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 € 4,189 thousand (previous year: tax income of € 3,816 thousand).

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

Off-balance sheet items primarily include deferred tax assets on 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 € 137,009 thousand (previous year: € 65,892 thousand) and trade tax loss carry-forwards of € 159,949 thousand (previous year: € 104,393 thousand) for which deferred tax assets of € 47,993 thousand (previous year: € 27,600 thousand) are recognised. No deferred taxes (previous year: € 13,454 thousand) are recognised on foreign tax loss carry-forwards (previous year: € 3,754 thousand). No deferred tax assets are recognised for domestic corporation tax loss carry-forwards of € 40,372 thousand (previous year: € 37,273 thousand), domestic trade tax loss carry-forwards of € 45,242 ­thousand (previous year: € 36,859 thousand) and foreign tax loss carry-forwards of € 37,235 thousand (previous year: € 36,845 thousand). Under current legislation, tax losses can be carried forward in Germany without restriction.

Deferred tax assets of € - 18,907 thousand (previous year: € - 18,469 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 order to address the concerns about unequal profit distribution and unequal tax payments by major multinational companies, the Organisation for Economic Co-operation and Development (OECD) published its “Model Rules” in December 2021. These rules are a framework for an international minimum tax rate (known as the “Pillar 2 rules”). The aim of introducing the OECD’s globally applicable Pillar 2 rules is to subject company profits in countries with low taxation to a supplemental tax with a minimum tax rate of 15 %.

The directive adopted by the European Union (EU) on 15 December 2022 with the aim of implementing the OECD requirements was passed into national law by the Federal Republic of Germany and most other Member States effective 2024. This means that the companies in the HHLA Group may be subject to a national supplemental tax from the 2024 financial year onwards that will increase the effective taxation of profit for individual tax jurisdictions to a minimum tax rate of 15 %.

The companies in the HHLA Group are almost exclusively located in countries where the nominal tax rate is above the OECD’s minimum level of 15 %. The global minimum taxation regulations also provide for what are known as safe harbour regulations for the 2024 financial year in order to determine the actual minimum tax rate. The application of the minimum tax rate regulations was audited as part of the preparation of the 2024 consolidated financial statements.

The results showed that no additional taxation is expected as a result of the regulations on global minimum taxation for the HHLA Group in the 2024 financial year.

The Group applies the temporary, mandatory exemption with regard to the recognition of deferred taxes resulting from the introduction of the global minimum tax rate and recognises these taxes as tax expenses/income if they arise.