18. Income tax

Paid or outstanding income taxes and deferred taxes are shown under the item income taxes. Income taxes are made up of corporation tax, a solidarity surcharge and trade tax. Companies domiciled in Germany pay corporation tax of 15.0 % and a solidarity surcharge of 5.5 % of the corporation tax expense. These companies and German-based subsidiaries in the legal form of limited partnerships are also liable for trade tax, which is imposed at different local rates. Trade tax does not reduce the amount of a limited company’s profits on which corporation tax is payable.

Current income tax expenses include tax expenses from other accounting periods amounting to € - 35 thousand (previous year: € 1,189 thousand).

Deferred tax assets and liabilities result from temporary differences and tax loss carry-forwards.

Deferred taxes are calculated on the basis of the tax rates currently in force in Germany or those expected to apply at the time of realisation. A tax rate of 32.28 % was used for the calculations in both the reporting year and the previous year. This is made up of corporation tax at 15.0 %, a solidarity surcharge of 5.5 % of the corporation tax, and the trade tax payable in Hamburg of 16.45 %. Limited partnerships are also liable for trade tax. Due to special rules, property management companies generally do not pay trade tax. Due to rules on minimum taxation, tax loss carry-forwards are only partially usable in Germany. Tax losses of up to € 1 million can be set off against taxable profits without restriction, and higher tax losses up to a maximum of 60 %.

Permanent differences only include items for which no deferred taxes are recognised due to their permanent nature. The change compared to the previous year is essentially due to the discounting of an entitlement to financial settlement resulting from a profit and loss transfer agreement.

The effects of tax rates for domestic and foreign taxes that diverge from the Group parent company’s tax rate are reported in offsetting and reconciliation under differences in tax rates.

Deferred tax assets are recognised on tax loss carry-forwards and temporary differences if it is sufficiently certain that they can be realised in the near future. The Group has corporation and trade tax loss carry-forwards of € 2,381 thousand (previous year: € 0 thousand) for which deferred tax assets of € 860 thousand (previous year: € 0 thousand) are recognised. Deferred taxes of € 1,515 thousand (previous year: € 406 thousand) are recognised on foreign tax loss carry-forwards of € 6,008 thousand (previous year: € 2,138 thousand). No deferred tax assets are recognised for domestic corporation tax loss carry-forwards of € 14,612 thousand (previous year: € 7,955 thousand), domestic trade tax loss carry-forwards of € 36,318 thousand (previous year: € 23,956 thousand) and foreign tax loss carry-forwards of € 32,119 thousand (previous year: € 20,950 thousand). Under current legislation, tax losses can be carried forward in Germany without restriction.

Deferred tax assets of € 28,045 thousand (previous year: € 43,459 thousand) recognised directly in equity without effect on profit and loss come from actuarial gains and losses on pension provisions and unrealised gains/losses arising from financial assets measured at fair value.