13  INCOME TAXES

The income tax expense can be analyzed as follows:

1. See Note 13.2.3

The tax rate of the Group is the weighted average tax rate obtained by applying the currently effective rate for each individual jurisdiction to its respective profit before taxes. As a result of changes in the country mix of the profit before taxes, the Group’s expected tax rate for 2022 increased to 19.8%.

Amounts recognized and movements in deferred tax assets and liabilities:

1. Other comprehensive income

1. Other comprehensive income

Temporary differences on intangible assets primarily relate to assets recognized during the purchase price allocation process for business combinations.

Deferred tax assets related to tax loss carry-forwards: 

On May 19, 2019, the Swiss electorate passed the Federal Act on Tax Reform and AHV Financing (TRAF). The tax reform abolished the tax regimes for holding, domiciliary and mixed companies as of January 1, 2020 and introduced new tax calculation principles. As part of the TRAF and cantonal tax practice, transitional measures were introduced in order to ease the transition from the current reliefs to the new tax calculation principles. For the Group, these measures allow amongst others the tax-effective amortization of a step-up amount over a period of up to 10 years. As a consequence, the Group started to capitalize corresponding deferred tax assets in 2019.

Tax benefits related to the step-up mechanism that are not capitalized at year-end: 

At December 31, 2022, there are temporary differences of CHF 1’041 million (2021: CHF 1’290.9 million) related to investments in subsidiaries for which no deferred tax liabilities are recognized since the Group controls the timing of reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.