[14] Income taxes

Current taxes

The income tax expense of €220.5 million (2023: €145.4 million) consisted of €265.6 million in current tax expense (2023: €286.6 million) and €45.1 million in deferred tax income (2023: €141.2 million). The current tax expense included expenses of €3.4 million (2023: €11.9 million) relating to previous financial years. Of the deferred tax income, €36.3 million was attributable to the change in deferred taxes recognized on temporary differences (2023: €99.6 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 (2023: 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 2023.

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 swelled to €489.3 million as at December 31, 2024 (December 31, 2023: €443.2 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 2024, KION GROUP AG and the consolidated subsidiaries that reported losses for 2024 or 2023 recognized net deferred tax assets on temporary differences, loss carryforwards, and tax credits totaling €25.5 million (2023: €59.3 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 €560.7 million (2023: €581.3 million) – of which €193.0 million (2023: €202.0 million) can only be carried forward on a restricted basis – or on interest carryforwards of €299.8 million (2023: €292.9 million) or on temporary differences of €8.3 million (2023: €19.9 million).

Corporation-tax loss carryforwards amounting to €20.6 million (2023: €24.1 million) on which no deferred tax assets have been recognized will expire within the next five years. Corporation-tax loss carryforwards amounting to €19.5 million (2023: €14.5 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 €152.9 million (2023: €163.8 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 €139.5 million (December 31, 2023: €135.2 million), of which €91.1 million (December 31, 2023: €84.6 million) concerned tax losses that can be carried forward indefinitely.

The KION Group’s corporation-tax loss carryforwards in Germany as at December 31, 2024 amounted to €229.1 million (December 31, 2023: €214.4 million), while trade-tax loss carryforwards stood at €213.7 million (December 31, 2023: €198.2 million). There were also tax loss carryforwards outside Germany totaling €625.7 million (December 31, 2023: €579.9 million).

The recognition of deferred tax assets on tax loss carryforwards that had not been recognized in the previous year gave rise to deferred tax income of €8.0 million (2023: €27.6 million). Utilization of tax loss carryforwards on which no deferred tax assets had been recognized in the previous year led to a reduction in the current tax expense of €0.9 million (2023: €4.4 million).

The interest that can be carried forward indefinitely in Germany amounted to €299.8 million as at December 31, 2024 (December 31, 2023: €292.9 million).

As had also been the case in 2023, the deferred tax liabilities essentially related to hidden reserves identified in the purchase price allocation, particularly for intangible assets and property, plant and equipment, that had been carried out in connection with the acquisition of Dematic.

The currency translation of deferred tax assets and deferred tax liabilities gave rise to a net asset totaling €0.7 million as at the reporting date that was recognized in other comprehensive income (loss) under cumulative translation adjustment, resulting in an increase in equity (2023: increase in equity of €2.9 million).

No deferred taxes have been recognized on temporary differences of €212.0 million (2023: €206.7 million) between the net assets reported in the consolidated financial statements for the Group companies and the tax base for the shares held 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 the sale of equity investments is not probable in the foreseeable future.

Based on Directive (EU) 2022/2523 of December 14, 2022, the German legislator adopted the Act to Ensure Global Minimum Taxation for Corporate Groups (Minimum Tax Act, MinStG). The rules on global minimum taxation are designed to ensure that multinational corporate groups are subject to an effective tax rate of at least 15 percent in every jurisdiction in which they operate. The Minimum Tax Act applies to Germany-based KION GROUP AG with effect as of 2024 as it is classified as a partially owned parent entity. Furthermore, many countries have introduced national top-up tax rules aimed at ensuring effective minimum taxation of the subsidiaries of multinational corporate groups that are based in those countries. To calculate the effective minimum tax rate in each affected jurisdiction, not only the KION Group companies but potentially also Weichai Power Co., Ltd. and its other subsidiaries must be taken into account. Based on the data at its disposal for 2024, the KION Group has not identified any material impact resulting from application of the global minimum tax rules.

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 (2023: 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.