Tax Strategy
HUGO BOSS firmly believes that paying tax is of central importance to our global economic and social relationships. By paying our taxes, we assume responsibility for our actions in every country in which we operate. Our tax payments are an important contribution to the expansion and maintenance of infrastructure and social cohesion in every one of these countries, as well as representing a cornerstone in our commitment to conduct and develop our business in a sustainable, fair and cooperative manner across the world.
Despite the fact that there is not always absolute certainty regarding tax in international business transactions, which leaves some space for interpretation, HUGO BOSS recognizes its clear responsibility in respect of local legislation. This forms the basis for the responsible and dutiful treatment of tax matters and is in line with the company’s ambition to comply to all applicable laws and regulations. For this reason, tax compliance for HUGO BOSS is more than gearing our decision-making processes to the exact wording of the law. HUGO BOSS commits to fully comply with the spirit as well as the letter of the tax laws and regulations in the countries in which it operates.
For this purpose, HUGO BOSS has drawn up the following guiding principles in the form of a tax strategy aimed at ensuring that legal obligations are met throughout the Group as a whole, as well as aligning it with our economic activities. The following tax strategy was developed by the Group Tax Department and approved by the management board and the Audit Committee.
– The Managing Board
Tax reconciliation
| (In EUR thousand) | 2022 |
|---|---|
| Earnings before taxes | 285,295 |
| Anticipated income tax | 84,305 |
| Tax effects of permanent items | 4,827 |
| Tax rate-related deviation | (15,275) |
| thereof effects of changes in tax rates | 1 |
| thereof adjustments of tax amount to diverging local tax rate | (15,276) |
| Tax refund/tax arrears | (3,317) |
| Deferred tax effects from prior years | (485) |
| Valuation allowance on deferred tax assets | (2,535) |
| Tax effects from distributable profit of subsidiaries | (2,610) |
| Other deviations | (1,472) |
| Income tax expenditure reported | 63,438 |
| Effective tax rate | 22% |
Breakdown of income tax accrued (current year) by country
The successful execution of the “CLAIM 5” growth strategy significantly spurred the operational and financial performance in fiscal year 2022. HUGO BOSS posted record sales as well as strong bottom-line improvements. This is also reflected in the corresponding increase in income tax expenses.
As already in the previous years, Germany, as one of the core markets of HUGO BOSS, had the highest revenue1 and current income tax expenses (excluding aperiodic effects). In this context, the current tax expenses only reflect operations in the current year and do not include deferred taxes or provisions for uncertain tax liabilities. As Great Britain, the United States, and mainland China are among the core markets of HUGO BOSS, this is also reflected in their share of revenue1 and income tax accrued. The distribution of revenue1 and current income tax accrued among the other countries corresponds to the respective course of business.
| Main countries of company’s operations | Sales 20221 | Earnings before tax 20221 | Income tax accrued 20221 | Number of Employees 2022 | Primary Activities |
|---|---|---|---|---|---|
| Germany | 32% | 38% | 30% | 20% | Management activities, supply unit, development and design, production, procurement, sales |
| Great Britain | 8% | 9% | 14% | 5% | Sales, support services |
| United States | 12% | 4% | 13% | 8% | Sales, support services |
| China | 4% | -1% | 6% | 8% | Sales, support services |
| France | 4% | 3% | 5% | 3% | Sales, support services |
| Turkey | 3% | 4% | 4% | 29% | Production, sales |
| Mexico | 2% | 2% | 4% | 2% | Sales |
| Brasil | 1% | 2% | 4% | 1% | Sales |
| Benelux | 3% | 28% | 4% | 2% | Sales, Finance unit |
| Switzerland | 14% | 0% | 3% | 3% | Supply unit, Trademark unit, development and design, production, procurement, salesales |
| Australia | 1% | 1% | 2% | 1% | Sales |
| Canada | 2% | 1% | 2% | 2% | Sales |
| Spain | 2% | 1% | 2% | 2% | Sales |
| Austria | 1% | 0% | 2% | 1% | Sales |
| Italy | 1% | 1% | 1% | 2% | Production, sales |
| Other countries | 10% | 7% | 4% | 11% | |
| Result | 100% | 100% | 100% | 100 % |
1 Figures are based on the separate financial statements of the respective subsidiaries included in the consolidated financial statements.