Income Statement Disclosures


Breakdown of Total Taxes on Income
in million €20182017
Current tax expense-134.3-136.4
 of which: taxes on income for the financial year-157.4-137.7
 of which: taxes on income for previous years23.11.3
Deferred taxes-19.43.4
Total taxes on income-153.7-133.0
Source of Deferred Tax Assets and Liabilities on Temporary Differences Due to Different Carrying Amounts of Balance Sheet Items
in million €31 Dec. 201831 Dec. 2017
tax assets
tax liabilities
tax assets
tax liabilities
Intangible assets182.6282.7150.0244.1
Property, plant and equipment106.3219.5253.3377.1
Non-current financial assets45.821.514.18.7
Receivables and other assets49.722.358.020.4
Loss carryforwards41.
Interest carryforwards2.
Other off-balance sheet transactions1.
Pension provisions165.120.5163.630.3
Other provisions277.536.2305.930.6
Total deferred tax assets/liabilities1,054.5664.41,168.5744.1
 of which: non-current796.2568.0971.1687.7
 of which: current258.396.4197.456.4
Amount recognised in the balance sheet436.446.3465.340.9

To the extent that the realisation of the deferred tax asset depends on future taxable profits exceeding the earnings impact from the reversal of existing taxable temporary differences, deferred tax assets were recognised only if there were sufficient substantial indications for their realisation in future periods. Companies with tax losses in the current or prior period recognised deferred tax assets of 319.1 million euros (previous year: 308.2 million euros) for deductible temporary differences in future periods, which are higher than the earnings impact from the reversal of existing taxable temporary differences. The recognition of deferred tax assets is subject to sufficient indications that they will be realised in future periods as a result of future structural measures and existing tax budgets. No deferred tax assets were recognised for deductible temporary differences of 404.8 million euros (previous year: 379.9 million euros).

As was the case for the decrease in corporate tax loss carryforwards, the decline in deferred tax assets on tax loss carryforwards was due primarily to the utilisation of loss carryforwards in the consolidated tax group of RZF and REWE Deutscher Supermarkt AG & Co. KGaA, Cologne. By contrast, loss carryforwards at the Italian tax group rose, which also led to an increase in unrecognised corporate tax loss carryforwards.

Composition of Carryforwards for Which No Deferred Taxes Were Recognised
in million €20182017
Corporate tax - loss carryforwards  
Corporate tax - loss carryforwards as at 31 Dec.908.8910.1
Corporate tax - unrecognised loss carryforwards as at 31 Dec.723.5647.4
 Corporate tax - unrecognised loss carryforwards - expiration after 5 years or no expiration723.5647.4
Trade tax - loss carryforwards  
Trade tax - loss carryforwards as at 31 Dec.471.1442.3
Trade tax - unrecognised loss carryforwards as at 31 Dec.437.7315.6
 Trade tax - unrecognised loss carryforwards - no expiration437.7315.6
Losses pursuant to § 15a German Income Tax Act (EStG)  
Losses pursuant to § 15a EStG as at 31 Dec.11.59.4
Losses pursuant to § 15a EStG - unrecognised loss carryforwards as at 31 Dec.11.59.4
 Losses pursuant to § 15a EStG - unrecognised loss carryforwards - no expiration11.59.4
Interest carryforwards  
Interest carryforwards as at 31 Dec.7.913.0
Interest carryforwards - unrecognised as at 31 Dec.0.00.7
 Interest carryforwards - unrecognised - no expiration0.00.7
Off-balance sheet tax benefit  
Off-balance sheet tax benefit as at 31 Dec.4.62.4
Off-balance sheet tax benefit - unrecognised as at 31 Dec.0.00.0

The increase in trade tax loss carryforwards during the financial year are due primarily to losses from partnerships. For the most part, no deferred tax assets were taken into account for these trade tax loss carryforwards. By contrast, the trade tax loss carryforwards in RZF's consolidated tax group were utilised in full.

Change in Deferred Tax Assets and Liabilities
in million €20182017
Deferred taxes390.1424.4
Year-on-year change-34.348.9
Change in deferred taxes on items recognised directly in equity (IAS 39, IAS 19, IFRS 9)-18.022.9
Change in deferred taxes from acquisitions/divestments recognised directly in equity2.124.3
Change in deferred taxes from exchange rate changes recognised directly in equity1.0-2.4
Change in deferred taxes due to temporary differences recognised through profit and loss6.5-14.4
Change in deferred taxes due to loss and interest carryforwards recognised through profit and loss-25.917.8
Reclassification of changes in deferred taxes recognised through profit or loss in respect of discontinued operations0.00.3
Reclassification of amount recognised in the balance sheet for deferred taxes recognised in respect of discontinued operations0.00.4

The change (recognised through profit or loss) in deferred taxes due to loss and interest carryforwards is due mainly to the utilisation of tax loss carryforwards and the associated deferred tax assets recognised in previous years. By contrast, the prior-year period was characterised by the recognition of deferred tax assets on loss carryforwards as a result of improved earnings and utilisation prospects.

The change in deferred taxes relating to cash flow hedges and other financial instruments which are recognised directly in equity (IAS 39, IFRS 9) amounted to -8.1 million euros and the change in pension and similar obligations recognised directly in equity (IAS 19) amounted to -9.9 million euros. The change in deferred taxes recognised directly in equity relating to acquisitions and divestitures declined to 2.1 million euros in the financial year and includes a further equity investment in UAB Palink. The significantly higher amount in the previous year was primarily due to the formation of the joint venture REWE Dortmund SE & Co. KG, Dortmund, and the acquisition of 64 store locations from the Kaiser's Tengelmann Group, including K-LOG Kaiser's Tengelmann Logistik- und Dienstleistungsgesellschaft mbH.

Reconciliation of the Expected Income Tax to the Actual Income Tax Expense
in million €20182017
Earnings before taxes, continuing operations583.5474.8
Earnings before taxes, discontinued operations0.0-2.9
Profit before taxes on income: profit (+)/loss (-)583.5471.9
Anticipated tax rate30.0%30.0%
Anticipated tax expense-175.0-141.6
Effects of different tax rates on the tax rate1.631.4
Effects from tax rate changes3.513.7
Effects from taxes from previous years recognised in the financial year45.033.4
Effects of non-allowable income taxes (withholding and foreign taxes)-0.6-0.6
Effects from non-deductible operating expenses-15.7-15.7
Effects of tax-free income4.34.5
Effects from trade tax add-backs/reductions-37.4-44.4
Effects of permanent effects51.8-28.7
Effects from transfers of assessment bases from/to non-consolidated companies17.4-5.2
Effects from recognition adjustments and write-downs of deferred tax assets-49.017.7
Effects from equity consolidation0.41.4
Total tax income (+)/tax expense (-) as per reconciliation-153.7-134.1
of which: from continuing operations-153.7-133.0
of which: from discontinued operations0.0-1.1

The Group tax rate for 2018 remains unchanged at 30.0 per cent, consisting of the corporate tax with a tax rate of 15.0 per cent and the solidarity surcharge, which is levied at 5.5 per cent on the corporate tax, in addition to the trade tax.

The effective tax rate in the financial year was 26.3 per cent (previous year: 28.4 per cent).

As at 31 December 2018, 0.4 million euros in deferred tax liabilities on undistributed profits of subsidiaries were recognised, for which a distribution of these profits is intended in the foreseeable future. All other profits are retained or continually reinvested.

The temporary differences in connection with investments in subsidiaries, joint ventures and associates, for which no deferred tax liabilities were recognised, were 689.7 million euros (previous year: 658.9 million euros) as at the balance sheet date.