10 Income tax income/expense

The statutory corporation tax rate in Germany for the 2022 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 46% (previous year: 0% and 50%). 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 2022 of €1,013 million (previous year: €700 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 €139 million (previous year: €32 million). Deferred tax expense was reduced by €1,687 million (previous year: €305 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 €70 million (previous year: €24 million). Deferred tax income resulting from the reversal of a write-down of deferred tax assets amounts to €34 million (previous year: €381 million).

Tax credits granted by various countries amounted to €493 million (previous year: €578 million).

No deferred tax assets were recognized for deductible temporary differences of €2,262 million (previous year: €2,157 million) and for tax credits of €159 million (previous year: €208 million) that would expire in the next 20 years.

In accordance with IAS 12.39, deferred tax liabilities of €265 million (previous year: €200 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 €31 million at Group level (previous year: €42 million).

Deferred tax assets of €1,731 million (previous year: €12,044 million) were recognized without being offset by deferred tax liabilities in the same amount. In fiscal year 2021, the existing deferred tax assets of companies within the German tax group, which had been 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.

€2,279 million (previous year: €7,281 million) of the deferred taxes recognized in the balance sheet was credited to equity and relates to other comprehensive income. €– 6 million (previous year: €27 million) of this figure is attributable to noncontrolling interests. In fiscal year 2022, deferred tax income of €2 million (previous year: €10 million) from the remeasurement of pension plans directly through equity was reclassified within equity. In the fiscal year under review and in the previous year, 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 2022, tax effects of €3 million resulting from equity transaction costs were credited to equity (previous year adjusted: €0 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 2022 of €6,208 million (previous year: €4,698 million) was €405 million lower (previous year: €1,340 million) than the expected tax expense of €6,613 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.