[14] Income taxes

Current taxes

The income tax expense of €145.4 million (2022: €32.2 million) consisted of €286.6 million in current tax expense (2022: €107.2 million) and €141.2 million in deferred tax income (2022: €75.0 million). The current tax expense included expenses of €11.9 million (2022: tax income of €17.5 million) relating to previous financial years. Of the deferred tax income, €99.6 million was attributable to the change in deferred taxes recognized on temporary differences (2022: €68.0 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 (2022: 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 2022.

Deferred taxes were allocated to the following items in the statement of financial position:

The amount of deferred tax assets recognized in the statement of financial position rose to €443.2 million as at December 31, 2023 (December 31, 2022: €300.8 million). 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 2023, KION GROUP AG and the consolidated subsidiaries that reported losses for 2023 or 2022 recognized net deferred tax assets on temporary differences, loss carryforwards, and tax credits totaling €59.3 million (2022: €18.5 million). The assets were considered to be recoverable 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 €581.3 million (2022: €773.3 million) – of which €202.0 million (2022: €191.6 million) can only be carried forward on a restricted basis – or on interest carryforwards of €292.9 million (2022: €292.9 million) or on temporary differences of €19.9 million (2022: €11.3 million).

Corporation-tax loss carryforwards amounting to €24.1 million (2022: €22.3 million) on which no deferred tax assets have been recognized will expire within the next five years. Corporation-tax loss carryforwards amounting to €14.5 million (2022: €14.9 million) on which no deferred tax assets have been recognized will expire within the next six to nine years. Corporation-tax loss carryforwards amounting to €163.8 million (2022: €154.4 million) on which no deferred tax assets have been recognized will expire after nine years.

Consequently, the total amount of unrecognized deferred tax assets relating to loss carryforwards was €135.2 million (December 31, 2022: €157.1 million), of which €84.6 million (December 31, 2022: €109.4 million) concerned tax losses that can be carried forward indefinitely.

The KION Group’s corporation-tax loss carryforwards in Germany as at December 31, 2023 amounted to €214.4 million (December 31, 2022: €163.6 million), while trade-tax loss carryforwards stood at €198.2 million (December 31, 2022: €150.7 million). There were also tax loss carryforwards outside Germany totaling €579.9 million (December 31, 2022: €569.6 million).

The recognition of deferred tax assets on tax loss carryforwards that had not been recognized in 2022 gave rise to deferred tax income of €27.6 million (2022: €4.5 million). Utilization of tax loss carryforwards on which no deferred tax assets had been recognized in 2022 led to a reduction in the current tax expense of €4.4 million (2022: €6.4 million).

The interest that can be carried forward indefinitely in Germany amounted to €292.9 million as at December 31, 2023 (December 31, 2022: €292.9 million).

As had also been the case in 2022, 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 of deferred tax assets and deferred tax liabilities gave rise to a net asset totaling €2.9 million as at the reporting date that was recognized in other comprehensive income (loss) under cumulative translation adjustment, resulting in an increase in equity (2022: decrease in equity of €13.4 million).

No deferred taxes have been recognized on temporary differences of €206.7 million (2022: €199.1 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 the temporary differences and there are no plans to dispose of equity investments in the foreseeable future.

Based on Directive (EU) 2022/2523 of December 14, 2022, German lawmakers adopted the Act to Ensure Global Minimum Taxation for Corporate Groups (Minimum Tax Act, MinStG). The new act applies to Germany-based KION GROUP AG from 2024 as it qualifies as a partially owned parent company. The KION Group carried out an impact analysis in order to ascertain whether the introduction of the global minimum tax rules will have an adverse impact on its tax situation. Based on this analysis, which was limited to data of KION Group companies, there would have been no notable additional tax expense in the relevant countries if MinStG had been required to be applied in respect of the 2023 financial year. For the impact analysis to be carried out conclusively, it would need to include not only the KION Group companies but also Weichai Power Co., Ltd. and its other subsidiaries. It is therefore not currently possible to rule out that the inclusion of Weichai Power Co., Ltd. and its other subsidiaries would have had an effect on the tax expense, with financial implications for the KION Group, if the global minimum tax rules had been required to be applied for financial years ended December 31, 2023.

The KION Group will update its assessment regarding the future financial implications of the global minimum tax rules on an ongoing basis.

The KION Group has applied the temporary, mandatory exception to the obligation to recognize deferred taxes resulting from the introduction of global minimum tax.

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 (2022: 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.