2.7 Income tax

Income tax expense charged to the income statement

Reconciliation

Change in deferred tax assets and liabilities

Deferred tax assets and liabilities by origination of temporary differences

At 31 December 2022, individual subsidiaries held tax loss carryforwards totalling CHF 638 million (previous year: CHF 1,024 million), which are available for offsetting against future taxable profits. Of these, the Alpiq Group has not recognised tax benefits on tax loss carryforwards of CHF 397 million (CHF 376 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 % (17 %). These tax loss carryforwards expire in the following periods:

In addition, unrecognised deductible temporary differences exist in an amount of CHF 167 million (CHF 227 million).

Global minimum corporate taxation

On 22 December 2021, the European Commission proposed the enactment of a directive that ensures a minimum effective tax rate for the global activities of large multinational groups. The proposal delivers on the EU’s pledge to move extremely swiftly and be among the first to implement the recent historic global tax reform agreement, which aims to bring fairness, transparency and stability to the international corporate tax framework. The proposal closely follows the international agreement and sets out how the principles of the 15 % effective tax rate – agreed by 137 countries – will be applied in practice within the EU. It includes a common set of rules on how to calculate this effective tax rate, so that it is properly and consistently applied across the EU. As soon as the changes in the tax laws have or have essentially come into effect (implementation expected as of 1 January 2024), in the countries in which the Alpiq Group operates the national entities may be subject to a supplemental tax. Alpiq is closely monitoring the progress of the legislative process in the relevant countries. At 31 December 2022, the available publications and data were not sufficient to determine a possible quantitative impact.

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.