
	Years Ended December 31,
			2019			2018			2017
			(In thousands)
Current
Domestic ⁽¹⁾	$	16,250		$	9,166		$	12,775
Foreign	1,140			41,412			14,628
Total	17,390			50,578			27,403
Deferred
Domestic ⁽¹⁾	$	7,412		$	6,164		$	5,853
Foreign	8,414			(9,798)			(13,520)
Total	15,826			(3,634)			(7,667)
Provision for income taxes	$	33,216		$	46,944		$	19,736


	Years Ended December 31,
			2019			2018			2017
			(In thousands)
Domestic ⁽¹⁾	$	112,427		$	115,594		$	121,061
Foreign	7,710			52,660			(36,465)
Income before income taxes	$	120,137		$	168,254		$	84,596

A corporate income tax rate of 15.00% was used to calculate the current and deferred taxes for the German entities. A solidarity surcharge of 0.825% (calculated as 5.5% on the corporate income tax rate) and a trade tax rate of 16.18%, for the years ended December 31, 2019, 2018 and 2017, respectively, were also taken into account in the calculation. As a result, the overall tax rate for the German entities was 32.00%, for the years ended December 31, 2019, 2018 and 2017 respectively. The current and deferred taxes for the non-German entities were calculated using their respective country-specific tax rates.

The following tax reconciliation shows the difference between the expected income taxes using the German overall tax rate of 32.0% and the effective income taxes in the income statement, for the years ended December 31, 2019, 2018 and 2017, respectively. The German tax rate is applied due to the fact that the primary operating entity is located in Germany and this entity holds all non-German operations.


	Years Ended December 31,
				2019				2018				2017
				(In thousands)
Income before income taxes	$	120,137			$	168,254			$	84,596
Expected income tax thereon	$	38,444			$	53,841			$	27,071
Tax rate differential	(3,517)				(6,695)				(2,249)
Change in valuation allowance on deferred tax assets and for losses without recognition of deferred taxes	450				(204)				(3,689)
Change in the tax rate and tax laws	115				(802)				(9,543)
Income taxes for prior years	(3,247)				876				561
Tax on non-deductible interest expenses	1,232				1,096				1,522
Taxes on other non-deductible expenses, and non-deductible taxes	745				(893)				6,216
Effects of changes in permanent differences	(45)				96				(879)
Tax effect on tax-free income	(898)				(532)				(1,033)

Other tax effects	(63)				161				1,759
Effective income taxes as reported	$	33,216			$	46,944			$	19,736
Effective tax rate	27.65		%		27.90		%		23.33		%

Change in the tax rate and tax laws in an amount of $8.8 million are related to the effect of the U.S. tax reform enacted in December 2017 reducing the corporate income tax rate from 35.0% to 21.0% in the USA. As a result the net deferred tax liabilities for the US entities are now based on the new tax rate of 21.0%.

Other non-deductible expenses, and non-deductible taxes include taxes for Brazil (treated as a disregarded entity for U.S. tax purposes) which are non-creditable in the U.S. were $2.3 million, $1.6 million, and $1.4 million for the years ended December 31, 2019, 2018 and 2017, respectively, in connection with the reduced corporate income tax rate from 35.0% to 21.0% in the USA (U.S. tax reform enacted in December 2017).

Tax rate differential for the year ended December 31, 2018 are mainly driven by a benefit $6.3 million from taxable income resulting from a land sale completed in Korea during 2018.

Income taxes for prior years ended December 31, 2019 are mainly driven by a the result of the conclusion of a tax audit in Poland. The amounts set in accruals for this purpose were released accordingly in 2019.

Income tax expense recognized in the consolidated statements of operations were $33.2 million in 2019, $46.9 million in 2018 and $19.7 million in 2017. Tax expenses/(benefit) recognized directly into the equity were $6.2 million in 2019, $0.3 million in 2018 and $(8.5) million in 2017.


