Deutsche Post says must pay 516 mn euros in back taxes

German postal giant Deutsche Post said Tuesday it must pay 516 million euros ($645 million) in back taxes for the period from 1998 to 2010, which will hit its second-quarter earnings.

“The German financial authorities have issued a notice of assessment that will result in an additional VAT (value-added tax) payment of 516 million euros,” Deutsche Post said in a statement.

The decision came after a review of the period from 1998 until 2010, when the law on VAT for postal services was revised and a number of postal services that were previously exempt were now ruled liable for VAT, the statement explained.

The back taxes would result in a 180-million-euro charge against the group’s pre-tax profit and a charge of 265 million euros on bottom-line net profit for the second quarter, Deutsche Post said.

It had already set aside reserves and so the charges would not affect Deutsche Post’s full-year earnings targets, it added.