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 with 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 income from other accounting periods amounting to € 3,816 thousand (previous year: tax expenditure of € 554 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 comprises corporation tax at 15.0 %, a solidarity surcharge of 5.5 % of 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 do not generally 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 offset 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 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 where it is sufficiently certain that they can be realised in the near future. The Group has corporation tax loss carry-forwards of € 65,892 thousand and trade tax loss carry-forwards of € 104,393 thousand (previous year: € 0 thousand) for which deferred tax assets of € 27,600 thousand (previous year: € 0 thousand) are recognised. Deferred taxes of € 13,454 thousand (previous year: € 0 thousand) are recognised on foreign tax loss carry-forwards of € 3,754 thousand (previous year: € 0 thousand). No deferred tax assets are recognised for domestic corporation tax loss carry-forwards of € 37,273 thousand (previous year: € 15,601 thousand), domestic trade tax loss carry-forwards of € 36,859 thousand (previous year: € 55,357 thousand) and foreign tax loss carry-forwards of € 36,845 thousand (previous year: € 28,328 thousand). Under current legislation, tax losses can be carried forward in Germany without restriction.

Deferred tax assets of € - 18,469 thousand (previous year: € 22,924 thousand) recognised directly in equity without effect on profit and loss come from actuarial gains and losses on pension provisions, cash flow hedges and unrealised gains/losses arising from financial assets measured at fair value.

Disclosure regarding minimum taxation (Pillar 2)

In December 2022, the EU Member States agreed to implement the OECD’s model provisions for global minimum taxation (Pillar 2). The implementation was decided under German law in December 2023 and will apply for the first time to financial years starting after 30 December 2023.

For the 2023 financial year, the minimum taxation law does not yet apply and no applicable laws have been passed for the foreign companies. No actual tax loss/gain from the implementation of the global minimum taxation regulations therefore needs to be taken into account.

The HHLA Group, which is active worldwide, would have fallen within the scope of the minimum taxation regulations for the 2023 financial year had these regulations been applicable for the 2023 financial year.

Based on the latest tax returns, country-specific reporting and annual financial statements for the individual companies, an indicative assessment of the potential burden of the Safe Harbour guidelines was conducted for the 2023 financial year as per Section 84 et seqq. of the German Minimum Taxation Law (MinStG).

Based on these assessments, the countries of Hungary, Estonia and Georgia, which each have a nominal tax rate (accumulated) of under 15 % in particular fulfil at least one of the preconditions for the CbCR Safe Harbour according to Section 84 MinStG. This would not result in any actual tax gain/loss for the HHLA Group from the German Minimum Taxation Law or foreign minimum taxation laws.

The HHLA Group exercised the option to be exempt from reporting deferred taxes associated with the minimum taxation rate according to IAS 12.4A.