous year: €356 million).

Previously unused tax loss carryforwards amounted to €12,726 million (previous year: €11,164 million). Tax loss carryforwards amounting to €6,719 million (previous year: €9,070 million) can be used indefinitely, while €775 million (previous year: €442 million) must be used within the next ten years. There are additional tax loss carryforwards amounting to €5,232 million (previous year: €1,652 million) that can be used within a period of 15 or 20 years. Tax loss carryforwards of €9,422 million (previous year: €9,002 million), of which €3,406 million (previous year €478 million) can only be utilized subject to restrictions within the next 20 years, were estimated not to be usable overall. The decrease in tax loss carryforwards with an unlimited carryforward period and the increase in tax loss carryforwards with a limited carryforward period are mainly due to a change in the law governing the carryforward of tax losses in Hungary.

The benefit arising from previously unrecognized tax losses or tax credits of a prior period that is used to reduce current tax expense amounts to €50 million (previous year: €247 million). Deferred tax expense was reduced by €49 million (previous year: €15 million) because of a benefit arising from previously unrecognized tax losses and tax credits of a prior period. Deferred tax expense arising from the write-down of deferred tax assets amounts to €253 million (previous year: €203 million). Deferred tax income arising from the reversal of a write-down of a deferred tax asset amounts to €117 million (previous year: €92 million).

Tax benefits amounting to €906 million (previous year: €785 million) were recognized because of tax credits granted by various countries.

No deferred tax assets were recognized for deductible temporary differences of €1,531 million (previous year: €620 million) and for tax credits of €504 million (previous year: €448 million) that would expire in the next 20 years, or for tax credits of €172 million (previous year: €103 million) that will not expire.

In accordance with IAS 12.39, deferred tax liabilities of €290 million (previous year: €211 million) for temporary differences and undistributed profits of Volkswagen AG subsidiaries were not recognized because control exists.

Due to the change in the statutory provisions in Germany, a refund claim for corporation tax was recognized as a current tax asset for the first time in fiscal year 2006. The present value of the refund claim was €380 million at the balance sheet date (previous year: €496 million).

Deferred tax expense resulting from changes in tax rates amounted to €7 million at Group level (previous year: €94 million income).

Deferred taxes of €831 million (previous year: €411 million) were recognized without being offset by deferred tax liabilities in the same amount. The companies concerned expect positive tax income in future following losses in the fiscal year under review or in the previous year.

€5,180 million (previous year: €1,394 million) of the deferred taxes recognized in the balance sheet was credited to equity and relates to other comprehensive income. €2 million of this figure (previous year: €31 million) is attributable to noncontrolling interests. There were effects from capital transactions with noncontrolling interest shareholders in the reporting period and the prior-year period. Changes in deferred taxes classified by balance sheet item are presented in the statement of comprehensive income.

In the reporting period, tax effects of €19 million resulting from equity transaction costs were credited directly to the capital reserves.

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 of €3,726million reported for 2014 (previous year: €3,283 million) was €683 million (previous year: €383 million) lower than the expected tax expense of €4,409 million that would have resulted from application of a tax rate applicable to undistributed profits of 29.8% to the profit before tax of the Group.