CHF 1,000



Current income taxes 



Deferred income taxes






Total income taxes 




The income tax expense can be analyzed as follows:





CHF 1,000



Profit before taxes 






Tax expense based on the Group’s weighted average rate of 19.81% (2018: 20.82%)






Non-deductible expenses and additional taxable income



Tax-free income and tax reductions



Tax-deductible impairments of investments in subsidiaries (including reversal)



Impact of acquisitions


Effect of tax rate change on opening deferred taxes 



Impact of tax losses



Impact of Swiss tax reform


Unrecoverable withholding tax



Underprovided in prior years 






Tax expense reported 




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 2019 decreased to 19.81%. 




13.2.1  Amounts recognized in the financial statements

Deferred taxes are included in the balance sheet as follows:





CHF 1,000



Deferred tax assets



Deferred tax liabilities






Total net deferred tax assets





Deferred tax assets and liabilities are attributable to the following:




Change 2019


CHF 1,000




Net deferred tax assets arising from temporary ­differences




  Receivables and contract assets








  Property, plant and equipment




  Right-of-use assets



  Intangible assets




  Liabilities and accrued expenses












  Subtotal net deferred tax assets arising from temporary differences








Deferred taxes provided on expected dividends from ­subsidiaries




Potential tax benefits from tax loss carry-forwards




Potential tax benefits from the Swiss tax reform







Total net deferred tax assets








Deferred taxes recognized in profit or loss




Deferred taxes recognized in other comprehensive income




Deferred taxes recognized in equity




Acquisition through business combination




Translation differences




Total change compared with previous year




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


13.2.2  Potential tax benefits from tax loss carry-forwards

Tax loss carry-forwards:



Gross value of tax loss carry-forwards 
not capitalized

Potential tax benefits






CHF 1,000





Expiring in 





  1st – 5th year





  6th year or beyond















Tax loss carry-forwards capitalized










Expiring in 





  1st – 5th year

  6th year or beyond











Tax loss carry-forwards not capitalized










Total tax loss carry-forwards






13.2.3  Potential 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. Therefore, the Group has revalued its Swiss deferred tax positions which resulted in a non-recurring deferred tax benefit (CHF 0.3 million) and a positive non-recurring effect on both other comprehensive income (CHF 0.4 million) and equity (CHF 0.1 million).


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. As a consequence the Group capitalized deferred tax assets in the amount of CHF 3.6 million with a corresponding non-recurring deferred tax benefit in financial year 2019. The calculation of the deferred tax assets required management to make significant estimates and assumptions. The final outcome is still uncertain and might lead to adjustments in future years. At year-end 2019, potential tax benefits from the transition regime amounting to CHF 67.5 million (gross value of CHF 48 million for federal tax and CHF 546 million for cantonal tax) were not capitalized due to this uncertainty.


13.2.4  Unrecognized deferred tax liabilities

At December 31, 2019, there were temporary differences of CHF 377.2 million (2018: CHF 331.0 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.