12. Income taxes
Income taxes comprise income taxes paid or owed and deferred taxes. Income tax expense including deferred taxes is made up as follows:
|in € thousand||2015/16||2014/15|
The tax expense includes a current tax credit of € 1,665 thousand relating to prior years (previous year: a current tax expense of € 616 thousand) as well as a deferred tax credit of € 626 thousand (deriving from corrections to the tax-based figures) relating to prior years (previous year: a deferred tax expense of € 647 thousand).
The recognition of corporate income tax credits and increases pursuant to Section 37 of the German Corporate Income Tax Act (KStG) resulted in net income of € 49 thousand in the year reported (previous year: € 72 thousand).
The deferred tax credit in the amount of € 9,506 thousand results from the change in temporary balance sheet differences as well as from tax loss carryforwards. The difference between the tax credit in the year reported and the tax credit in the previous year was influenced by inventory measurement differences.
Applicable German tax legislation for fiscal year 2015/16 foresees a statutory corporate income tax rate of 15 % (previous year: 15 %), plus a solidarity surcharge of 5.5 % (previous year: 5.5 %). The trade tax rate applicable for Aurubis AG amounts to 16.59 % (previous year: 16.59 %) of the respective taxable income. Trade tax rates of between 11.09 % and 17.33 % are applicable for the other German group companies (previous year: between 11.09 % and 17.33 %). The foreign companies are subject to their respective national income tax rates, which vary between 10 % and 35.98 % (previous year: 10 % and 35.98 %).
The Group taxes include tax effects from foreign subsidiaries to a significant degree. As a consequence, the tax rate of the German parent company (32.41 %; previous year: 32.41 %) is not applied, but a group-wide mixed tax rate of 23.07 % (previous year: 19.49 %) instead. The change in the average group tax rate results from significant changes in the distribution of the companies’ contributions to total earnings as compared to the prior year. As in the prior year, the main contributions to earnings come from Aurubis AG and Aurubis Bulgaria AD in roughly equal shares.
The disclosed income tax expense of € 35,296 thousand in fiscal year 2015/16 (previous year: € 35,876 thousand) was € 1,349 thousand higher (previous year: € 2,851 thousand lower) than the expected income tax expense of € 36,645 thousand (previous year: € 33,025 thousand). The difference between the expected and the disclosed income tax expense is due to the reasons outlined in the following reconciliation:
|in € thousand||2015/16||2014/15|
|Earnings before taxes||158,815||169,444|
|Theoretical tax charge at 23.07 %
(previous year: 19.49 %)
|Changes in the theoretical tax charge due to:|
|– changes in tax rate||97||11|
|– non-recognition and correction of deferred taxes||2,804||2,944|
|– taxes for previous years||(2,291)||1,263|
|– non-deductible expenses||2,751||5,352|
|– non-taxable income||(240)||(317)|
|– notional interest deduction (Belgium)||(3,963)||(6,274)|
|– outside basis differences||(296)||(76)|
|– effects deriving from consolidation of items using the equity method||(233)||(59)|
The effects totaling € 2,969 thousand deriving from the non-recognition of loss carryforwards mainly result from Aurubis Netherlands BV and Aurubis Switzerland SA. The remaining amount includes corrections from loss carryforwards not recognized in the previous year as well as adjustments to tax loss carryforwards and declining loss carryforwards in the current year.
The “notional interest deduction” is a special feature to be observed under Belgian tax law, which results in a lower assessment basis for the current taxes of Aurubis Belgium in the reporting period of € 11,660 thousand (previous year: € 18,459 thousand).
The recognized deferred tax assets and deferred tax liabilities result from the following recognition and measurement differences in individual items in the statement of financial position, from tax loss carryforwards and from outside basis differences (OBD):
|in € thousand||Deferred tax
|Property, plant and equipment||631||111,013||1,062||114,875|
|Financial fixed assets||2||345||2||0|
|Financial fixed assets accounted for using the equity method||149||2,471||31||2,429|
|Receivables and other assets||2,261||22,079||779||42,422|
|Tax loss carryforwards||14,646||14,494||0|
|Outside basis differences||655||0||951|
|Per consolidated statement of financial position||10,418||150,847||8,080||182,986|
Altogether, € 16,283 thousand of the deferred tax assets (previous year: € 28,374 thousand) and € 182,210 thousand of the deferred tax liabilities (previous year: € 220,578 thousand) will be realized within the next 12 months. Deferred tax assets of € 144,705 thousand (previous year: € 154,323 thousand) and deferred tax liabilities of € 119,207 thousand (previous year: € 137,025 thousand) will be realized after more than 12 months. These figures represent the amounts prior to offsetting.
The following table shows the deferred and current taxes that directly decreased or increased the other comprehensive income (OCI) and accordingly equity:
|in € thousand||Balance||Change||Balance||Change|
Furthermore, there were changes affecting net income, amounting to € 39 thousand (previous year: € 693 thousand) in the individual deferred tax positions of the foreign subsidiaries due to exchange rates.
Deferred tax assets are only recognized to the extent to which the respective benefits will probably be realized. Based on the forecast profit expectations of the subsidiaries, it is probable that the tax loss carryforwards will be utilized in conformity with IAS 12.34.
Total tax loss carryforwards amounted to € 165,931 thousand (previous year: € 156,839 thousand). Deferred tax assets were recognized in respect of income tax losses of € 58,309 thousand (previous year: € 56,836 thousand), although some of the companies involved have a history of losses. In such cases, corresponding deferred tax liabilities existed, or these companies had positive future earnings forecasts.
No deferred tax assets were recognized in respect of trade tax loss carryforwards of € 107,621 thousand (previous year: € 100,003 thousand), as the possibility of utilizing them is believed to be unlikely from a current perspective. Of the tax loss carryforwards deemed not to be utilizable, an amount of € 31,806 thousand (previous year: € 33,363 thousand) can be carried forward indefinitely, an amount of € 22,771 thousand (previous year: € 26,395 thousand) can be utilized within the next seven years and an amount of € 53,044 thousand (previous year: € 40,246 thousand) can be utilized within the next nine years.
Deferred tax liabilities of € 655 thousand (previous year: € 951 thousand) were set up in respect of the differences between the proportional equity of subsidiaries recognized in the consolidated statement of financial position and the investment carrying amounts for these subsidiaries shown in the tax-based records of the respective parent company (so-called outside basis differences) as at the balance sheet date. No deferred tax liabilities were set up for outside basis differences deriving from undistributed earnings of subsidiaries, amounting to € 11,745 thousand (previous year: € 14,144 thousand), since the reversal of these differences is unlikely in the foreseeable future.