Chart

13 INCOME TAXES

13.1 INCOME TAXES IN STATEMENT OF PROFIT OR LOSS AND RECONCILIATION

 

2020

2021

CHF 1,000

 

 

Current income taxes 

 19,377 

32,118

Deferred income taxes

 (4,835) 

(15,852)

 

 

 

Total income taxes 

 14,542 

16,266

 

The income tax expense can be analyzed as follows:

 

 

2020

2021

CHF 1,000

 

 

Profit before taxes

 118,227 

137,925

 

 

 

Tax expense based on the Group’s weighted average rate of 17.9% (2020: 20.3%)

 24,052 

24,635

 

 

 

Deferred taxes: tax rate change on opening deferred taxes and tax rate used for 
calculation of deferred taxes different to currently effective rate

 (336) 

2,768

Non-deductible expenses and additional taxable income

 352 

4,852

Tax-free income and tax reductions

 (378) 

(2,633)

Transitional measures from Swiss tax reform

 (10,364) 

(12,580)

Impact of tax losses

 (117) 

106

Impact of investment in subsidiaries and investments at FVOCI

 953 

(779)

Unrecoverable withholding tax

 (76) 

652

Under/(over)provided in prior years

 456 

(755)

 

 

 

Tax expense reported 

 14,542 

16,266

 

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 2021 decreased to 17.9%.

 

13.2 DEFERRED INCOME TAXES

 

13.2.1 Amounts recognized in the financial statements

Amounts recognized and movements in deferred tax assets and liabilities:

 

 

 

 

 

 

 

 

31.12.2020

 

 

Net 
balance 
at 
January 1

 Recognized

Translation

differences

Net

Deferred

tax

assets

Deferred 

tax 

liabilities

 

in profit

or loss

in OCI1

directly in equity

CHF 1,000

 

 

 

 

 

 

 

 

Deferred taxes arising from temporary differences

 

 

 

 

 

 

 Receivables and contract assets

 (585) 

 (126) 

 - 

 - 

 (24) 

 (735) 

 267 

 (1,002) 

 Inventories

 6,154 

 3,113 

 - 

 - 

 (333) 

 8,934 

 9,466 

 (532) 

 Property, plant and equipment

 (444) 

 242 

 - 

 - 

 35 

 (167) 

 465 

 (632) 

 Right-of-use assets

 (9,503) 

 1,453 

 - 

 - 

 264 

 (7,786) 

 1 

 (7,787) 

 Intangible assets

 (10,857) 

 654 

 - 

 - 

 708 

 (9,495) 

 13 

 (9,508) 

 Liabilities and accrued expenses 

 12,617 

 480 

 - 

 - 

 (602) 

 12,495 

 12,495 

 - 

 Liability for post-employment

   benefits

 9,477 

 (71) 

 3,588 

 - 

 (10) 

 12,984 

 12,984 

 - 

 Provisions

 1,708 

 (1,679) 

 - 

 1,950 

 (97) 

 1,882 

 6,412 

 (4,530) 

 Other

 (287) 

 288 

 - 

 - 

 (6) 

 (5) 

 479 

 (484) 

 

 

 

 

 

 

 

 

 

 Subtotal 

 8,280 

 4,354 

 3,588 

 1,950 

 (65) 

18,107 

42,582 

 (24,475) 

 

 

 

 

 

 

 

 

 

Expected tax benefits from

 

 

 

 

 

 

 

 

 Tax loss carry-forwards

 8,049 

 (1,288) 

 - 

 - 

 (600) 

 6,161 

 6,161 

 - 

 Swiss tax reform

 3,635 

 1,693 

 - 

 - 

 - 

 5,328 

 5,328 

 - 

 

 

 

 

 

 

 

 

 

Deferred taxes provided on expected

 dividends from subsidiaries

 (1,884) 

 76 

 - 

 - 

 - 

 (1,808) 

 - 

 (1,808) 

 

 

 

 

 

 

 

 

 

Offsetting

 

 

 

 

 

 

 (21,910) 

 21,910 

 

 

 

 

 

 

 

 

 

Total 

 18,080 

 4,835 

 3,588 

 1,950 

 (665) 

 27,788 

 32,161 

 (4,373) 

1 Other comprehensive income

 

 

 

 

 

31.12.2021

 

 

Net

balance at

January 1

 Recognized

Acquired

in business 

combination

Translation

differences

Net

Deferred

tax

assets

Deferred 

tax 

liabilities

in profit

or loss

in OCI1

directly in equity

CHF 1,000

 

 

 

 

 

 

 

 

 

Deferred taxes arising from temporary differences

 

 

 

 

 

 

 

Receivables and contract assets

(735) 

