10. Income tax income/expense

The statutory corporation tax rate in Germany for the 2025 assessment period was 15%. Including trade tax and the solidarity surcharge, this resulted in an aggregate tax rate of 30.02% (previous year: 30.00%).

To measure deferred taxes in the German consolidated tax group, a tax rate of 30.0% (previous year: 30.0%) was used for differences between the carrying amount of an asset in the balance sheet and its tax base that will be realized in the short term. For long-term temporary differences, the entity-specific tax rate applicable at the time of reversal was used.

The local income tax rates applied to companies outside Germany vary between 4% and 45% (previous year: 0% and 45%). 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 2025 of €362 million (previous year: €356 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 €335 million (previous year: €718 million). Interest carried forward in the amount of €141 million (previous year: €528 million) can be used without time limit, while €194 million (previous year: €191 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 €33 million (previous year: €65 million). Deferred tax expense was reduced by €5 million (previous year: €99 million) because of a benefit arising from previously unrecognized tax losses and tax credits of a prior period, as well as from temporary differences that had not yet been taken into account. Deferred tax expense resulting from the write-down of a deferred tax asset amounts to €640 million (previous year: €81 million). Deferred tax income resulting from the reversal of a write-down of deferred tax assets amounts to €63 million (previous year: €19 million).

Tax credits granted by various countries amounted to €469 million (previous year: €443 million).

No deferred tax assets were recognized for deductible temporary differences of €2,456 million (previous year: €3,200 million) and for tax credits of €78 million (previous year: €114 million) that would expire in the next 20 years.

In accordance with IAS 12.39, deferred tax liabilities of €243 million (previous year: €216 million) for temporary differences and undistributed profits of Volkswagen AG subsidiaries were not recognized because control exists. Deferred tax assets of €4,492 million (previous year: €4,419 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 in countries outside Germany amounted to €11 million at Group level (previous year, adjusted: deferred tax expense of €82 million).

In July 2025, an amendment to the Körperschaftsteuergesetz (KStG – German Corporate Income Tax Act) was adopted in Germany. As a result, the corporate income tax rate will be reduced in stages from 15% to 10% from 2028 onward. In the fiscal year ended on December 31, 2025, this led to a gain of €878 million (previous year: €24 million) from the measurement of deferred tax assets and deferred tax liabilities of the German Group companies.

As of December 31, 2025, Volkswagen reported deferred tax assets that exceeded deferred tax liabilities by €6,626 million (previous year: €7,779 million) for companies that incurred a loss in the current or prior period. Of this amount €3,275 million is attributable to companies in VW AG’s tax group and €2,078 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.

€258 million (previous year: €2,659 million) of the deferred taxes recognized in the balance sheet was credited to equity and relates to other comprehensive income. €−197 million (previous year: €−22 million) of this figure is attributable to non-controlling interests. In connection with the disposal of equity instruments measured through other comprehensive income, deferred taxes totaling €−9 million were reclassified directly within equity in fiscal year 2025 (previous year: €−million). The classification of changes in deferred taxes is presented in the statement of comprehensive income.

In fiscal year 2025, tax effects of €2 million resulting from equity transaction costs were credited to equity (previous year: €−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 2025 of €2,403 million (previous year: €4,411 million) was €389 million (previous year: €631 million) lower than the expected tax expense of €2,792 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 €48 million. The Volkswagen Group has applied the exemption from recognizing and disclosing deferred taxes in connection with Pillar 2 income taxes.