Income taxes, broken down into current and deferred income taxes, are as follows:
in € millions | 2016 | 2015 |
---|---|---|
Earnings before income taxes (total) | 1,556 | 1,454 |
Current income taxes from continuing operations | (388) | (287) |
Deferred income taxes from continuing operations | (31) | (59) |
Income taxes from continuing operations | (419) | (346) |
Current income taxes from discontinued operations | – | – |
Deferred income taxes from discontinued operations | – | – |
Income taxes from discontinued operations | – | – |
Total income taxes | (419) | (346) |
Net income after income taxes (total) | 1,137 | 1,108 |
Tax loss carryforwards of €433 million (previous year: €446 million) were utilized in the financial year 2016, reducing current tax expenses by €102 million (previous year: €104 million). Of the tax loss carryforwards utilized, €132 million (previous year: €172 million) was due to German corporate income tax, €41 million (previous year: €25 million) was due to German trade tax and €260 million (previous year: €249 million) was due to foreign income taxes. These amounts include €40 million (previous year: €88 million) for tax loss carryforwards for which no deferred tax assets were recognized in the past. These relate to German corporate tax in the amount of €1 million (previous year: €1 million), German trade tax in the amount of €1 million (previous year: €5 million) and foreign income taxes in the amount of €38 million (previous year: €82 million). This led to a reduction in current tax expense of €11 million (previous year: €24 million).
Deferred tax assets and liabilities resulted from the following items and factors:
12/31/2016 | 12/31/2015 | |||||
---|---|---|---|---|---|---|
in € millions | Assets | Equity and liabilities | thereof recognized in profit or loss | Assets | Equity and liabilities | thereof recognized in profit or loss |
Intangible assets | 276 | 570 | (4) | 301 | 569 | 11 |
Property, plant and equipment | 63 | 39 | 10 | 64 | 46 | 9 |
Financial assets | 14 | 26 | 7 | 5 | 21 | 7 |
Inventories | 75 | 4 | (7) | 80 | 4 | (11) |
Receivables | 111 | 24 | (11) | 123 | 25 | 7 |
Advance payments and other assets | 113 | 153 | 17 | 118 | 165 | (46) |
Provisions | 826 | 182 | (5) | 776 | 240 | 12 |
Financial debt | 19 | 42 | (13) | 22 | 32 | (13) |
Liabilities | 29 | 4 | 9 | 19 | 3 | 1 |
Advance payments and other liabilities | 55 | 31 | 5 | 54 | 40 | (4) |
Loss carryforwards/tax credits | 355 | (39) | 384 | (32) | ||
Total | 1,936 | 1,075 | (31) | 1,946 | 1,145 | (59) |
Offset | (929) | (929) | (985) | (985) | ||
Carrying amount | 1,007 | 146 | 961 | 160 |
No deferred tax liabilities were recognized for temporary differences in connection with investments in subsidiaries in the amount of €781 million (previous year: €657 million) as Bertelsmann can control their reversal, and it is probable that these temporary differences will not be reversed in the foreseeable future. Current and deferred tax assets and liabilities are offset against each other if they relate to the same tax authority and meet the criteria for offsetting. The term of the deferred taxes on temporary differences is mostly long term.
Information on amounts of income tax relating to other comprehensive income is presented in section 18 “Equity”.
Valuation allowances for deferred tax assets are recognized on temporary differences, tax loss carryforwards and tax credits when it is unlikely that they can be utilized in the foreseeable future. The need to recognize valuation allowances is assessed primarily based on existing deferred tax liabilities from temporary differences and projected taxable income within a planning period.
Temporary differences, tax loss carryforwards and tax credits for which no deferred taxes have been recognized can be carried forward as follows:
in € millions | 12/31/2016 | 12/31/2015 |
---|---|---|
Tax loss carryforwards | ||
To be carried forward for more than 5 years | 6,488 | 6,733 |
To be carried forward for up to 5 years | 126 | 131 |
Temporary differences | 91 | 121 |
Tax credits | ||
To be carried forward for more than 5 years | 50 | 68 |
To be carried forward for up to 5 years | 1 | 3 |
A reconciliation of expected tax result to actual tax result is shown in the following table:
in € millions | 2016 | 2015 |
---|---|---|
Earnings before income taxes from continuing operations | 1,555 | 1,451 |
Income tax rate applicable to Bertelsmann SE & Co. KGaA | 30.80% | 30.70% |
Expected tax expense from continuing operations | (479) | (445) |
The tax effects of the following items led to differences between the expected and actual tax expense: | ||
Adjustment to different national tax rates | (8) | (23) |
Effect of changes in tax rate and tax law | (4) | 5 |
Tax effects in respect of results from disposals of investments | 5 | (6) |
Current income taxes for previous years | 11 | 22 |
Deferred income taxes for previous years | 13 | 55 |
Effects of measurements of deferred tax assets | 48 | 4 |
Permanent differences | 13 | 51 |
Other adjustments | (18) | (9) |
Total of adjustments | 60 | 99 |
Actual tax expense from continuing operations | (419) | (346) |
The income tax rate applicable to Bertelsmann SE & Co. KGaA consists of corporate income tax, the solidarity surcharge and trade tax.
2016 | 2015 | |
---|---|---|
Corporate income tax including solidarity surcharge | 15.83 % | 15.83 % |
Trade tax | 14.97 % | 14.87 % |
Effective income tax rate | 30.80 % | 30.70 % |