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.
Tax reconciliation
| (In EUR thousand) | 2023 |
|---|---|
| Earnings before taxes | 356,889 |
| Anticipated income tax | 105,431 |
| Tax effects of permanent items | 219 |
| Tax rate-related deviation | (14,634) |
| thereof effects of changes in tax rates | (176) |
| thereof adjustments of tax amount to diverging local tax rate | (14,458) |
| Tax refund/tax arrears from prior years | (6,682) |
| Deferred tax effects from prior years | 3,707 |
| Valuation allowance on deferred tax assets | (1,887) |
| Tax effects from distributable profit of subsidiaries | 0 |
| Other deviations | 945 |
| Income tax expenditure reported | 87,099 |
| Income tax burden | 24% |
Breakdown of income tax accrued and income taxes paid by country
HUGO BOSS looks back on a successful business performance in fiscal year 2023, recording strong top- and bottom-line improvements. The successful execution of several brand, product, and distribution initiatives as part of “CLAIM 5” further spurred the operational and financial performance in 2023. 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 revenues1 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. In addition to current tax payments for the fiscal year, tax payments include tax payments for previous periods. As the United States, Great Britain, and mainland China are among the core markets of HUGO BOSS, this is also reflected in their share of revenue1 as well as income tax accrued and income taxes paid. The distribution of revenue1 and current income taxes among the other countries corresponds to the respective course of business.
| Main countries of company’s operations | Sales 20231 | Earnings before tax 20231,2 | Income tax accrued 20231 | Income tax paid 20231 | Number of Employees 2023 | Primary Activities | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| % | in EUR million | % | in EUR million | % | in EUR million | % | in EUR million | % | FTE | ||
| Germany | 30 | 2,213.4 | 8 | 24.8 | 37 | 24.7 | 30 | 21.3 | 21 | 3,868 | Management activities, trademark unit since 09/2023, supply unit, development and design, production, procurement, sales |
| United States | 12 | 869.1 | 16 | 45.9 | 8 | 5.4 | 12 | 8.2 | 8 | 1,584 | Sales, support services |
| Great Britain | 6 | 450.8 | 0 | 0.4 | 5 | 3.2 | 14 | 9.8 | 5 | 925 | Sales, support services |
| China | 5 | 331.4 | 3 | 7.9 | 1 | 0.4 | 5 | 3.8 | 7 | 1,383 | Sales, support services |
| Switzerland | 16 | 1,204.6 | 29 | 84.5 | 7 | 4.6 | 3 | 2.0 | 3 | 591 | Supply unit, trademark unit until 08/2023, development and design, production, procurement, sales |
| Turkey | 4 | 259.9 | 5 | 13.3 | 4 | 2.3 | 5 | 3.5 | 27 | 5,148 | Production, sales |
| Italy | 2 | 110.5 | 1 | 4.2 | 2 | 1.4 | 1 | 0.4 | 2 | 358 | Production, sales |
| United Arab Emirates | 3 | 213.1 | 8 | 24.9 | 0 | 0.0 | 0 | 0.0 | 1 | 270 | Sales |
| Netherlands | 2 | 169.9 | 2 | 7.2 | 6 | 3.8 | 5 | 3.8 | 1 | 260 | Sales, Finance Unit |
| France | 3 | 243.8 | 5 | 14.3 | 5 | 3.6 | 9 | 6.3 | 3 | 622 | Sales |
| Mexico | 2 | 162.0 | 1 | 3.8 | 1 | 0.8 | 4 | 2.9 | 2 | 326 | Sales |
| Spain | 2 | 138.3 | 4 | 10.7 | 4 | 3.0 | 4 | 2.6 | 2 | 407 | Sales |
| Canada | 2 | 121.6 | 3 | 9.3 | 2 | 1.6 | 1 | 1.0 | 2 | 343 | Sales |
| Japan | 1 | 88.8 | 2 | 6.4 | 4 | 2.4 | 1 | 0.7 | 2 | 299 | Sales |
| Austria | 1 | 78.7 | 0 | -0.2 | 2 | 1.1 | 1 | 0.9 | 1 | 117 | Sales |
| Brasil | 1 | 62.5 | 3 | 9.8 | 4 | 2.7 | 4 | 2.7 | 2 | 338 | Sales |
| Other countries | 8 | 611.2 | 10 | 26.7 | 8 | 5.0 | 1 | 0.9 | 11 | 1,900 | Sales |
| Result | 100 | 7,329.6 | 100 | 293.9 | 100 | 66.0 | 100 | 70.8 | 100 | 18,738 | |
1 Figures are based on the separate financial statements of the respective subsidiaries included in the consolidated financial statements and therefore do not correspond in total to the consolidated figures in the 2023 Annual Report.
2 Intercompany dividends and intercompany profit assumptions were eliminated from earnings before tax.