16. Income taxes

The breakdown of income taxes is as follows:

The combined income tax rate for the German companies for 2021 amounted to 30.1% (2020: 30.1%), comprising corporate income tax at a rate of 15%, the solidarity surcharge of 5.5% on corporate income tax and trade income tax at an average rate of 14.2%. The taxation of the foreign subsidiaries is calculated on the basis of the tax rate applicable in the respective country of domicile. Deferred taxes, calculated using the tax rates which apply respectively, are expected to apply in the various countries at the time of realization.

The income tax expense of the Group actually reported differs from the theoretical income tax expense based on the total German income tax rate for 2021 as follows:

The item ‘Other’ consists mainly of other non-income taxes (e.g., non-creditable foreign withholding tax expense) in 2021 and 2020.

The position ‘Other tax-free income’ for fiscal year 2020 mainly includes a one-off tax effect realized in the US. In fiscal year 2020, NORMA Group decided to treat its Brazilian subsidiary as a so-called disregarded entity for US income tax purposes. Considering various requirements, one-off tax write-offs were performed on the carrying amount of the investment and on an existing shareholder loan of the Company, resulting in a tax benefit of EUR 5.0 million. The conditions of deductibility of the write-off are subject to review by the US tax authorities.

The income tax charged/credited directly to other comprehensive income during the year is as follows: