Deutsche Post DHL has been ordered to pay 516 million euros ($645 million) in back taxes to the German government to settle a complex legal dispute prompted by European Union competition regulators.
Europe’s biggest logistics and mail group said the payment of sales taxes covering 1998 to 2010 will impact earnings before interest, tax, depreciation and amortization by $225 million and reduce net profit by $320 million.
But the Bonn-based company still expects to meet its 2012 earnings guidance because it had already made provisions in earlier years.
The German government exempted Deutsche Post from sales tax when it privatized the company in the late 1990s to compensate for maintaining an expensive universal postal service.
But European Union regulators pressed Germany to end the exemption following complaints by rivals, including TNT Express and United Parcel Service.
Deutsche Post said it won’t appeal the payment in order to establish legal certainty and avoid years of legal battles with no certain outcome.
The company is also facing a demand to repay $372 million in state aid that were declared unlawful by the European Union.
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