24 Income Taxes

Income tax expense
In CHF million 
  20092008
Current income tax expense
  128–7
Deferred income tax expense
  –25–22
Total income tax expense
  103–29


The expected weighted-average tax rate for the continuing operations of the Group was 30.7% in 2009 (2008: 27.0%). 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 increase 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 
  20092008
Expected income tax expense
  131–317
Increase/reduction in taxes resulting from
 
lower taxed income
  –188–112
non-deductible expenses
  142150
other income taxes (incl. withholding taxes)
  43–8
change in unrecognised tax losses
  38273
adjustments for current tax of prior periods
  17–118
changes in tax rates
  00
intercompany effects
  –80101
other
  02
Actual income tax expense
  103–29


In 2009, other income taxes (incl. withholding taxes) of CHF 43 million are mainly based on a transaction at a lower income tax rate compared to the ordinary income tax rate. Positive intercompany effects of CHF 80 million in 2009 are primarily due to tax group effects and to intragroup income and expense.

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 in 2008 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 
  Deferred tax assetsDeferred tax liabilities
  31.12.200931.12.200831.12.200931.12.2008
Financial assets
  192306109148
Investment property
  429430
Intangible assets
  3942354381
Property and equipment
  293010
Financial liabilities
  8292310
Insurance liabilities
  37835680
Employee benefits
  32355647
Deferred income
  0755
Other
  45316627
Tax losses
  4114
Deferred income tax assets/liabilities
  4235771 0991 128
Offset
  –343–480–343–480
Total deferred income tax assets/liabilities
  8097756648


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

In CHF million 
 

Balance as at
1 January


Recognised
in income


Recognised
in equity

Business
combinations
and disposals
Foreign
currency
translation
differences


Balance as at
end of period
 
Movements by type of temporary difference during the year 2009
 
Financial assets
  15886–1610083
Investment property
  –430100–429
Intangible assets
  –3391311–11–315
Property and equipment
  30–2028
Financial liabilities
  19–340–15
Insurance liabilities
  3–2200–19
Employee benefits
  –12–120–24
Deferred income
  2–70–5
Other
  4–26001–21
Tax losses
  1428–141
Net deferred income tax assets/liabilities
  –55125–150–11–676


Movements by type of temporary difference during the year 2008
 
Financial assets
  2697–1140–4158
Investment property
  –413–2416–430
Intangible assets
  –245–1836–12412–339
Property and equipment
  34–86–230
Financial liabilities
  6140–119
Insurance liabilities
  –713–2–13
Employee benefits
  –2312–1–12
Deferred income
  030–12
Other
  3170–15–14
Tax losses
  96–1014
Net deferred income tax assets/liabilities
  –36722–79–1347–551


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 2009 (2008: CHF 1.7 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 taxation 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 is taken into account in establishing the valuation allowance. For the following tax-loss carryforwards, which will expire as follows, no deferred tax asset has been recognised:

Unrecognised tax losses
Amounts in CHF million 
  Tax lossesTax rate
  31.12.200931.12.200831.12.200931.12.2008
2010
  151111.5%8.5%
2011
  19159.5%9.2%
2012
  243113.2%14.0%
Thereafter
  1 0951 14522.8%22.6%
Total
  1 1531 202n/an/a


 
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