[34] Income tax Audited

The following table presents the tax reconciliation from theoretical tax expense to 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.

The tax expense consisted of corporation and trade income taxes for the companies domiciled in Germany as well as comparable income taxes for foreign companies.

In 2012, one-time deferred tax income of € 2.4 million was recognized owing to changes in tax rates in individual companies (2011: € 19.2 million).

The reconciliation between deferred taxes in the balance sheet and deferred taxes in the income statement is presented in the following table:

Tax loss carryforwards were structured as follows:

The increase in tax loss carryforwards compared to 2011 was mainly the result of the release of tax reserves in the tax balance sheet of Merck KGaA as well as the recognition of state taxes for the United States. Deferred tax assets are recognized for tax loss and interest carryforwards only if for tax loss carryforwards of less than € 5.0 million, realization of the related tax benefits is probable within one year, and for tax loss carryforwards of more than € 5.0 million realization of the related tax benefits is probable within the next three years.

The vast majority of the tax loss carryforwards either has no expiry date or can be carried forward for up to 20 years.

The tax loss carryforwards accumulated in Germany for corporation and trade tax amounted to € 281.9 million (2011: € 1.8 million).

The additional theoretically possible deferred tax assets amounted to € 22.1 million (2011: € 28.5 million).

In 2012, the income tax expense was reduced by € 0.1 million (2011: € 25.7 million) due to the utilization of tax loss carryforwards from prior years for which no deferred tax asset had been recognized in prior periods.

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

In addition to deferred tax assets on tax loss carryforwards amounting to € 74.3 million (2011: € 35.1 million), deferred tax assets of € 872.3 million (2011: € 694.9 million) were recognized for other temporary differences.

As of the balance sheet date, deferred tax liabilities for temporary differences for interests in subsidiaries as regards planned dividend payments amounted to € 52.7 million (2011: € 100.2 million). Of this amount, € 43.6 million (2011: € 83.5 million) was recognized within the scope of the Millipore acquisition. No deferred tax liabilities were recognized for other temporary differences relating to interests in subsidiaries since the reversal of these differences was not foreseeable. Temporary differences relating to the retained earnings of subsidiaries amounted to € 3,533.0 million (2011: € 3,508.8 million).