[14] Income taxes
Current taxes
The income tax expense of €32.2 million (2021: €191.7 million) consisted of €107.2 million in current tax expense (2021: €203.8 million) and €75.0 million in deferred tax income (2021: €12.1 million).
The current corporate income tax rate in Germany is 15.0 percent plus a solidarity surcharge (5.5 percent of corporate income tax). Taking into account the average trade tax rate of 14.9 percent, the combined nominal tax rate for entities in Germany was 30.7 percent (2021: 30.7 percent).
Deferred tax assets and liabilities
The nominal income tax rates for foreign companies used in the calculation of deferred taxes were between 9.0 percent and 34.0 percent, as had also been the case in 2021.
Deferred tax assets were allocated to the following items in the statement of financial position:
in € million |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
Intangible assets and property, plant and equipment |
377.3 |
275.1 |
Other assets |
224.5 |
170.2 |
Provisions |
127.0 |
302.5 |
Liabilities |
597.9 |
595.9 |
Deferred income |
65.4 |
83.1 |
Tax loss carry forwards, interest carry forwards and tax credits |
32.0 |
25.0 |
Offsetting |
–1,123.3 |
–1,002.4 |
Total deferred tax assets |
300.8 |
449.3 |
The amount of deferred tax assets recognized in the statement of financial position decreased to €300.8 million as at December 31, 2022 (December 31, 2021: €449.3 million). This can primarily be explained by changed discount rates and plan adjustments affecting defined benefit obligations.
Deferred taxes are recognized on deductible temporary differences and on tax loss carryforwards and interest carryforwards to the extent that taxable temporary differences exist or that it is probable that sufficient taxable income will be available in the future.
In 2022, KION GROUP AG and the consolidated subsidiaries that reported losses for 2022 or 2021 recognized net deferred tax assets on temporary differences, loss carryforwards, and tax credits totaling €18.5 million (2021: €24.1 million). The assets were considered to be unimpaired because the companies in question are expected to generate taxable income in the future.
No deferred tax assets have been recognized on tax loss carryforwards of €773.3 million (2021: €707.4 million) – of which €191.6 million (2021: €255.5 million) can only be carried forward on a restricted basis – or on interest carryforwards of €292.9 million (2021: €283.9 million). Consequently, the total amount of unrecognized deferred tax assets relating to loss carryforwards is €157.1 million (2021: €155.0 million), of which €109.4 million (2021: €92.8 million) concerns tax losses that can be carried forward indefinitely.
The KION Group’s corporation-tax loss carryforwards in Germany as at December 31, 2022 amounted to €163.6 million (December 31, 2021: €109.3 million), while trade-tax loss carryforwards stood at €150.7 million (December 31, 2021: €98.5 million). There were also tax loss carryforwards outside Germany totaling €569.6 million (December 31, 2021: €571.4 million).
The interest that can be carried forward indefinitely in Germany as at December 31, 2022 amounted to €292.9 million (December 31, 2021: €283.9 million).
Deferred tax liabilities were allocated to the following items in the statement of financial position:
in € million |
Dec. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
Intangible assets and property, plant and equipment |
951.4 |
960.2 |
Other assets |
461.1 |
421.0 |
Provisions |
45.6 |
27.0 |
Liabilities |
145.3 |
108.5 |
Deferred income |
12.6 |
9.3 |
Offsetting |
–1,123.3 |
–1,002.4 |
Total deferred tax liabilities |
492.8 |
523.5 |
As had also been the case in 2021, the deferred tax liabilities essentially related to the purchase price allocation carried out in connection with the acquisition of Dematic, particularly for intangible assets and property, plant, and equipment.
The currency translation as at the reporting date gave rise to total net deferred tax assets and deferred tax liabilities of €13.4 million that were recognized in other comprehensive income (loss) under cumulative translation adjustment, resulting in a decrease in equity (2021: decrease in equity of €9.9 million).
No deferred taxes have been recognized on temporary differences of €199.1 million (2021: €210.6 million) between the net assets reported in the consolidated financial statements for the Group companies and the tax base for the shares in these Group companies (outside basis differences) because the KION Group is in a position to manage the timing of the reversal of temporary differences and there are no plans to dispose of equity investments in the foreseeable future.
Reconciliation of effective income taxes
The table below shows the reconciliation of expected income tax expenses to effective income tax expenses. Expected income taxes are calculated using the combined nominal income tax rate of 30.7 percent (2021: 30.7 percent), which is the rate applicable to the German tax group of the Group parent company KION GROUP AG. The Group reconciliation is an aggregation of the individual company-specific reconciliations prepared in accordance with relevant local tax rates, taking into account consolidation effects recognized in income.
in € million |
2022 |
2021 |
|---|---|---|
Earnings before tax |
138.0 |
759.7 |
|
|
|
Anticipated income taxes |
–42.4 |
–233.2 |
Deviations due to the trade tax base |
–3.6 |
–2.7 |
Deviations from the anticipated tax rate |
13.9 |
34.6 |
Losses for which deferred taxes have not been recognized |
–28.2 |
–3.9 |
Change in tax rates and tax legislation |
–0.0 |
0.8 |
Non-deductible expenses |
–27.9 |
–13.4 |
Non-taxable income/tax-exempt income/tax incentives |
28.4 |
21.8 |
Taxes relating to other periods |
17.5 |
2.6 |
Deferred taxes relating to prior periods |
11.5 |
3.9 |
Non-creditable withholding tax on dividends |
–1.5 |
–4.3 |
Other |
0.2 |
2.1 |
Effective income taxes (current and deferred taxes) |
–32.2 |
–191.7 |