DHL 2011 Annual Report Download - page 109

In , the regulatory authority announced a benchmark decision specifying the
conditions that would apply in  and  to regulation under the price-cap pro-
cedure for mail prices requiring approval.  is stipulates that the general rate of in a-
tion and the expected productivity growth rate for Deutsche Post  are the key factors
applicable to mail prices subject to approval. Prices must be lowered if the in ation
rate in the reference period is lower than the productivity growth rate speci ed by the
regulatory authority. In the year under review, the regulatory authority approved the
prices to be charged in  for the products regulated under the price-cap procedure.
 e German tax authorities have announced their intention to qualify several -
exempt mail products retroactively as subject to . We assume that amended tax
assess ments will be reissued for all open tax periods.  e  exemption for postal
services is based on European law (postal services directive,  directive) and national
German law (Postgesetz – Postal Act), the Post-Universaldienstleistungsverordnung
(Postal Universal Service Ordinance) and the Umsatzsteuergesetz (Value Added Tax
Act)). Based on these laws, Deutsche Post  classi es its postal services either as -
exempt or -liable.  e German tax authorities have reviewed this assessment over
the years and have not objected to it. Should the  tax assessments be amended, we
shall take legal action where appropriate. Despite our view that the products’ exemption
complies with current European and German law, we cannot rule out the possibility of
additional tax payments.
Since  July , as a result of the revision of the relevant tax exemption provi-
sions, the  exemption has only applied to speci c universal services in Germany
that are not subject to individually negotiated agreements or provided on special terms
(discounts etc.). Deutsche Post  does not believe that the legislative amendment fully
complies with the applicable speci cations of European Community law. Due to the
legal uncertainty resulting from the new legislation, Deutsche Post  is endeavouring
to clarify certain key issues with the tax authorities. Although Deutsche Post  has
implemented the required measures to a large extent, in the event of di ering legal
opinions on the part of Deutsche Post  and the tax authorities, Deutsche Post  will
consider pursuing the matter in court.
Risks arising from market and sector-specifi c conditions
In addition to the regulatory environment, market and sector-speci c conditions
have a signi cant e ect on the business performance of the Group.
We pay close attention to economic trends in all regions, particularly in the indus-
trial countries. Despite the volatile climate, demand for logistics services rose in 
and our revenues increased accordingly. However, we cannot rule out the possibility
of an economic downturn in speci c regions and a stagnation or decrease in transport
quantities.
 e national debt crisis in the euro zone represents another element of uncertainty,
not only for logistics companies, and has lowered economic expectation. Cost  exibil-
ity is therefore becoming increasingly necessary to allow a fast response to changes in
market demand.
Deutsche Post DHL Annual Report 
Group Management Report
Outlook
Opportunities and risks
103