11 Income taxes

For the reconciliation of the income tax expenses 2021, the group used for the group tax rate the weighted average tax rate. Prior to the spin-off for 2020, the group applied the statutory tax rate of Sulzer Mixpac AG, Haag. The weighted average tax rate results from applying each subsidiary’s statutory income tax rate to the income before taxes. Since the group operates in countries that have differing tax laws and rates, the consolidated weighted average effective tax rate will vary from year to year according to variations in income per country and changes in applicable tax rates.

Reconciliation of income tax expenses

The effective income tax rate for 2021 was 14.3%. The effect of tax loss carryforwards and allowances of deferred income tax assets in the amount of CHF –3.1 million mainly consists of unrecognized tax losses in Germany, which forfeited following the spin-off of the group from the Sulzer group.

The effective income tax rate for 2020 was 8.1%. The effect of tax loss carryforwards and allowances of deferred income tax assets in the amount of CHF –5.4 million mainly consist of unrecognized tax loss carryforwards, which forfeited following the spin-off of the group from the Sulzer group in 2021. Prior year items and others in the amount of CHF 2.4 million include the recognition of a tax asset upon the revaluation of intangible assets for tax purposes.

Income tax liabilities

Summary of deferred income tax assets and liabilities in the balance sheet

Cumulative deferred income taxes recorded in equity as of December 31, 2021, amounted to CHF –1.7 million (2020: CHF 0.2 million). 

The group does not recognize any deferred taxes on investments in group entities because it controls the dividend policy of its entities — i.e., the group controls the timing of reversal of the related taxable temporary differences and management is satisfied that no material amounts will reverse in the foreseeable future.

Movement of deferred income tax assets and liabilities in the balance sheet

Tax loss carryforwards (TLCF)

Deferred income tax assets are recognized for tax loss carryforwards to the extent that the realization of the related tax benefit through future taxable profits is probable. No deferred income tax assets have been recognized on tax loss carryforwards in the amount of CHF 3.2 million (2020: CHF 32.8 million).