12 INCOME TAXES
12.1 INCOME TAXES IN STATEMENT OF PROFIT OR LOSS AND RECONCILIATION
| 2023 | 2024 |
CHF 1,000 |
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Current income taxes | 33,659 | 18,611 |
Deferred income taxes | (31,929) | (7,998) |
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Total income taxes | 1,730 | 10,613 |
The income tax expense can be analyzed as follows:
| 2023 | 2024 |
CHF 1,000 |
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Profit before taxes | 133,805 | 78,277 |
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Tax expense based on the Group’s weighted average rate of 20.0% (2023: 19.4%) | 25,957 | 15,678 |
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Deferred taxes: tax rate change on opening deferred taxes and tax rate used for | (1,482) | (3,222) |
Non-deductible expenses and additional taxable income | 3,776 | 601 |
Tax-free income and tax reductions | (2,458) | (1,904) |
Transitional measures from Swiss tax reform1 | (23,188) | 477 |
Impact of tax losses | – | (1) |
Unrecoverable withholding tax | (766) | 123 |
Overprovided in prior years | (109) | (995) |
Other | – | (144) |
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Tax expense reported | 1,730 | 10,613 |
- See note 12.2.3
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 2024 increased to 20.0%.
12.2 DEFERRED INCOME TAXES
12.2.1 AMOUNTS RECOGNIZED IN THE FINANCIAL STATEMENTS
Amounts recognized and movements in deferred tax assets and liabilities:
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| 31.12.2023 | |||||
| Net balance at January1 | Recognized | Translation differences | Net | Deferred tax assets | Deferred tax liabilities | ||
in profit or loss | in OCI1 | directly in equity | ||||||
CHF 1,000 |
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Deferred taxes arising from temporary differences |
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Receivables and contract assets | (913) | (825) | – | – | (1) | (1,739) | 538 | (2,277) |
Inventories | 15,537 | 3,128 | – | – | (1,483) | 17,182 | 17,717 | (535) |
Property, plant and equipment | (3,500) | 1,885 | – | – | 203 | (1,412) | 642 | (2,054) |
Right-of-use assets | (12,042) | (90) | – | – | 875 | (11,257) | 307 | (11,564) |
Intangible assets | (79,541) | 9,328 | – | – | 6,508 | (63,705) | – | (63,705) |
Liabilities and accrued expenses | 20,150 | (1,169) | – | – | (1,543) | 17,438 | 18,019 | (581) |
Deferred revenue | 8,005 | 217 | – | – | (734) | 7,488 | 7,488 | – |
Liability for post-employment benefits | 3,424 | (818) | 5,265 | – | (43) | 7,828 | 7,828 | – |
Provisions | 2,056 | 1,176 | – | (790) | (198) | 2,244 | 5,852 | (3,608) |
Other | (2,304) | 824 | – | – | 56 | (1,424) | 13 | (1,437) |
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Subtotal | (49,128) | 13,656 | 5,265 | (790) | 3,640 | (27,357) | 58,404 | (85,761) |
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Expected tax benefits from |
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Tax loss carry-forwards | 3,917 | (564) | – | – | (316) | 3,037 | 3,037 | – |
Swiss tax reform | 14,292 | 18,054 | – | – | – | 32,346 | 32,346 | – |
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Deferred taxes provided on dividends from subsidiaries | (2,352) | 776 | – | – | – | (1,576) | – | (1,576) |
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Offsetting | – | – | – | – | – | – | (42,032) | 42,032 |
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Total | (33,271) | 31,922 | 5,265 | (790) | 3,324 | 6,450 | 51,755 | (45,305) |
- Other comprehensive income
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| 31.12.2024 | |||||
| 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 |
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Deferred taxes arising from temporary differences |
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Receivables and contract assets | (1,739) | (68) | – | – | (2) | (1,809) | 733 | (2,542) |
Inventories | 17,182 | 2,784 | – | – | 1,006 | 20,972 | 21,519 | (547) |
Property, plant and equipment | (1,412) | (1,544) | – | – | (174) | (3,130) | 223 | (3,353) |
Right-of-use assets | (11,257) | (2,587) | – | – | (589) | (14,433) | 321 | (14,754) |
Intangible assets | (63,705) | 11,608 | – | – | (4,579) | (56,676) | – | (56,676) |
Liabilities and accrued expenses | 17,438 | 6,113 | – | – | 1,127 | 24,678 | 25,200 | (522) |
Deferred revenue | 7,488 | (1,268) | – | – | 549 | 6,769 | 6,769 | – |
Liability for post-employment benefits | 7,828 | 663 | (3,572) | – | (2) | 4,917 | 4,917 | – |
Provisions | 2,244 | (75) | – | (443) | 116 | 1,842 | 2,711 | (869) |
Other | (1,424) | 381 | (3,334) | – | (69) | (4,446) | 1,137 | (5,583) |
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Subtotal | (27,357) | 16,007 | (6,906) | (443) | (2,617) | (21,316) | 63,530 | (84,846) |
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Expected tax benefits from |
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Tax loss carry-forwards | 3,037 | (211) | – | – | 231 | 3,057 | 3,057 | – |
Swiss tax reform | 32,346 | (7,749) | – | – | – | 24,597 | 24,597 | – |
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Deferred taxes provided on dividends from subsidiaries | (1,576) | (49) | – | – | – | (1,625) | – | (1,625) |
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Offsetting |
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| (49,964) | 49,964 |
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Total | 6,450 | 7,998 | (6,906) | (443) | (2,386) | 4,713 | 41,220 | (36,507) |
- Other comprehensive income
Temporary differences on intangible assets primarily relate to assets recognized during the purchase price allocation process for business combinations.
12.2.2 TAX BENEFITS FROM TAX LOSS CARRY-FORWARDS
Deferred tax assets related to tax loss carry-forwards:
| Gross value of tax loss | Tax benefits | ||
| 31.12.2023 | 31.12.2024 | 31.12.2023 | 31.12.2024 |
CHF 1,000 |
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Expiring in |
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1st–5th year |
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| – | – |
6th year or beyond |
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| 1,178 | 1,052 |
Unlimited |
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| 1,859 | 2,005 |
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Tax loss carry-forwards capitalized |
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| 3,037 | 3,057 |
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Expiring in |
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1st–5th year | – | – | – | – |
6th year or beyond | 13,844 | 10,291 | 967 | 719 |
Unlimited | – | – | – | – |
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Tax loss carry-forwards not capitalized | 13,844 | 10,291 | 967 | 719 |
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Total tax loss carry-forwards | 13,844 | 10,291 | 4,004 | 3,776 |
12.2.3 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 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 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. Therefore, 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:
| Gross value of tax benefits not capitalized | Tax benefits | |||
| Year | 31.12.2023 | 31.12.2024 | 31.12.2023 | 31.12.2024 |
CHF 1,000 |
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Tax benefits available for |
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Federal taxes | Until 2029 | – | – | – | – |
Cantonal taxes | Until 2029 | 153,152 | 153,417 | 17,781 | 17,689 |
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Tax benefits not capitalized | 153,152 | 153,417 | 17,781 | 17,689 | |
12.2.4 UNRECOGNIZED DEFERRED TAX LIABILITIES
On December 31, 2024, there are temporary differences of CHF 1’130.0 million (2023: CHF 964.0 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.