15 Income taxes
Income tax expense
In CHF million | 2015 | 2014 | ||
---|---|---|---|---|
Current income tax expense | 296 | 373 | ||
Adjustments recognised for current tax of prior periods | (1) | 5 | ||
Deferred tax expense | 106 | 4 | ||
Total income tax expense recognised in income statement | 401 | 382 | ||
Thereof Switzerland | 387 | 412 | ||
Thereof foreign countries | 14 | (30) |
In addition, the other comprehensive income includes positive income taxes of CHF 133 million (prior year: CHF 250 million) which may be analysed as follows:
In CHF million |
2015 |
2014 restated |
||
---|---|---|---|---|
Foreign currency translation adjustments of foreign subsidiaries | 51 | 15 | ||
Actuarial gains and losses from defined benefit pension plans | 80 | 238 | ||
Change in fair value of cash flow hedges | (1) | (2) | ||
Gains and losses from cash flow hedges transferred to income statement | 3 | (1) | ||
Total income tax expense recognised in other comprehensive income | 133 | 250 |
Analysis of income taxes
The applicable income tax rate which serves to prepare the following analysis of income tax expense is the weighted average income tax rate calculated on the basis of the Group’s operating subsidiaries in Switzerland. The applicable income tax rate remains unchanged from the prior year at 20.9%.
In CHF million | 2015 | 2014 | ||
---|---|---|---|---|
Income before income taxes in Switzerland | 1,692 | 2,206 | ||
Income before income taxes foreign countries | 71 | (118) | ||
lncome before income taxes | 1,763 | 2,088 | ||
Applicable income tax rate | 20.9% | 20.9% | ||
Income tax expense at the applicable income tax rate | 368 | 436 | ||
Reconciliation to reported income tax expense | ||||
Effect of share of results of associates | (5) | (5) | ||
Effect of tax rate changes on deferred taxes | 19 | (21) | ||
Effect of use of different income tax rates in Switzerland | 2 | (2) | ||
Effect of use of different income tax rates in foreign countries | (7) | (10) | ||
Effect of non-recognition of tax loss carry-forwards | 7 | 9 | ||
Effect of recognition and offset of tax loss carry-forwards not recognised in prior years | – | (2) | ||
Effect of exclusively tax-deductible expenses and income | (23) | (16) | ||
Effect of non-taxable income and non-deductible expenses | 36 | (12) | ||
Effect of income tax of prior periods | 4 | 5 | ||
Total income tax expense | 401 | 382 | ||
Effective income tax rate | 22.7% | 18.3% |
Income tax assets and liabilities
Current income tax assets and liabilities
Movements in current-tax assets and liabilities are to be analysed as follows:
In CHF million | 2015 | 2014 | ||
---|---|---|---|---|
Current income tax liabilities at 1 January, net | 155 | 162 | ||
Recognised in income statement | 295 | 378 | ||
Recognised in other comprehensive income | 23 | 1 | ||
Income taxes paid in Switzerland | (345) | (377) | ||
Income taxes paid in foreign countries | (5) | (9) | ||
Additions from business combinations | 2 | – | ||
Current income tax liabilities at 31 December, net | 125 | 155 | ||
Thereof current income tax assets | (21) | (17) | ||
Thereof current income tax liabilities | 146 | 172 | ||
Thereof Switzerland | 129 | 159 | ||
Thereof foreign countries | (4) | (4) |
Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities are to be analysed as follows:
31.12.2015 |
31.12.2014 restated |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
In CHF million |
Assets |
Liabilities |
Net amount |
Assets |
Liabilities |
Net amount |
||||||
Property, plant and equipment | 41 | (523) | (482) | 47 | (467) | (420) | ||||||
Intangible assets | – | (335) | (335) | – | (341) | (341) | ||||||
Provisions | 86 | (59) | 27 | 79 | (4) | 75 | ||||||
Defined benefit obligations | 582 | – | 582 | 508 | – | 508 | ||||||