852 

-

(3,990) 

(27) 

(3,900) 

635 

(4,535)

Inventories

8,934 

6,219 

3,327 

78 

18,558 

19,075 

(517)

Property, plant and equipment

(167) 

(91) 

-

(3,202) 

(37) 

(3,497)

228 

(3,725)

Right-of-use assets

(7,786) 

6,848 

-

(12,241) 

(63) 

(13,242) 

290 

(13,532)

Intangible assets

(9,495) 

(600) 

(76,030) 

(754) 

(86,879) 

(86,879)

Liabilities and accrued expenses 

12,495 

(2,419) 

12,155 

150 

22,381 

22,478 

(97)

Deferred revenue

-

4,343 

-

-

-

(6) 

4,337 

4,337

-

 Liability for post-employment

   benefits

12,984 

370 

(4,398) 

(35) 

8,921 

8,921 

-

 Provisions

1,882 

(608) 

650 

1,649 

25 

3,598 

8,747 

(5,149)

 Other

(5) 

(181) 

(351) 

(9) 

(546) 

220 

(766)

 

 

 

 

 

 

 

 

 

 

 Subtotal 

18,107 

14,733 

(4,398) 

650 

(78,683) 

(678) 

(50,269) 

64,931 

(115,200)

 

 

 

 

 

 

 

 

 

 

Expected tax benefits from

 

 

 

 

 

 

 

 

 

 Tax loss carry-forwards

6,161 

(1,656) 

189 

4,694 

4,694 

-

 Swiss tax reform

5,328 

3,427 

8,755 

8,755 

-

 

 

 

 

 

 

 

 

 

 

Deferred taxes provided on expected 

 dividends from subsidiaries

(1,808) 

(652) 

(2,460) 

(2,460)

 

 

 

 

 

 

 

 

 

 

Offsetting

 

 

 

 

 

 

 

(47,699) 

47,699

 

 

 

 

 

 

 

 

 

 

Total 

27,788 

15,852 

(4,398) 

650 

(78,683) 

(489) 

(39,280) 

30,681 

(69,961)

1 Other comprehensive income

 

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

 

13.2.2 Expected tax benefits from tax loss carry-forwards

Deferred tax assets related to tax loss carry-forwards: 

 

 

Gross value of tax loss 
carry-forwards not capitalized

Expected tax benefits

 

31.12.2020

31.12.2021

31.12.2020

31.12.2021

CHF 1,000

 

 

 

 

Expiring in 

 

 

 

 

 1st - 5th year

 

 

 - 

 - 

 6th year or beyond

 

 

3,817 

2,678

 Unlimited

 

 

2,344 

2,016

 

 

 

 

 

Tax loss carry-forwards capitalized

 

 

6,161 

4,694

 

 

 

 

 

Expiring in 

 

 

 

 

 1st - 5th year

 - 

 - 

 - 

 - 

 6th year or beyond

 11,393 

 13,262 

 796 

 926 

 Unlimited

 - 

 - 

 - 

 - 

 

 

 

 

 

Tax loss carry-forwards not capitalized

 11,393 

 13,262

 796 

 926 

 

 

 

 

 

Total tax loss carry-forwards

 11,393 

 13,262 

 6,957 

 5,620 

 

13.2.3 Expected tax benefits from the Swiss tax reform

On May 19, 2019, the Swiss electorate passed the Federal Act on Tax Reform and AHV Financing (TRAF). The tax reform abolishes the tax regimes for holding, domiciliary and mixed companies as of January 1, 2020 and introduces new tax measures. To the extent that the tax reform requires cantonal and communal tax law changes, these have to be implemented through modification of the cantonal tax law. On September 1, 2019, in a public vote, the electorate of the canton of Zurich accepted the respective revision of the cantonal tax law. The relevant changes to the Group include a decrease in the statutory income tax rate in the canton of Zurich, effective as from January 1, 2021. 

 

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 measures. 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.

 

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

 

 

Gross value of tax benefits

not capitalized

Expected tax benefits

 

Year

31.12.2020

31.12.2021

31.12.2020

31.12.2021

CHF 1,000

 

 

 

 

Tax benefits available for

 

 

 

 

 Federal taxes

2026/27 - 2029

 39,911 

24,806 

 2,758 

 1,714 

 Cantonal taxes

2025 - 2029

 387,839 

354,749 

 45,610 

41,718 

 

 

 

 

 

Tax benefits not capitalized

 427,750 

379,555 

 48,368 

 43,432 

 

13.2.4 Unrecognized deferred tax liabilities

At December 31, 2021, there are temporary differences of CHF 1’290.9 million (2020: CHF 445.6 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. The corresponding unrecognized amount is not material.

 

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