25 Income Taxes

Income tax expense
In CHF million  20082007
Current income tax expense  –7204
Deferred income tax expense  –22–82
Total income tax expense  –29122


The expected weighted-average tax rate for the continuing operations of the Group was 27.0% in 2008 (2007: 30.9%). This rate was derived by obtaining a weighted average of the expected income tax rates in the various jurisdictions in which the Group operates. The decrease of the weighted-average tax rate is due to the geographical allocation of the profits and the different tax rates in these jurisdictions. The actual income tax expense differs from the expected amount as follows:

Actual and expected income tax
In CHF million  20082007
Expected income tax expense  –317262
Increase/reduction in taxes resulting from 
tax-exempt interest  00
tax-exempt dividends  –37–16
other non-taxable income  –75–65
non-deductible expenses  1506
other income taxes (incl. withholding taxes)  –86
unrecognised tax losses/credits  2741
use of previously unrecognised tax losses/credits  –1
adjustments for current tax of prior periods  –1180
changes in tax rates  0–51
intercompany effects  10112
other  2–33
Actual income tax expense  –29122


The Swiss Life Group realised net tax benefits of CHF 118 million due to tax audits and final assessments in 2008. Intercompany effects of CHF 101 million are mainly based on intragroup dividends.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same tax authority.

Deferred income tax assets and liabilities
In CHF million  31.12.200831.12.200731.12.200831.12.2007
  Deferred tax
assets
Deferred tax
assets
Deferred tax
liabilities
Deferred tax
liabilities
Financial assets  306461148192
Investment property  2430415
Intangible assets  4212381257
Property and equipment  303400
Financial liabilities  299103
Insurance liabilities  83748081
Employee benefits  35324755
Deferred income  750
Other  31202717
Tax losses and tax credits  149
Deferred income tax assets/liabilities  5776531 1281 020
Offset  –480–535–480–535
Total deferred income tax assets/liabilities  97118648485


The movements in net deferred income tax assets/liabilities during the period were as follows:

Net deferred income tax assets and liabilities

In CHF million
 


Balance as at
1 January



Recognised
in income



Recognised
in equity


Changes from
discontinued
operations
Acquisitions
and foreign
currency
translation
differences



Balance as at
31 December
 
Movements by type of temporary difference during the year 2008 
Financial assets  2697–114–4158
Investment property  –413–2416–430
Intangible assets  –245–1836–112–339
Property and equipment  34–8430
Financial liabilities  614–119
Insurance liabilities  –713–2–13
Employee benefits  –2312–1–12
Deferred income  03–12
Other  3170–164
Tax losses and tax credits  96–114
Net deferred income tax assets/liabilities  –36722–79–127–551


Movements by type of temporary difference during the year 2007 
Financial assets  –27311739040–5269
Investment property  –408–4–14–4–413
Intangible assets  –2234–6945–2–245
Property and equipment  331034
Financial liabilities  35–31206
Insurance liabilities  –36102170–7
Employee benefits  –19–2–20–23
Deferred income  78–30–7500
Other  –116803
Tax losses and tax credits  69–16–4409
Valuation allowance  –1616
Net deferred income tax assets/liabilities  –7718232211–11–367


Deferred tax liabilities have not been recognised on the aggregate amount of temporary differences with consolidated investments in subsidiaries to the extent the Group considers such undistributed earnings as being indefinitely reinvested and does not expect to repatriate these earnings in the foreseeable future. The amount of such temporary differences was approximately CHF 1.7 billion as at 31 December 2008 (2007: CHF 3.1 billion). If such earnings are ever repatriated, no material tax liabilities would be incurred due to participation exemption rules, unrecognised tax loss carryforwards and applicable double tax treaties.

Deferred tax assets are recognised for tax-loss carryforwards and unused tax credits only to the extent that realisation of the related tax benefit is probable. Swiss tax assets are calculated in accordance with cantonal and communal tax legislation. The uncertainty of the recoverability of tax losses and tax credits is taken into account in establishing the valuation allowance. For the following tax-loss carryforwards and tax credits, which will expire as follows, no deferred tax asset has been recognised:

Unrecognised tax losses and tax credits
Amounts in CHF million  31.12.200831.12.200731.12.200831.12.2007
  Tax lossesTax lossesTax rateTax rate
2009  9716.7%9.0%
2010  11108.5%7.8%
2011  15159.2%8.4%
Thereafter  1 1764222.4%16.6%
Total  1 21174n. a.n. a.


 
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