25 Income Taxes

Income tax expense
In CHF million  
  2011 2010
Current income tax expense
  18 101
Deferred income tax expense
  –39 –65
Total income tax expense
  –21 36


The expected weighted-average tax rate for the Group was 26.5% in 2011 (2010: 26.7%). 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 change 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:

Reconciliation of Income Tax Expense
In CHF million  
  2011 2010
 
Profit before income tax
  585 596
 
Income tax calculated using the expected weighted-average tax rate
  155 159
Increase/reduction in taxes resulting from
 
lower taxed income
  –169 –277
non-deductible expenses
  112 104
other income taxes (incl. withholding taxes)
  20 15
change in unrecognised tax losses
  28 40
adjustments for current tax of prior periods
  –96 17
changes in tax rates
  –41 0
intercompany effects
  –26 –21
other
  –4 –1
Income tax expense
  –21 36


In 2011, the Swiss Life Group realised a tax benefit of CHF 90 million due to the final assessment of the disposal of business activities in prior periods.

In 2011, a change in the tax rate in Switzerland led to a positive income tax effect of CHF 41 million.

In 2010, a positive one-off income tax effect amounting to CHF 87 million was realised due to a change in the French tax legislation. The intercompany effects in 2010 were based on tax grouping and intragroup income and expense.

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 assets Deferred tax liabilities
  31.12.2011 31.12.2010 31.12.2011 31.12.2010
Financial assets
  155 149 552 192
Investment property
  1 496 455
Intangible assets
  56 34 279 308
Property and equipment
  25 28 3 3
Financial liabilities
  15 13 11 19
Insurance liabilities
  56 55 62 60
Employee benefits
  22 23 53 55
Deferred income
  2 2 3 3
Other
  149 137 22 31
Tax losses
  9 14
Deferred income tax assets/liabilities
  490 455 1 481 1 126
Offset
  –337 –305 –337 –305
Total deferred income tax assets/liabilities
  153 150 1 144 821


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


Acquisitions
and disposals
Foreign
currency
translation
differences


Balance as at
end of period
 
Movements by type of temporary difference during the year 2011
 
Financial assets
  –43 21 –372 –2 –1 –397
Investment property
  –455 –26 –2 –13 1 –495
Intangible assets
  –274 21 28 –1 3 –223
Property and equipment
  25 –3 0 0 22
Financial liabilities
  –6 7 3 0 0 4
Insurance liabilities
  –5 0 0 –1 –6
Employee benefits
  –32 1 0 0 –31
Deferred income
  –1 0 0 –1
Other
  106 23 0 1 –3 127
Tax losses
  14 –5 0 9
Net deferred income tax assets/liabilities
  –671 39 –343 –15 –1 –991


Movements by type of temporary difference during the year 2010
 
Financial assets
  83 –49 –70 0 –7 –43
Investment property
  –429 –33 0 7 –455
Intangible assets
  –315 13 8 0 20 –274
Property and equipment
  28 0 –3 25
Financial liabilities
  –15 7 0 2 –6
Insurance liabilities
  –19 19 –1 –4 –5
Employee benefits
  –24 –5 –3 –32
Deferred income
  –5 3 0 1 –1
Other
  –21 133 0 –6 106
Tax losses
  41 –23 –4 14
Net deferred income tax assets/liabilities
  –676 65 –63 0 3 –671


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. The foreign entities are controlled by the Group and these earnings are not expected to be repatriated in the foreseeable future. The amount of such temporary differences was approximately CHF 4.4 billion as at 31 December 2011. 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 only to the extent that realisation of the related tax benefit is probable. Swiss tax assets are calculated in accordance with cantonal and municipal tax legislation. The uncertainty of the utilisation 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 losses Tax rate
  31.12.2011 31.12.2010 31.12.2011 31.12.2010
2012
  6 2 15.9% 13.0%
2013
  1 7 16.7% 8.7%
2014
  8 2 16.0% 16.0%
Thereafter
  1 127 1 134 13.1% 13.6%
Total
  1 142 1 145 n/a n/a


 

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