21 Income Taxes
Accounting Policies
Income taxes for the current and prior fiscal years are recognized as current income tax liabilities to the extent that they have not yet been paid. The current tax expense is determined on the basis of the taxable income for the fiscal year.
Deferred tax assets and liabilities are recognized using the liability method under the temporary concept, providing for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax assets are only recognized for temporary differences and on loss carryforwards to the extent that there are deferred tax liabilities that can be netted against them – regarding deferred tax assets on loss carryforwards taking the minimum taxation into account – or, based on the predictable profits in the foreseeable future, it can be verified that they will be realized.
Deferred tax assets and liabilities are not recognized where the temporary difference arises from initial recognition of goodwill in connection with a business combination or the initial recognition (other than a business combination) of other assets and liabilities in a transaction that neither affects taxable income nor net income and does not result in equal taxable and deductible temporary differences on the transaction date.
The carrying amount of a deferred tax asset is reviewed at each reporting date. If necessary, the carrying amount of the deferred tax asset is reduced to the extent that it is no longer offset by deferred tax liabilities that can be netted against it or that it is no longer probable that sufficient taxable profit will be available in the future.
Deferred taxes are measured at the tax rates that apply, or are expected to apply, to the period in which the tax asset is realized or the liability is settled based on the current legislation in the countries in question. As in 2024, the combined tax rate of corporate income tax and trade tax of 33.1% was also used to calculate domestic deferred taxes for 2025. On July 11, 2025, the German upper house (Bundesrat) adopted a gradual reduction in the corporate income tax rate from 15% to 10% over a five-year period starting in 2028. In accordance with IAS 12, all deferred tax assets and deferred tax liabilities – including deferred tax assets based on corporate income tax loss carryforwards – were measured, at the reporting date, using the tax rates that are expected to apply in the years in which the underlying temporary differences will be realized/settled. The individual stages of the tax rate reduction were taken into account depending on the expected realization date of the temporary differences. The corporate income tax rate for the companies based in Austria has been 23.0% since 2024, while the rate for companies based in Sweden is 20.6%.
Deferred tax assets and liabilities are netted against each other only if Vonovia has a legally enforceable right to set off the recognized amounts, when the same tax authority is involved and when the realization period is the same. In accordance with the regulations of IAS 12 “Income Taxes,” deferred tax assets and liabilities are not discounted.
Income Taxes
in € million | 2024 | 2025 | |||
Current income tax | 220.9 | 244.3 | |||
Prior-year current income tax | 0.9 | -80.9 | |||
Deferred tax − temporary differences | 51.2 | -1,904.4 | |||
Deferred tax − unutilized loss carryforwards | 112.6 | 154.5 | |||
385.6 | -1,586.5 | ||||
For the 2025 fiscal year, the combined tax rate of corporate income tax and solidarity surcharge for domestic companies is 15.8% (2024: 15.8%). Including trade tax at a rate of about 17.3% (2024: 17.3%), the combined domestic tax rate is 33.1% in 2025 (2024: 33.1%). The recalculation of deferred taxes based on the changes in corporate income tax rates resulted in deferred tax income of € 2,457.3 million in the 2025 fiscal year, which is reported under income taxes in the consolidated income statement. The corporate income tax rate for the companies based in Austria is 23.0% (2024: 23.0%), while the rate for the companies in Sweden comes to 20.6% (2024: 20.6%). The other foreign companies pay tax that is of a negligible amount from the Group’s perspective in the countries in which they are domiciled.
For deductible temporary differences (excl. loss carryforwards) in the amount of € 445.4 million (December 31, 2024: € 82.5 million), no deferred corporate income taxes or deferred trade taxes were recognized, because they are not likely to be used in the future. The increase can be explained by the addition of a number of companies with substantial carryforwards of deductible temporary differences.
As of December 31, 2025, there were corporate income tax loss carryforwards amounting to € 3,884.7 million (December 31, 2024: € 3,989.4 million), as well as trade tax loss carryforwards amounting to € 2,140.8 million (December 31, 2024: € 2,258.9 million), for which deferred tax assets have been recognized to the extent that their realization is sufficiently probable. As of December 31, 2025, there were corporate income tax loss carryforwards abroad amounting to € 275.6 million (December 31, 2024: € 313.8 million), as well as trade tax loss carryforwards amounting to € 15.1 million (2024: € 14.8 million), for which deferred tax assets have been recognized to the extent that their realization is sufficiently probable. The drop in tax loss carryforwards resulted from current tax gains at individual companies and the associated utilization of the loss carryforwards.
