20. Income taxes
The tax ratio (=taxes as a percentage of earnings before taxes) was 119.5% (previous year: 21.8%).
EUR million | 2024 | 2023 |
Current taxes | –10.4 | –11.7 |
Deferred taxes | –4.5 | –0.7 |
Total taxes | –14.9 | –12.4 |
In accordance with the OECD BEPS 2.0 Pillar Two rules, the Group has applied the global minimum tax framework in the countries in which it operates from the 2024 financial reporting year. All relevant countries can benefit from the Transitional Country-by-Country Reporting Safe Harbor and are therefore exempt from a top-up tax calculation. The Group applies the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes.
Zehnder Group anticipates that losses of EUR 0.2 million (previous year: EUR 0.5 million) can be utilised against future taxable profits. The deferred tax assets on these losses amount to EUR 0.0 million (previous year: EUR 0.1 million).
Total deferred tax assets not capitalised amount to EUR 1.2 million (previous year: EUR 6.5 million) and originate predominantly from Finland.
The differences between the expected income tax expense, based on the expected income tax rate and the effective income tax expense shown in the income statement, is explained by the following factors. The expected income tax rate of the Group is based on the profit/loss before taxes and the applicable tax rate in the tax year for the Group companies.
EUR million | 2024 | 2023 |
Earnings before taxes | 12.4 | 57.1 |
Expected tax rate in % | 22.5 | 21.5 |
Expected tax expenses | –2.8 | –12.3 |
Effect from non-refundable tax credits/incentives | 0.2 | 0.5 |
Effect of non-deductible expenses | –6.8 | –0.7 |
Effect of non-recognition of tax loss carry-forwards | –0.8 | –0.3 |
Effect of use of unrecognised tax loss carry-forwards | 0.2 | 0.3 |
Effect from deferred tax asset valuation allowances | –4.5 | - |
Effective tax expenses | –14.9 | –12.4 |
Effective tax rate in % | 119.5 | 21.8 |
In the year under review, EUR 5.3 million of the total EUR 6.8 million effect of non-deductible expenses were derived from the impairment in China and the divestment of the Zehnder Climate Ceiling Solutions business.
Furthermore, EUR 4.5 million (previous year: EUR 0.0 million) capitalised deferred taxes were impaired in relation to the business development in China and the diminished probability of generating sufficient taxable profits to realise these assets.