2024 | 2023 | |||
Current income taxes | (16 489) | (11 686) | ||
Deferred income taxes | 2 978 | 1 903 | ||
Total income taxes | (13 511) | (9 783) |
The differences between the expected and the effective income taxes were as follows:
2024 | 2023 | |||
Net income before taxes | 85 785 | 74 630 | ||
Expected income tax rate | 18.1% | 17.4% | ||
Expected income taxes | (15 492) | (13 005) | ||
Effect of utilisation of non-recognised tax losses carry-forward | 656 | 661 | ||
Effect of non-tax-deductible expenses and non-taxable income | 2 408 | 2 569 | ||
Effect of non-recognition of current tax losses | (1 207) | (2 015) | ||
Effect of increased/reduced allowance on deferred tax balances | (39) | (8) | ||
Effect of changes in tax rates on deferred tax balances | 286 | (67) | ||
Effect of non-refundable withholding taxes on dividends | (846) | – | ||
Effect of BEPS Pillar 2.0 (15% minimum taxation) | (568) | – | ||
Effect of tax credits/debits from prior years and other effects | 1 291 | 2 082 | ||
Effective income taxes | (13 511) | (9 783) | ||
Effective income tax rate | 15.7% | 13.1% |
The expected Corporate income tax rate corresponds to the weighted average income tax rate based on the net income before taxes and the income tax rate of each individual Group company. The net income before taxes complies with the ordinary result according to Swiss GAAP FER.
In the reporting year, the difference between the expected income tax rate of 18.1 % and the effective income tax rate of 15.7% is mainly attributable to the following five factors: First, in several countries (Switzerland, China, France, UK, Germany) research and development and other tax benefits are available, that are used by HUBER+SUHNER (shown in the line “effect of non-tax-deductible expenses and non-tax-deductible income”). Second, in accordance with the valuation principles for recognizing tax assets on losses carried forward, one subsidiary recognised only a portion of the potential tax asset on current year tax loss (shown in the line “effect of non-recognition of current tax losses”). Third, due to the deviation from the assumed income tax rate and the effective income tax rate and prior-year true-up in Switzerland (shown in the line “effect of tax credits/debits from prior years and other effects”). Fourth, in line with the CbCR filing to Swiss tax authority in 2024 and the BEPS Pillar 2 developments, non-refundable withholding taxes on dividends from Group companies are booked as current income taxes from 2024 onwards (shown in the line “effect of non-refundable withholding taxes on dividends”). Last but not least, for 2024, HUBER+SUHNER will be subject to the provisions of the pillar two OECD/G20 BEPS 2.0 project (a global minimum tax of 15%) in several jurisdictions (shown in the line “effect of BEPS Pillar 2.0 (15% minimum taxation))".
The capitalised deferred tax assets on losses carried forward amount to CHF 7.4 million (previous year: CHF 4.7 million). The increase compared to prior year is mainly related to the recognition of current year tax losses in three subsidiaries. The unrecognised tax loss carried forward was CHF 35.1 million (previous year: CHF 28.7 million). This corresponds to a potential tax asset of CHF 8.8 million (previous year: CHF 8.0 million). In 2024, no tax losses carried forward expired (previous year: CHF 0.0 million).
The valuation of related tax assets on losses carried forward is generally based on business plans. The capitalisation of usable tax losses carried forward is assessed on a yearly basis. Tax losses carried forward are recognised only to the extent that it is probable that future taxable profits will be available and therefore allow the assets to be utilised. In countries and for subsidiaries where the use of tax losses carried forward is not foreseeable, tax loss is not capitalised. For the calculation of deferred income taxes in the consolidated balance sheet, the expected tax rate per tax subject is applied.