5.1Income Taxes
in CHF 1 000 | 2024 | 2023 | ||
|---|---|---|---|---|
Current income taxes | -29 481 | -14 356 | ||
Deferred taxes | 51 | 8 788 | ||
Income tax recognized | -29 429 | -5 568 | ||
in CHF 1 000 | 2024 | 2023 | ||
Income before taxes | 176 151 | 142 413 | ||
Expected tax expenses | -35 184 | -28 834 | ||
applicable tax rate | 20.0% | 20.2% | ||
Non-deductible expenses | -472 | -981 | ||
Tax-exempt income | 7 614 | 6 147 | ||
Adjustments from previous years | -289 | 10 585 | ||
Non-reclaimable withholding taxes | -146 | -129 | ||
Effect of companies with mixed tax rates | -48 | 1 404 | ||
Change in tax rate | -292 | - | ||
Change in tax valuation adjustment on temporary differences | - | 6 576 | ||
Other | -613 | -335 | ||
Income tax recognized | -29 429 | -5 568 | ||
effective tax rate | 16.7% | 3.9% |
While in 2023 cumulated one-time effects of CHF 17.1 million led to an effective tax rate of 3.9%, there were no one-time effects impacting the effective tax rate in 2024.
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 0.2 percentage points in the reporting period (2023: +1.4 percentage points). There were no major changes in the structure of Belimo Group that impacted the applicable tax rate in 2024 and 2023.
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 in 2019 (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 24.6 million were recognized as at December 31, 2024 (2023: CHF 28.2 million). The decrease of the deferred tax assets on intangible assets resulted from amortization.
Tax-exempt income includes additional research and development and patent box deductions of CHF 5.8 million (2023: CHF 5.8 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
December 31, 2024 | December 31, 2023 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Deferred tax | Deferred tax | |||||||||||
in CHF 1 000 | Assets | Liabilities | Net | Assets | Liabilities | Net | ||||||
Receivables | 524 | -863 | -339 | 358 | -3 599 | -3 241 | ||||||
Inventories | 7 576 | -7 105 | 471 | 5 487 | -5 003 | 484 | ||||||
Property, plant and equipment | 713 | -9 036 | -8 323 | 838 | -9 149 | -8 311 | ||||||
Intangible assets | 2 343 | -2 586 | -242 | 1 901 | -3 233 | -1 332 | ||||||
Intangible assets from tax reforms | 24 554 | - | 24 554 | 28 163 | - | 28 163 | ||||||
Other assets | - | -1 261 | -1 261 | 36 | -302 | -265 | ||||||
Non-current employee benefits | 8 | - | 8 | - | -11 | -11 | ||||||
Current liabilities | 1 566 | -478 | 1 089 | 1 007 | -181 | 826 | ||||||
Non-current liabilities | 867 | -16 | 851 | 853 | -2 | 852 | ||||||
Tax loss carryforwards and tax credits | 2 121 | - | 2 121 | 1 704 | - | 1 704 | ||||||
Total (gross) | 40 273 | -21 343 | 18 929 | 40 347 | -21 480 | 18 866 | ||||||
Set-off of tax | -19 725 | 19 725 | - | -20 695 | 20 695 | - | ||||||
Total (net) | 20 548 | -1 618 | 18 929 | 19 652 | -785 | 18 866 | ||||||
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 participation relief is applicable. Due to the participation relief, there is no significant tax effect from dividend payments.
As at December 31, 2024 deferred tax assets relating to temporary differences amounting to CHF 6.7 million (2023: CHF 6.8 million) as well as relating to tax losses and credits amounting to 1.2 million (2023: CHF 1.0 million) are not recognized. At the reporting date, deferred tax assets of CHF 1.6 million (2023: CHF 1.8 million) are recognized for Group companies that incurred losses supported by taxable temporary differences and expected future profitability.
The following table summarizes the movements in the net deferred tax position:
in CHF 1 000 | 2024 | 2023 | ||
|---|---|---|---|---|
As at January 1 | 18 866 | 9 273 | ||
Recognized in the income statement | 51 | 8 788 | ||
Recognized in other comprehensive income | -541 | 1 436 | ||
Translation differences | 553 | -631 | ||
As at December 31 | 18 929 | 18 866 |
Deferred tax assets on tax loss carryforwards and tax credits as well as loss carryforwards not recognized expire as follows:
in CHF 1 000 | Expiry in 1–5 years | Expiry after 5 years | No expiry | December 31, 2024 | December 31, 2023 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
Deferred tax assets on tax loss carryforwards and tax credits | 116 | 796 | 1 208 | 2 121 | 1 704 | |||||
Tax loss carryforwards not recognized | 255 | 3 388 | - | 3 643 | 954 |
In the current year, no tax loss carryforwards not recognized in the previous year have been recognized (2023: none).
International Tax Reforms - Pillar Two Model Rules
In Switzerland and various other jurisdictions in which Belimo operates, the Global Anti-Base Erosion Rules (GloBE - Pillar Two) were enacted until December 31, 2024. Being in the scope of the enacted legislation, Belimo applied a temporary mandatory relief from deferred tax accounting for the impact of the top-up taxes related to Pillar Two. For 2024, Belimo recognized no material top-up tax liabilities. Further no material top-up tax liabilities are expected for future periods.
Estimates are required to determine the total assets and liabilities for current and deferred taxes. There are transactions and calculations for which the final tax assessment is uncertain by the end of the reporting period, e.g., the final step-up amount. Where the actual outcome of final tax assessments or tax audits of such matters differs from the amounts that were initially recognized, such differences may materially impact the income tax and deferred tax positions in the period in which such a determination is made.
Income taxes
Income taxes include current and deferred income taxes. Income taxes are recognized in the income statement unless they relate to an item that is recognized in other comprehensive income or directly in equity.
Current income taxes are determined with regard to taxable profit, based on the tax rates in force as at the reporting date, including tax expenses for previous periods.
Deferred taxes
Deferred taxes are calculated using the balance sheet liability method on all temporary differences between the tax basis and the group value carrying amounts. No deferred taxes are recognized for the following temporary differences: initial recognition of assets or liabilities in a transaction that neither affects taxable nor accounting profit and investments in subsidiaries if it is probable that the temporary differences will not be reversed in the foreseeable future. Deferred tax assets, including the tax benefits from deductible tax loss carryforwards, are recognized only if it is probable that the temporary differences or loss carryforwards can be offset against future taxable profits.