[13] Income tax 

The tax expense consists of corporation and trade income taxes for the companies domiciled in Germany as well as comparable income taxes for foreign companies. Changes in tax rates at individual companies resulted in total deferred tax expense of EUR –0.1 million (2009: EUR 2.6 million tax income).

The reconciliation between deferred tax assets and liabilities shown in the balance sheet and deferred taxes in the income statement is presented below:

At EUR 693.9 million, “Changes in scope of consolidation/currency translation/Other changes” are mainly due to the first-time consolidation of Millipore. The other changes were primarily the result of fluctuations in the exchange rates of the U.S. dollar and the Swiss franc.

Tax loss carryforwards are structured as follows:

The decrease in tax loss carryforwards compared to 2009 was mainly the result of the positive business development of the relevant Group companies. Deferred tax assets are recognized for tax loss and interest carryforwards only if realization of the related tax benefits is probable in the foreseeable future.

The vast majority of the tax loss carryforwards either has no expiry date or can be carried forward for up to 20 years. The interest carryforward results from the German earnings stripping rule and has no expiry date. Deferred tax assets on interest carryforwards from 2009 amounting to EUR 7.5 million were fully utilized in 2010. In 2010, the income tax expense was reduced by EUR 20.0 million (2009: EUR 15.6 million) due to the utilization of tax loss carryforwards from prior years for which no deferred tax asset had been recognized in prior periods.

The tax loss carryforwards accumulated in Germany for corporation tax amounted to EUR 1.5 million (2009: EUR 73.8 million) and to EUR 0.5 million (2009: EUR 90.5 million) for trade tax. The additional theoretically possible deferred tax assets amounted to EUR 21.0 million (2009: EUR 27.6 million).

Deferred tax assets and liabilities correspond to the following balance sheet items:

Deferred tax liabilities of EUR 16.7 million (2009: EUR 11.4 million) were set up for temporary differences for interests in subsidiaries. These relate to planned dividend payments. Additionally, a deferred tax claim of EUR 3.0 million was recognized for the announced divestment of Crop BioScience. No deferred tax liabilities were recognized for other temporary differences since the reversal of these differences is not foreseeable.

In addition to deferred tax assets on tax loss carryforwards, deferred tax assets of EUR 553.9 million (2009: EUR 522.6 million) were recognized for other temporary differences.

The following table presents the tax reconciliation from theoretical tax expense to tax expense before exceptional items and tax expense according to the income statement. The theoretical tax expense is determined by applying the statutory tax rate of 30.7% of a corporation headquartered in Darmstadt.