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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