2.7 Income tax

Income tax expense charged to the income statement

CHF million

2021

2020

Current income tax

– 22

– 25

Deferred income tax

50

68

Income tax

28

43

Reconciliation

CHF million

2021

2020 (adjusted) 1

Earnings before tax

– 299

112

Expected income tax rate (Swiss average rate)

16 %

16 %

Income tax at the expected income tax rate

48

– 18

Tax effects from:

 

 

Difference in tax rate of 16 % compared to locally expected income tax rates

– 6

– 5

Income exempt from tax

9

23

Non-deductible expenses for tax purposes

– 27

– 28

Valuation from tax loss carryforwards

1

11

Effect of changes in tax rates

1

72

Previous years

7

– 9

Other effects

– 5

– 3

Total income tax expense

28

43

Effective income tax rate

9 %

– 38 %

1 See note 1.4

Change in deferred tax assets and liabilities

CHF million

Deferred tax assets

Deferred tax liabilities

Net deferred tax liabilities

Balance at 31 December 2019

99

426

327

Deferred taxes recognised in the income statement

– 18

– 86

– 68

Deferred taxes recognised in other comprehensive income

– 1

– 1

 

Acquisition / disposal of subsidiaries

 

– 1

– 1

Currency translation differences

– 1

 

1

Balance at 31 December 2020

79

338

259

Deferred taxes recognised in the income statement

3

– 47

– 50

Deferred taxes recognised in other comprehensive income

– 2

31

33

Acquisition / disposal of subsidiaries

0

0

0

Currency translation differences

– 3

– 1

2

Balance at 31 December 2021

77

321

244

Deferred tax assets and liabilities by origination of temporary differences

CHF million

31 Dec 2021

31 Dec 2020

Tax losses and tax assets not yet used

109

41

Property, plant and equipment

30

29

Other non-current assets

1

2

Current assets

36

19

Provisions and liabilities

29

26

Total gross deferred tax assets

205

117

Property, plant and equipment

124

127

Other non-current assets

196

182

Current assets

80

39

Provisions and liabilities

49

28

Total gross deferred tax liabilities

449

376

Net deferred tax liabilities

244

259

Tax assets recognised in the balance sheet

77

79

Tax liabilities recognised in the balance sheet

321

338

At 31 December 2021, individual subsidiaries held tax loss carryforwards totalling CHF 1,024 million (previous year: CHF 782 million), which are available for offsetting against future taxable profits. Of this, the Alpiq Group has not recognised tax benefits on tax loss carryforwards of CHF 376 million (CHF 577 million) in the balance sheet item “Deferred tax assets”, as they are recognised for tax loss carryforwards only to the extent that realisation of the related tax benefit is probable. The average tax rate on tax loss carryforwards not eligible for capitalisation is 17 % (15 %). These tax loss carryforwards expire in the following periods:

CHF million

31 Dec 2021

31 Dec 2020

Within 1 year

0

59

Within 2 – 3 years

35

45

After 3 years

230

370

Unlimited use

111

103

Total non-capitalisable tax loss carryforwards

376

577

In addition, non-capitalised deductible temporary differences exist in an amount of CHF 227 million (CHF 91 million).

Assumptions are made based on local legal principles in calculating current income tax. Income taxes that are actually payable may deviate from the values originally calculated, as the definitive assessment is not finalised until years after the end of the reporting period in some cases. Furthermore, the definitive clarification of the taxation issue at the partner power plants in the canton of Grisons is still pending. The resulting risks are identified, assessed and recognised where necessary. Deferred tax assets are calculated in part using far-reaching estimates. The underlying forecasts pertain to a period of several years and comprise, among other things, a forecast of future taxable income as well as interpretations of the existing legal basis.

Accounting policies

Income tax expense represents the sum of current and deferred income tax. Current income tax is calculated on taxable earnings using the tax rates that have been enacted by the end of the reporting period. Deferred income tax is calculated using the tax rates enacted or substantively enacted at the reporting date.

Deferred taxes are recognised due to the differing recognition of certain income and expense items in the Group’s annual internal accounts and annual tax accounts. Deferred tax arising from temporary differences is calculated applying the balance sheet liability method. Deferred tax is not recognised for differences associated with investments in group companies, which will not reverse in the foreseeable future and where the timing of the reversal is controlled by the Group. Deferred tax assets are recognised when it is probable that they will be realised. Unrecognised tax loss carryforwards and unrecognised tax assets are disclosed.

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