24 Income Taxes
Income tax expense
| In CHF million | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Current income tax expense | 345 | 266 | ||
| Deferred income tax expense | 61 | 34 | ||
| Total income tax expense | 406 | 300 | ||
The expected weighted-average tax rate for the Group in 2021 was 22.1% (2020: 20.4%). This rate was derived by obtaining a weighted average of the expected income tax rates in the various jurisdictions in which the Group operates. The change of the weighted-average tax rate is due to the geographical allocation of the profits and the different tax rates in these jurisdictions. The actual income tax expense differs from the expected amount as follows.
Reconciliation of income tax expense
| In CHF million | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Profit before income tax | 1 663 | 1 351 | ||
| Income tax calculated using the expected weighted-average tax rate | 367 | 275 | ||
| Increase/reduction in taxes resulting from | ||||
| lower taxed income | –102 | –60 | ||
| non-deductible expenses | 54 | 52 | ||
| other income taxes (incl. withholding taxes) | 41 | 26 | ||
| change in unrecognised tax losses | 9 | –6 | ||
| adjustments for current tax of prior periods | 25 | –27 | ||
| changes in tax rates | 15 | 5 | ||
| intercompany effects | –27 | 13 | ||
| other | 24 | 22 | ||
| Income tax expense | 406 | 300 | ||
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same tax authority.
Deferred income tax assets and liabilities
| In CHF million | ||||||||
|---|---|---|---|---|---|---|---|---|
| Deferred income tax assets | Deferred income tax liabilities | |||||||
| 31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | |||||
| Financial assets | 339 | 326 | 1 368 | 1 684 | ||||
| Investment property | 110 | 102 | 1 310 | 1 229 | ||||
| Intangible assets | 32 | 40 | 201 | 183 | ||||
| Property and equipment | 13 | 12 | 19 | 22 | ||||
| Financial liabilities | 104 | 94 | 24 | 26 | ||||
| Insurance liabilities | 53 | 23 | 178 | 168 | ||||
| Employee benefits | 120 | 154 | 84 | 88 | ||||
| Other | 46 | 75 | 39 | 37 | ||||
| Tax losses | 48 | 52 | ||||||
| Deferred income tax assets/liabilities | 864 | 879 | 3 223 | 3 436 | ||||
| Offset | –793 | –800 | –793 | –800 | ||||
| Total deferred income tax assets/liabilities | 71 | 79 | 2 430 | 2 636 | ||||
The movements in net deferred income tax assets /liabilities during the period were as follows.
| In CHF million | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance as at 1 January | Profit or loss | Other comprehensive income | Acquisitions and disposals | Foreign currency translation differences | Balance as at end of period | |||||||
| Movements by type of temporary difference during the year 2021 | ||||||||||||
| Financial assets | –1 358 | 24 | 295 | – | 10 | –1 029 | ||||||
| Investment property | –1 127 | –80 | –1 | –2 | 10 | –1 200 | ||||||
| Intangible assets | –143 | –15 | –7 | –7 | 2 | –169 | ||||||
| Property and equipment | –10 | 3 | – | 1 | 0 | –6 | ||||||
| Financial liabilities | 68 | 9 | 5 | 0 | –2 | 80 | ||||||
| Insurance liabilities | –145 | 18 | –1 | – | 3 | –125 | ||||||
| Employee benefits | 66 | 3 | –31 | – | –2 | 36 | ||||||
| Other | 39 | –23 | – | –9 | –1 | 7 | ||||||
| Tax losses | 52 | –1 | – | –1 | –2 | 48 | ||||||
| Net deferred income tax assets/liabilities | –2 557 | –61 | 260 | –18 | 19 | –2 359 | ||||||
| Movement by type of temporary difference during the year 2020 | ||||||||||||
| Financial assets | –1 252 | 42 | –148 | 0 | 0 | –1 358 | ||||||
| Investment property | –1 002 | –102 | 0 | –22 | 0 | –1 127 | ||||||
| Intangible assets | –141 | –5 | 1 | 1 | 0 | –143 | ||||||
| Property and equipment | –10 | 0 | – | 0 | 0 | –10 | ||||||
| Financial liabilities | 43 | 23 | 2 | 0 | 0 | 68 | ||||||
| Insurance liabilities | –140 | –5 | 0 | 0 | 0 | –145 | ||||||
| Employee benefits | 69 | –3 | 1 | 0 | 0 | 66 | ||||||
| Other | 31 | 7 | – | 1 | 0 | 39 | ||||||
| Tax losses | 43 | 9 | – | 0 | 0 | 52 | ||||||
| Net deferred income tax assets/liabilities | –2 360 | –34 | –144 | –20 | 1 | –2 557 | ||||||
Deferred income tax liabilities have not been recognised on the aggregate amount of temporary differences with consolidated investments in subsidiaries to the extent the Group considers such undistributed earnings as being indefinitely reinvested. The amount of such temporary differences was approximately CHF 12.0 billion as at 31 December 2021 (2020: CHF 12.5 billion). If such amounts from entities controlled by the Group are ever distributed, no material tax liabilities would be incurred due to participation exemption rules, unrecognised tax loss carryforwards and applicable double taxation treaties.
Deferred income tax assets are recognised for tax-loss carryforwards only to the extent that realisation of the related tax benefit is probable. Swiss tax assets are calculated in accordance with cantonal and municipal tax legislation. The uncertainty of the utilisation of tax losses is taken into account in establishing the valuation allowance. For the following tax-loss carryforwards, which will expire as follows, no deferred income tax asset has been recognised.
Unrecognised tax losses
| Amounts in CHF million | ||||||||
|---|---|---|---|---|---|---|---|---|
| Tax losses | Tax rate | |||||||
| 31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | |||||
| 2022 | 2 | 1 | 19.7% | 21.2% | ||||
| 2023 | 2 | 3 | 19.7% | 21.2% | ||||
| 2024 | 2 | 2 | 19.7% | 21.2% | ||||
| Thereafter | 196 | 171 | 20.4% | 21.0% | ||||
| Total | 202 | 176 | n/a | n/a | ||||