11 Income taxes

millions of CHF	2022	2021
Current income tax expenses	–5.4	–13.0
Deferred income tax income	4.8	5.7
Total income tax expenses	–0.6	–7.3

For the reconciliation of the income tax expenses, the group used the weighted average tax rate for the group tax rate. The weighted average tax rate results from applying each subsidiary’s statutory income tax rate to the income before taxes based on absolute values (that is, making all values positive). 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

millions of CHF	2022	2021
Income before income tax expenses	12.2	51.3
Group tax rate	17.4%	17.5%
Income taxes at group tax rate	–2.1	–9.0
Income taxed at different tax rates	2.8	4.7
Effect of tax loss carryforwards and allowances for deferred income tax assets	–0.9	–3.1
Expenses not deductible for tax purposes	–0.8	–0.3
Effect of changes in tax rates and legislation	0.3	–0.2
Prior year items and others	0.2	0.6
Total income tax expenses	–0.6	–7.3
Effective income tax rate	5.1%	14.3%

The effective income tax rate for 2022 was 5.1%. The effect of income tax at different tax rates in the amount of CHF 2.8 million mainly consists of tax-deductible impairments of foreign subsidiaries, partly offset by deconsolidating the net assets of medmix Poland. Without the effects of foreign subsidiaries impairments and deconsolidating medmix Poland, the effective income tax rate would have been 14.2%.

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.

Income tax liabilities

millions of CHF	2022	2021
Balance as of January 1	10.6	6.9
Additions	5.4	11.5
Released as no longer required	–0.0	–0.3
Utilized	–11.4	–7.5
Currency translation differences	0.1	–0.0
Total income tax liabilities as of December 31	4.7	10.6
– thereof non-current	–0.0	1.7
– thereof current	4.7	8.9

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

	2022
millions of CHF	Assets	Liabilities	Net
Intangible assets	1.5	–18.8	–17.2
Property, plant and equipment	1.5	–1.0	0.5
Inventory	2.4	–1.1	1.3
Other assets	1.0	–3.3	–2.2
Non-current provisions	0.2	–	0.2
Current provisions	0.5	–0.1	0.4
Other liabilities	2.5	–0.2	2.4
Tax loss carryforwards	4.4	–	4.4
Tax assets / liabilities	14.1	–24.5	–10.3

Offset of assets and liabilities	–8.4	8.4	–

Net recorded deferred income tax assets and liabilities	5.8	–16.1	–10.3

	2021
millions of CHF	Assets	Liabilities	Net
Intangible assets	1.2	–23.0	–21.8
Property, plant and equipment	1.3	–0.4	1.0
Inventory	2.7	–0.4	2.3
Other assets	0.7	–3.0	–2.2
Defined benefit obligations	0.2	–0.0	0.1
Non-current provisions	0.3	–	0.3
Current provisions	0.2	–0.1	0.1
Other liabilities	4.2	–1.9	2.3
Tax loss carryforwards	2.5	–	2.5
Tax assets / liabilities	13.3	–28.8	–15.4

Offset of assets and liabilities	–9.2	9.2	0.0

Net recorded deferred income tax assets and liabilities	4.2	–19.6	–15.4

Cumulative deferred income taxes recorded in equity as of December 31, 2022, amounted to CHF 1.2 million (2021: CHF 1.7 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

2022

millions of CHF

Balance as of January 1

Recognized in profit or loss

Recognized in other comprehensive income

Acquisition of entities

Currency translation differences

Balance as of December 31

Intangible assets

–21.8

5.1

–

–0.5

–17.2

Property, plant and equipment

1.0

–0.8

–

0.3

0.5

Inventory

2.3

–1.0

–

0.1

1.3

Other assets

–2.2

0.2

–0.2

–

–2.2

Defined benefit obligations

0.1

–0.8

0.7

–

Non-current provisions

0.3

–0.0

–

–0.1

0.2

Current provisions

0.1

0.3

–

0.4

Other liabilities

2.3

0.0

–

2.4

Tax loss carryforwards

2.5

1.9

–

4.4

Total

–15.4

4.8

0.5

–

–0.2

–10.3

2021

millions of CHF

Balance as of January 1

Recognized in profit or loss

Recognized in other comprehensive income

Acquisition of entities

Currency translation differences

Balance as of December 31

Intangible assets

–25.7

2.8

–

1.0

–21.8

Property, plant and equipment

0.1

0.5

–

0.3

1.0

Inventory

1.1

1.4

–

–0.2

2.3

Other assets

–0.2

–2.1

0.1

–

–2.2

Defined benefit obligations

0.9

1.2

–2.0

–

0.1

Non-current provisions

0.3

–0.2

–

0.2

0.3

Current provisions

–0.0

0.2

–

0.1

Other liabilities

1.0

1.3

–

2.3

Tax loss carryforwards

1.9

0.6

–

2.5

Total

–20.5

5.7

–1.9

–

1.3

–15.4

Tax loss carryforwards (TLCF)

	2022
millions of CHF	Amount	Potential tax assets	Valuation allowance	Carrying amount	Unrecognized TLCF
Expiring in the next 3 years	1.2	0.2	–0.2	0.0	1.3
Expiring in 4–7 years	4.5	0.5	–0.5	0.0	4.5
Available without limitation	24.0	5.0	–0.6	4.4	3.8
Total tax loss carryforwards as of December 31	29.8	5.7	–1.3	4.4	9.6

	2021
millions of CHF	Amount	Potential tax assets	Valuation allowance	Carrying amount	Unrecognized TLCF
Expiring in the next 3 years	–	–	–	–	–
Expiring in 4–7 years	1.7	0.6	–	0.6	–
Available without limitation	15.1	2.3	–0.4	1.9	3.2
Total tax loss carryforwards as of December 31	16.8	2.9	–0.4	2.5	3.2

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 9.6 million (2021: CHF 3.2 million).