No deferred taxes were recognized in the balance sheet for domestic and foreign corporate income tax loss carryforwards amounting to € 1,596.8 million (December 31, 2024: € 1,479.6 million). Of this amount, € 119.3 million arose for the first time in the 2025 fiscal year (2024: € 46.9 million). Under current tax law, these loss carryforwards are not subject to restrictions either with regard to time or the amount of the loss carryforward. The fact that no deferred tax assets were recognized on the new corporate income tax loss carryforwards results in a tax effect of € 15.6 million (2024: € 7.5 million). In addition, there are further trade tax loss carryforwards subject to no restrictions with regard to how they can be carried forward in the amount of € 850.0 million in total (December 31, 2024: € 755.1 million). These did not give rise to any deferred tax assets. Of this amount, € 97.5 million arose for the first time in the 2025 fiscal year (2024: € 40.5 million) and the resulting tax effect is € 15.9 million (2024: € 6.8 million).
The remeasurement of deferred tax assets on temporary differences and loss carryforwards led to expense amounting to € 120.8 million in the 2025 fiscal year (2024: income of € 2.0 million). This increase can again be explained by the addition of companies with substantial carryforwards of deductible temporary differences.
Deferred taxes on interest carryforwards are recognized if the interest carryforward is likely to be able to be used in the future. Due to the Group’s capital structure, no interest carryforwards are likely to be able to be used in the future. As a result, no deferred tax assets have been recognized on domestic interest carryforwards in the amount of € 2,275.7 million (December 31, 2024: € 1,910.5 million). € 361.5 million of this amount arose for the first time in the reporting year (2024: € 403.1 million). The fact that no deferred tax assets were recognized on the new interest carryforward generated a tax effect of € 115.3 million in Germany (2024: € 129.1 million). Sweden has a regulation similar to the German interest threshold. As a result, no deferred tax assets have been recognized on interest carryforwards in the amount of € 204.1 million in Sweden (2024: € 193.2 million). Of this amount, € 29.2 million (2024: € 33.4 million) arose for the first time in the reporting year. The fact that no deferred taxes were recognized generated a tax effect of € 6.0 million in Sweden (2024: € 6.9 million).
A reconciliation between disclosed effective income taxes and expected tax expense, which is the product of the accounting profit for the period multiplied by the tax rate applicable in Germany, is shown in the table below.
Reconciliation Between Disclosed Effective Income Taxes and Expected Tax Expense
in € million | 2024 | 2025 | |||
Earnings before tax | -603.4 | 2,527.7 | |||
Income tax rate in % | 33.1 | 33.1 | |||
Expected tax expense | -199.7 | 836.7 | |||
Trade tax effects | 172.2 | -3.0 | |||
Non-deductible operating expenses | 287.7 | 272.6 | |||
Tax-free income | -9.4 | -132.7 | |||
Change in the deferred tax assets on loss | -2.0 | 120.8 | |||
New loss and interest carryforwards not recognized and utilization of interest carryforwards | 150.3 | 152.8 | |||
Prior-year income tax and taxes on | 28.5 | -334.6 | |||
Differing foreign tax rates | -38.7 | -53.2 | |||
Change in deferred taxes due to change in corporate income tax rate | – | -2,457.3 | |||
Other tax effects (net) | -3.3 | 11.4 | |||
Effective income taxes | 385.6 | -1,586.5 | |||
Effective income tax rate in % | -63.9 | -62.8 | |||
The deferred taxes refer to temporary differences in balance sheet items and unutilized loss carryforwards as follows:
Deferred Tax Assets
in € million | Dec. 31, 2024 | Dec. 31, 2025 | |||
Intangible assets | 6.4 | 5.3 | |||
Investment properties | 69.0 | 99.4 | |||
Inventories | 102.2 | 96.2 | |||
Assets held for sale | 2.0 | 0.3 | |||
Property, plant and equipment | 6.7 | 2.6 | |||
Financial assets | 44.9 | 7.4 | |||
