[14] Income taxes

The income tax expense of €34,041 thousand (2010: income of €34,722 thousand) consisted of €49,349 thousand (2010: €14,997 thousand) in current tax expense and €15,308 thousand (2010: €49,719 thousand) in deferred tax income. The current tax expense includes expenses of €2,602 thousand (2010: income of €11,868 thousand) relating to previous financial years.

At the reporting date there were income tax assets of €4,953 thousand receivable from tax authorities (2010: €4,550 thousand) and income tax liabilities of €15,439 thousand (2010: €6,661 thousand).

Deferred taxes are recognised for temporary differences between the tax base and IFRS carrying amounts. Deferred taxes are determined on the basis of the tax rates that will apply or are expected to apply at the realisation date in accordance with the current legal situation in each country concerned. The current corporate income tax rate in Germany is 15.0 per cent. Taking into account the average trade tax rate of 13.9 per cent and the solidarity surcharge (5.5 per cent of corporate income tax), the combined tax rate for companies in Germany was unchanged on 2010 at 29.8 per cent. The income tax rates for foreign companies used in the calculation of deferred taxes are between 10.0 per cent and 38.5 per cent (2010: 10.0 per cent and 37.8 per cent).

No deferred taxes have been recognised on differences of €100,146 thousand between the IFRS carrying amounts and the tax base for equity investments (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 investments in the foreseeable future.

Deferred tax assets include the following items in the statement of financial position:

Deferred tax liabilities include the following items in the statement of financial position:

The deferred tax liabilities essentially relate to the purchase price allocation in the acquisition of the KION Group, particularly for intangible assets and property, plant and equipment.

Deferred tax assets amounting to €211,398 thousand (2010: €161,119 thousand) have not been recognised because it is unlikely that the corresponding benefit can be utilised. Unrecognised deferred tax assets relate to tax loss carryforwards of €91,636 thousand (2010: €74,263 thousand), interest carryforwards of €116,060 thousand (2010: €81,844 thousand) and other temporary differences of €3,702 thousand (2010: €5,012 thousand).

Deferred taxes are recognised on tax loss carryforwards and interest carryforwards to the extent that sufficient future taxable income is expected to be generated against which the losses can be utilised. Of the deferred tax assets amounting to €9,198 thousand recognised on interest carryforwards for the first time in 2010, €2,243 thousand was written down in 2011 because, based on the information available at the reporting date, a lower amount was expected to be used in future. The total amount of unrecognised deferred tax assets relating to loss carryforwards of €91,636 thousand (2010: €74,263 thousand) concerns tax losses that can be carried forward indefinitely.

As of 31 December 2011, the KION Group's tax loss carryforwards in Germany amounted to €381,941 thousand (31 December 2010: €400,286 thousand) for corporate income tax and €263,525 thousand (31 December 2010: €288,910 thousand) for trade tax. There were also foreign tax loss carryforwards totalling €187,438 thousand (31 December 2010: €183,353 thousand).

As of 31 December 2011, the interest carryforwards in Germany that can be carried forward indefinitely amounted to €464,939 thousand (31 December 2010: €342,252 thousand).

The table below shows the reconciliation of expected income tax expense to effective income tax expense. 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 recognised in income. The expected tax rate applied in the reconciliation is unchanged on 2010 at 29.8 per cent.