10. Income tax income/expense

The statutory corporation tax rate in Germany for the 2024 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 45% (previous year: 0% and 46%). 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 2024 of €356 million (previous year: €816 million).

The tax loss carryforwards and the expiry of loss carryforwards that could not be used changed as follows:

Deferred taxes on interest carried forward are recognized to the extent that it is probable that the interest carried forward can be used in the future. Interest carried forward that has not yet been used amounted to €718 million (previous year: €574 million). Interest carried forward in the amount of €528 million (previous year: €409 million) can be used without time limit, while €191 million (previous year: €165 million) has to be used within the next ten years.

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 €65 million (previous year: €120 million). Deferred tax expense was reduced by €99 million (previous year: €372 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 €81 million (previous year: €44 million). Deferred tax income resulting from the reversal of a write-down of deferred tax assets amounts to €19 million (previous year: €125 million).

Tax credits granted by various countries amounted to €443 million (previous year: €473 million).

No deferred tax assets were recognized for deductible temporary differences of €3,200 million (previous year: €2,232 million) and for tax credits of €114 million (previous year: €128 million) that would expire in the next 20 years.

In accordance with IAS 12.39, deferred tax liabilities of €216 million (previous year: €251 million) for temporary differences and undistributed profits of Volkswagen AG subsidiaries were not recognized because control exists. Deferred tax assets of €4,419 million (previous year: €3,964 million) for temporary differences in connection with investments in subsidiaries that are not expected to reverse in the foreseeable future due to the exercise of control have not been recognized.

Deferred tax expense resulting from changes in tax rates amounted to €119 million at Group level (previous year: deferred tax income of €9 million).

As of December 31, 2024, Volkswagen reported deferred tax assets that exceeded deferred tax liabilities by €7,779 million (previous year: €6,819 million) for companies that incurred a loss in the current or prior period. Of this amount €4,985 million is attributable to companies in VW AG’s tax group and €2,325 million to companies in Luxembourg; the amounts relate primarily to deductible temporary differences and loss carryforwards. Tax assets in Luxembourg are recognized because some expenses for equity investments led to losses in the past, but taxable income is expected in future based on the business models of the companies in question. In Germany, recognition is based, among other factors, on a sufficient level of taxable profit in subsequent fiscal years, as documented in the business plans. In addition, Volkswagen expects that various cost/efficiency programs and product launches will lead to considerable improvements in profits. 

The overall analysis has concluded that the companies concerned will generate a sufficient level of taxable profit that can be used to offset the tax losses and deductible temporary differences that have not been used to date.

€2,659 million (previous year: €2,861 million) of the deferred taxes recognized in the balance sheet was credited to equity and relates to other comprehensive income. €– 22 million (previous year: €−66 million) of this figure is attributable to non-controlling interests. In fiscal year 2024, deferred tax income of €0 million from the remeasurement of pension plans directly through equity was reclassified within equity (previous year: €– million). There were no effects from capital transactions with non-controlling interests in either the current or the previous year. The classification of changes in deferred taxes is presented in the statement of comprehensive income.

In fiscal year 2024, no tax effects resulting from equity transaction costs were credited to equity (previous year: €3 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:

The tax expense reported for 2024 of €4,411 million (previous year adjusted: €5,237 million (see disclosures on IAS 8)) was €631 million (previous year: €1,692 million) lower than the expected tax expense of €5,042 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.

Global minimum top-up tax

The introduction of global minimum taxation (Pillar 2) does not result in any material charges for the Volkswagen Group. The actual tax expense in connection with Pillar 2 income taxes amounts to €14 million. The Volkswagen Group has applied the exemption from recognizing and disclosing deferred taxes in connection with Pillar 2 income taxes.