Other assets | 180.1 | 137.4 | |||
Provisions for pensions | 62.2 | 36.4 | |||
Other provisions | 98.6 | 36.7 | |||
Liabilities | 143.9 | 127.8 | |||
Loss carryforwards | 793.7 | 639.2 | |||
Deferred tax assets | 1,509.7 | 1,188.7 | |||
Deferred Tax Liabilities
in € million | Dec. 31, 2024 | Dec. 31, 2025 | |||
Intangible assets | 10.9 | 11.1 | |||
Investment properties | 16,401.2 | 14,791.3 | |||
Inventories | 155.7 | 110.2 | |||
Assets held for sale | 209.5 | 130.5 | |||
Property, plant and equipment | 71.7 | 53.9 | |||
Financial assets | 22.7 | 1.6 | |||
Other assets | 114.6 | 66.3 | |||
Provisions for pensions | 0.7 | 0.8 | |||
Other provisions | 19.1 | 18.8 | |||
Liabilities | 93.9 | 100.7 | |||
Deferred tax liabilities | 17,100.0 | 15,285.2 | |||
Excess deferred tax liabilities | 15,590.3 | 14,096.5 | |||
Deferred tax assets and liabilities are netted against each other when the same company and the same tax authority are involved and the realization period is the same. As a result, the following deferred tax assets and liabilities are stated:
Deferred Tax Assets and Liabilities
in € million | Dec. 31, 2024 | Dec. 31, 2025 | |||
Deferred tax assets | 23.2 | 8.3 | |||
Deferred tax liabilities | 15,613.5 | 14,104.9 | |||
Excess deferred tax liabilities | 15,590.3 | 14,096.6 | |||
The change in deferred taxes is as follows:
Change in Deferred Taxes
in € million | 2024 | 2025 | |||
Excess deferred tax liabilities as of Jan. 1 | 15,626.8 | 15,590.3 | |||
Deferred tax expense in income statement | 163.8 | -1,749.9 | |||
Deferred tax due to first-time consolidation and | – | 179.2 | |||
Change in deferred taxes recognized in other comprehensive income due to equity instruments measured at fair value | 0.3 | 0.3 | |||
Change in deferred taxes recognized in other comprehensive income on actuarial gains and losses | 1.3 | 16.0 | |||
Change in deferred taxes recognized in other comprehensive income on derivative financial instruments | -0.7 | 6.8 | |||
Balance sheet reclassification to assets and liabilities held for sale with regard to discontinued operations | -177.3 | – | |||
Deferred taxes recognized in the capital reserve on capital procurement costs of capital increases | 0.1 | 13.1 | |||
Currency translation differences | -20.9 | 42.6 | |||
Reclassification to result from | -3.1 | -1.9 | |||
Other | – | – | |||
Excess deferred tax liabilities as of Dec. 31 | 15,590.3 | 14,096.5 | |||
No deferred tax liabilities are recognized for profits accumulated at subsidiaries of € 52,910.1 million (December 31, 2024: € 52,744.7 million), as these profits are to remain invested for an indefinite period or are not subject to taxation. In the event of distribution or disposal of the subsidiaries, 5% of the distributed amounts or the capital gains would be subject to German taxation so that there would normally be an additional tax obligation.
The BEPS Pillar 2 regulations were transposed into German law (German Minimum Tax Act [MinStG]) at the end of 2023 and came into force on January 1, 2024. The Group falls within the scope of these regulations based on the revenue threshold set out in Section 1 MinStG.
Vonovia carried out an extensive analysis as of the reporting date to identify the applicability of the Pillar 2 regulations and the jurisdictions from which the Group could be exposed to potential effects in connection with a Pillar 2 top-up tax. The first step involved checking whether the CbCR safe harbor rules set out in Section 84 MinStG applied to the individual jurisdictions. None of the CbCR safe harbor tests are relevant for Germany. A Pillar-2 calculation revealed that no top-up tax was due as of December 31, 2025.
Vonovia applies the exception provided for in IAS 12, based on which no deferred tax assets or liabilities are recognized in connection with OECD Pillar 2 income taxes and no disclosures are made in this regard either.
The Group closely monitors the progress made in the legislative process in every country in which Vonovia operates.