The income tax expense can be analyzed as follows:

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 2015 increased to 20.7 %.

Due to the sale of all treasury shares in the first half of 2015, the outstanding employee share options and the employee shares are covered only by the conditional share capital and no longer by treasury shares. This change in funding of the employee participation plans is resulting in a one-time tax benefit of CHF 0.8 million, of which CHF 0.6 million was recognized in the statement of profit or loss and CHF 0.2 million in equity.

Deferred taxes are included in the balance sheet as follows:

Deferred tax assets and liabilities are attributable to the following:

Temporary differences on inventories primarily relate to income on intra-Group profit eliminated for consolidation purposes.

Tax loss carry-forwards:

Due to the decided and anticipated changes in company structure, potential tax benefits in the amount of CHF 0.2 million were not capitalized. 

At December 31, 2015, there were temporary differences of CHF 172.3 million related to investments in subsidiaries for which no deferred tax liabilities were 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.