Autoneum - Annual Report 2023

11 Income taxes


CHF million	2023	2022
Current income taxes	–31.4	–17.3
Deferred income taxes	23.5	12.6
Total	–7.9	–4.7

Reconciliation between expected and actual income tax result:


CHF million	2023	2022
Earnings before taxes	69.0	15.7
Average applicable income tax rate	22.8%	24.9%
Expected income tax result	–15.7	–3.9
Non-taxable income and non-deductible expenses¹	14.8	–0.6
Current income taxes from prior periods	–5.0	1.6
Current year losses for which no deferred income tax assets were recognized	–4.5	–9.6
Utilization of previously unrecognized tax loss carryforwards	9.3	3.7
Recognition of previously unrecognized or derecognition of tax loss carryforwards	1.0	13.3
Recognition of previously unrecognized or derecognition of deductible temporary differences	–4.1	–3.0
Non-recoverable withholding taxes	–4.4	–3.8
Income taxes at other income tax rates or taxable base	0.7	–4.0
Impact of changes in income tax rates	0.6	1.0
Other effects	–0.6	0.5
Income tax expenses	–7.9	–4.7

¹ In the reporting period, non-taxable income is mainly impacted by the bargain purchase gain.

The change in the average applicable income tax rate is mainly due to the different geographic composition of earnings before taxes.

Deferred income tax assets and liabilities pertain to the following balance sheet line items:


CHF million	Deferred income tax assets 31.12.2023	Deferred income tax liabilities 31.12.2023	Deferred income tax assets 31.12.2022	Deferred income tax liabilities 31.12.2022
Tangible assets	3.5	27.0	5.1	26.6
Intangible assets	1.1	1.5	1.2	–
Non-current financial assets	–	2.2	–	2.2
Employee benefit assets	–	1.1	–	1.5
Other non-current assets	2.5	7.1	0.3	7.1
Inventories	2.0	0.4	0.8	0.7
Other current assets	1.1	4.7	1.7	3.6
Employee benefit liabilities	1.0	0.9	0.7	1.0
Provisions	0.7	0.3	0.6	0.3
Other liabilities	6.4	0.9	8.2	3.1
Tax loss carryforwards and tax credits	48.4	–	39.8	–
Inflation adjustment	–0.2	–	0.2	–
Subtotal	66.6	46.2	58.6	46.0
Offsetting	–16.0	–16.0	–25.7	–25.7
Total	50.7	30.2	32.9	20.3

The increase in the net deferred income tax asset by CHF 7.8 million (2022: increase of CHF 11.3 million) relates to the deferred income tax income recognized in the consolidated income statement of CHF 23.5 million (2022: CHF 12.6 million), to the deferred income tax income recognized in other comprehensive income of CHF 0.6 milllion (2022: nil), a negative inflation adjustment of CHF 0.4 million (2022: negative inflation adjustment of CHF 0.4 million), net deferred income tax liabilities assumed at the acquisition of Borgers Automotive of CHF 15.4 million and to a negative currency translation adjustment of CHF 0.4 million (2022: negative currency translation adjustment of CHF 0.9 million).

No deferred income tax assets are recognized from deductible temporary differences in the amount of CHF 127.0 million (December 31, 2021: CHF 119.8 million). At the reporting date, tax loss carryforwards of CHF 106.3 million (December 31, 2021: CHF 103.8 million) are recognized for Group companies that incurred losses in 2023 or 2022 (2022 or 2021) supported by taxable temporary differences and expected future profitability.

The table below discloses tax loss carryforwards by their year of expiry:


CHF million	Recognized¹ 31.12.2023	Non-recognized² 31.12.2023	Recognized¹ 31.12.2022	Non-recognized² 31.12.2022
Less than 3 years	–	3.7	6.7	3.8
In 3 to 7 years	35.4	0.8	14.4	13.6
Thereafter	126.1	318.9	127.5	348.8
Total	161.5	323.4	148.6	366.2

¹ Tax loss carryforwards for which deferred income tax assets are recognized.
² Tax loss carryforwards for which no deferred income tax assets are recognized.

The tax loss carryforwards for which no deferred income tax assets were recognized originate from countries with a deferred income tax rate of between 9% and 34% in both the reporting year and the prior year.

The table below discloses tax credits by their year of expiry:


CHF million	Recognized¹ 31.12.2023	Non-recognized² 31.12.2023	Recognized¹ 31.12.2022	Non-recognized² 31.12.2022
Less than 3 years	–	3.5	–	3.8
In 3 to 7 years	–	12.8	–	14.6
Thereafter	1.8	8.6	2.4	11.7
Total	1.8	24.9	2.4	30.2

¹ Tax credits for which deferred income tax assets are recognized.
² Tax credits for which no deferred income tax assets are recognized.

Global minimum tax

In December 2021, the OECD published the Pillar Two model rules to introduce a global minimum tax of 15% for multinational companies with consolidated revenue of more than EUR 750 million. Meanwhile, relevant elements of Pillar Two legislation have been substantively enacted in various jurisdictions in which the Group operates including Switzerland. Such legislation will be effective for Autoneum’s financial year beginning January 1, 2024. Autoneum has performed the assessments of the potential exposure to Pillar Two income taxes. Based on profit projections, the current stage of legislative implementation in the various countries and the Transitional CBCR Safe Harbor rules, net profits of Autoneum would not be expected to be materially impacted by the Pillar Two rules. Autoneum monitors the development of the Pillar Two rules and continually assesses the impacts.