Financial Report

5.1 Income Taxes

As Belimo operates in several jurisdictions, the applicable tax rate is computed as the weighted average of the applicable tax rate per jurisdiction. The applicable tax rate decreased by 0.8 percentage points in the reporting period (2021: -0.3 percentage points). There were no major changes in the structure of Belimo Group that would have impacted the applicable tax rate in 2022.

In accordance with the Swiss federal law on the tax reform and AHV financing (TRAF), the Canton of Zurich, where Belimo is headquartered, introduced certain provisions in the cantonal tax laws (e.g., patent box, additional research and development deductions) including transitional measures. Based on these transitional measures, in the balance sheet, deferred tax assets on intangible assets of CHF 19.8 million were recognized as at December 31, 2022 (2021: CHF 22.9 million). The decrease of the deferred tax assets on intangible assets resulted from amortization.

Tax-exempt income includes additional research and development deductions of CHF 3.6 million (2021: CHF 3.6 million) because of Belimo’s strong research and development base in Switzerland. Some Group companies are taxed at different rates, depending on the source of income. The effect of these mixed tax rates is presented as a separate item in the reconciliation above.

Deferred Taxes

In the reporting period and in the previous year, the Group did not consider temporary differences resulting from investments in Group companies because it controls the dividend policy of its subsidiaries while all subsidiaries are directly or indirectly owned by the Swiss Holding where the deduction for income from subsidiaries is applicable. Due to the deduction, there is no significant tax effect from dividend payments.

In 2022, all deferred income tax assets from deductible temporary differences have been recognized (2021: CHF 0.2 million not recognized). At the reporting date, deferred tax assets of CHF 1.7 million (2021: CHF 0.4 million) are recognized for Group companies that incurred losses in 2022 or 2021 supported by taxable temporary differences and expected future profitability.

The following table summarizes the movements in the net deferred tax position:

Deferred tax assets on tax loss carryforwards and tax credits as well as loss carryforwards without capitalized tax effect expire as follows:

The recoverability of tax loss carryforwards not capitalized in previous years has been reassessed and respective deferred tax assets of CHF 0.5 million have been recognized in the balance sheet.