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