Deferred tax assets	December 31
	2019		2018
	(In thousands)
Assets
Intangible assets	$	197	$	842
Property, plant and equipment	8,363		8,963
Financial assets	7,004		7,044
Inventories	2,817		4,131
Receivables, other assets	3,212		1,207
Liabilities
Provisions	20,662		18,825
Liabilities	41,434		31,093
Other
Loss carryforwards	39,595		43,753
Interest carryforwards	9,967		9,041
Tax credits	3,185		1,022
Other	2,028		2,750
Total deferred tax assets (gross)	138,463		128,671
Valuation allowance	(41,994)		(40,905)
Total deferred tax assets (net)	$	96,468	$	87,766


Deferred tax liabilities	December 31
	2019		2018
	(In thousands)
Assets
Intangible assets	$	3,673	$	12,973
Property, plant and equipment	33,040		30,628
Financial assets	7,649		6,719

Receivables, other assets	11,883		12,157
Liabilities
Provisions	8,203		6,441
Liabilities	12,568		3,953
Other	14,039		8,005
Total deferred tax liabilities	$	91,057	$	80,876


Net deferred tax position	December 31
	2019		2018
	(In thousands)
Deferred tax assets
Gross deferred tax assets	$	96,468	$	87,766
Net deferred tax assets	48,720		52,395
Deferred tax liabilities
Gross deferred tax liabilities	91,057		80,876
Net deferred tax liabilities	43,308		45,504
Net deferred tax asset / (liability) positions	$	5,412	$	6,891

Management assesses the recoverability of deferred tax assets. The assessment depends on future taxable profits being generated during the periods in which tax measurement differences reverse and tax loss carryforwards can be claimed. Orion expects that sufficient taxable income will be available to recover deferred tax assets due to the tax group in place.

As of December 31, 2019 and 2018, certain loss carryforwards were subject to restrictions with respect to the offsetting of losses. No deferred tax assets were recorded on these loss carryforwards if it is not likely that they will be used by future taxable income.


	December 31
			2019			2018
			(In thousands)
Corporate income tax loss carryforwards	$	41,334		$	71,904

Interest carryforwards for tax purposes	31,463			28,562
Total	$	72,797		$	100,466

The change between the recognized tax loss and interest carryforwards as at December 31, 2019 compared to 2018 is mainly driven by the taxable income of our German Tax Group.


	December 31
			2019			2018
			(In thousands)
Deductible temporary differences	$	41,994		$	40,905
Corporate income tax loss carryforwards	107,110			105,287

Interest carryforwards for tax purposes	31,463			28,562
Total	$	180,567		$	174,754


	Net operating loss carryforwards		Tax Credits
	(In thousands)
2020 to 2026	$	—	$	—
2027 and thereafter	31,207		3,164
Indefinite carryforwards	75,903		21
Total	$	107,110	$	3,185

As of December 31, 2019, the company's net operating loss carryforwards primarily relate to net operating losses which are due to expire at various dates, but not later than 2036.

No deferred taxes were recognized on a taxable temporary difference of $14.8 million (prior years: 2018: $11.8 million, 2017: $17.8 million) in connection with subsidiaries.

Deferred tax liabilities amounting $1.7 million (2018: $1.8 million, 2017: $2.2 million) were recognized for subsidiaries for which a dividend distribution is expected in the near future.

Deferred tax liabilities in the USA were reduced by $8.8 million, deferred tax assets were reduced by $0.4 million mainly reflecting the changes following the U.S. tax reform and the future corporate tax rate of 21.0% for the year ended December 31, 2017.


	2019		2018		2017
	(In thousands)
Balance at beginning of the year	$	14,771	$	13,155	$	10,660
Additions based on tax positions related to the current year	246		4		1,590
Additions for tax positions of prior year	—		2,982		1,663
Reductions of tax positions of prior year	(3,401)		(1,370)		(759)
Reductions related to settlements	—		—		—
Reductions from lapse of statute of limitations	—		—		—
Balance at end of the year	$	11,616	$	14,771	$	13,155

We recognize interest related to unrecognized tax benefits and penalties as income tax expense. During 2019 we accrued penalties of zero and interest of $0.5 million to the unrecognized tax benefits (noted above). As of December 31, 2019 we have a total of $4.0 million of accrued penalties and interest. We recognized no liabilities for penalties and accrued interest of $0.5 million during 2018 and had a total accrual of $3.4 million as of December 31, 2018 for penalties and interest while we recognized no liabilities for penalties and accrued interest of $0.9 million during 2017. Accrued penalties and interest totaled $2.9 million as of December 31, 2017.

Orion and certain subsidiaries are under audit in a number of jurisdictions, and in particular in Germany for the initial three years of incorporation (fiscal years 2011-2013). It cannot be excluded that a further change in the unrecognized tax benefits may occur within the next twelve months related to the settlement of one or more of these audits or the lapse of applicable statutes of limitations; however, an estimated range of the impact on the unrecognized tax benefits cannot be quantified at this time.