[14] Income taxes

The income tax expense of €15.9 million (2012: expense of €149.5 million) consisted of €59.0 million in current tax expense (2012: €122.1 million) and €43.1 million in deferred tax income (2012: deferred tax expense of €27.4 million). The current tax expense includes expenses of €9.1 million (2012: expenses of €8.8 million) relating to previous financial years.

At the reporting date there were income tax assets of €15.4 million receivable from tax authorities (2012: €5.5 million) and income tax liabilities of €27.7 million (2012: €85.0 million).

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 have been announced 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 plus the solidarity surcharge (5.5 per cent of corporate income tax). Taking into account the average trade tax rate of 14.14 per cent, the combined nominal tax rate for companies in Germany was virtually unchanged on 2012 at 30.0 per cent. The income tax rates for foreign companies used in the calculation of deferred taxes are between 10.0 per cent and 37.6 per cent (2012: between 10.0 per cent and 38.1 per cent).

No deferred taxes have been recognised on temporary differences of €88.5 million (2012: €96.1 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 investments in the foreseeable future.

Deferred tax assets are allocated to the following items in the statement of financial position: >> Table 050

Deferred tax liabilities are allocated to the following items in the statement of financial position: >> Table 051

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.

In April 2013, KION GROUP GmbH, Wiesbaden (controlling company; since renamed KION Material Handling GmbH), and Linde Material Handling GmbH, Aschaffenburg (subordinated company), concluded a control and profit-and-loss transfer agreement. The agreement came into effect upon entry in the commercial register on 17 May 2013 and established a tax group for these two companies (single entity for tax purposes) for the 2013 tax assessment period onwards. As a result of this arrangement, additional deferred tax assets totalling €41.8 million were recognised in 2013 in respect of tax loss carryforwards that it had previously not been possible to utilise. Of this amount, €12.7 million had been utilised by 31 December 2013.

Deferred tax assets amounting to €139.0 million (2012: €233.2 million) have not been recognised because it is unlikely that the corresponding benefit can be utilised given the current tax laws. Unrecognised deferred tax assets relate to tax loss carryforwards of €49.7 million (2012: €108.6 million), interest carryforwards of €89.1 million (2012: €124.0 million) and other temporary differences of €0.2 million (2012: €0.6 million).

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. The total amount of unrecognised deferred tax assets relating to loss carryforwards was €49.7 million (2012: €108.6 million), of which €41.0 million concerns tax losses that can be carried forward indefinitely.

The KION Group’s corporation-tax loss carryforwards in Germany as at 31 December 2013 amounted to €169.8 million (31 December 2012: €289.8 million), while trade-tax loss carryforwards stood at €140.5 million (31 December 2012: €270.8 million). There were also foreign tax loss carryforwards totalling €228.5 million (31 December 2012: €190.5 million).

The interest that can essentially be carried forward indefinitely in Germany as at 31 December 2013 amounted to €359.0 million (31 December 2012: €463.5 million).

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 30.0 per cent (2012: 29.9 per cent). >> Table 052