Tax loss carry-forwards | 171 | – | 171 | 218 | – | 218 | ||||||
Other | 192 | (91) | 101 | 98 | (92) | 6 | ||||||
Total tax assets (tax liabilities) | 1,072 | (1,008) | 64 | 950 | (904) | 46 | ||||||
Thereof deferred tax assets | 354 | 417 | ||||||||||
Thereof deferred tax liabilities | (290) | (371) | ||||||||||
Thereof Switzerland | (121) | (91) | ||||||||||
Thereof foreign countries | 185 | 137 |
In 2015, deferred tax assets and liabilities have changed as follows:
In CHF million |
Balance at 31.12.2014, restated |
Recognised in income statement |
Recognised in other compre- hensive income |
Change in scope of consoli- dation |
Foreign currency translation adjustments |
Balance at 31.12.2015 |
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Property, plant and equipment | (420) | (59) | – | – | (3) | (482) | ||||||
Intangible assets | (341) | 17 | – | (20) | 9 | (335) | ||||||
Provisions | 75 | (45) | – | (2) | (1) | 27 | ||||||
Defined benefit obligations | 508 | (9) | 80 | 4 | (1) | 582 | ||||||
Tax loss carry-forwards | 218 | (31) | – | 3 | (19) | 171 | ||||||
Other | 6 | 21 | 76 | 1 | (3) | 101 | ||||||
Total | 46 | (106) | 156 | (14) | (18) | 64 |
In 2014, deferred tax assets and liabilities have changed as follows:
In CHF million |
Balance at 31.12.2013 |
Recognised in income statement |
Recognised in other compre- hensive income |
Change in scope of consoli- dation |
Foreign currency translation adjustments |
Balance at 31.12.2014, restated |
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Property, plant and equipment | (301) | (119) | – | – | – | (420) | ||||||
Intangible assets | (364) | 35 | – | (12) | – | (341) | ||||||
Provisions | 10 | 65 | – | – | – | 75 | ||||||
Defined benefit obligations | 268 | – | 239 | 1 | – | 508 | ||||||
Tax loss carry-forwards | 203 | 16 | – | 2 | (3) | 218 | ||||||
Other | 7 | (1) | 12 | (12) | – | 6 | ||||||
Total | (177) | (4) | 251 | (21) | (3) | 46 |
Deferred tax assets relating to unused tax loss carry-forwards and to deductible temporary differences are recognised if it is probable that they can be offset against future taxable profits or existing temporary differences. At as 31 December 2015, various subsidiaries recognised deferred tax assets on tax loss carry-forwards and other temporary differences totalling CHF 1,072 million (prior year: CHF 950 million) since it was foreseeable that tax loss carry-forwards could be offset against future taxable profits. Of this amount, tax loss carry-forwards and other temporary differences of CHF 202 million (prior year: CHF 237 million) were recognised by subsidiaries reporting a loss in 2014 or 2015. On the basis of the approved business plans of these subsidiaries, Swisscom considers it probable that the tax loss carry-forwards and temporary differences can be offset against future taxable profits.
Tax loss carry-forwards for which no deferred tax assets were recognised, expire as follows:
In CHF million | 31.12.2015 | 31.12.2014 | ||
---|---|---|---|---|
Expiring within 1 year | – | 1 | ||
Expiring within 1 to 2 years | 1 | 2 | ||
Expiring within 2 to 3 years | 8 | 2 | ||
Expiring within 3 to 4 years | 12 | 8 | ||
Expiring within 4 to 5 years | 15 | 14 | ||
Expiring within 5 to 6 years | 22 | 29 | ||
Expiring within 6 to 7 years | 26 | 23 | ||
No expiration | 32 | 115 | ||
Total unrecognised tax loss carry-forwards | 116 | 194 | ||
Thereof Switzerland | 84 | 62 | ||
Thereof foreign countries | 32 | 132 |
Deferred tax liabilities of CHF 6 million (prior year: none) were recognised on the undistributed earnings of subsidiaries as of 31 December 2015. Temporary differences of subsidiaries and associates, on which no deferred income taxes were recognised as of 31 December 2015, amounted to CHF 931 million (prior year: CHF 779 million).