18. Deferred income taxes
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.
The offset amounts are as follows:
| In CHF'000 | 31.12.2008 | 31.12.2007 |
|---|---|---|
| Deferred tax assets | 51 856 | 39 750 |
| Deferred tax liabilities | -5 088 | -4 470 |
| 46 768 | 35 280 |
The movement on the deferred income tax account is as follows:
| In CHF'000 | Note | 2008 | 2007 |
|---|---|---|---|
| At January 1 | 35 280 | 29 265 | |
| Exchange differences | -234 | -84 | |
| Impact of business combinations | -276 | -59 | |
| Income statement (expense)/income | 12 | 11 998 | 6 158 |
| At December 31 | 46 768 | 35 280 |
The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:
| In CHF'000 | At January 1, 2008 | Income statement effect | Business combinations | Exchange differences | At December 31, 2008 |
|---|---|---|---|---|---|
| Deferred tax assets associated with: | |||||
| - intangibles | 16 748 | 1 681 | - | -30 | 18 399 |
| - employee benefits | 3 926 | 496 | 41 | -67 | 4 396 |
| - tax losses | 15 049 | 4 944 | - | -1 | 19 992 |
| - provisions and other elements tax deductible when paid | 1 086 | 4 032 | - | -142 | 4 976 |
| - inter-company profit elimination | 3 623 | 471 | - | -338 | 3 756 |
| - others | 29 | 558 | - | -22 | 565 |
| Total deferred tax assets (gross) | 40 461 | 12 182 | 41 | -600 | 52 084 |
| Deferred tax liabilities associated with: | |||||
| - affiliates and allowances for Group companies | -4 567 | 695 | - | 234 | -3 638 |
| - provisions & accelerated tax depreciation | -594 | - | -317 | 76 | -835 |
| - others | -20 | -879 | - | 56 | -843 |
| Total deferred tax liabilities (gross) | -5 181 | -184 | -317 | 366 | -5 316 |
| Net deferred tax asset/(liability) | 35 280 | 11 998 | -276 | -234 | 46 768 |
And for the past year:
| In CHF'000 | At January 1, 2007 | Income statement effect | Business combinations | Exchange differences | At December 31, 2007 |
|---|---|---|---|---|---|
| Deferred tax assets associated with | |||||
| - intangibles | 15 531 | 828 | 431 | -42 | 16 748 |
| - employee benefits | 3 403 | 509 | - | 14 | 3 926 |
| - tax losses | 9 759 | 5 290 | - | - | 15 049 |
| - provisions and other elements tax deductible when paid | 295 | 777 | - | 14 | 1 086 |
| - inter-company profit elimination | 3 506 | 149 | - | -32 | 3 623 |
| - others | 519 | -490 | - | - | 29 |
| Total deferred tax assets (gross) | 33 013 | 7 063 | 431 | -46 | 40 461 |
| Deferred tax liabilities associated with | |||||
| - affiliates and allowances for Group companies | -3 526 | -960 | - | -81 | -4 567 |
| - provisions & accelerated tax depreciation | -17 | -134 | -490 | 47 | -594 |
| - others | -205 | 189 | - | -4 | -20 |
| Total deferred tax liabilities (gross) | -3 748 | -905 | -490 | -38 | -5 181 |
| Net deferred tax asset/(liability) | 29 265 | 6 158 | -59 | -84 | 35 280 |
unrecognized tax losses carried forward
At the balance sheet date, the Group has unused tax losses and temporary differences of CHF 775.0 million (2007: 657.6 million) available for offset against future profits. A deferred tax asset has been recognized in respect of CHF 205.2 million (2007: CHF 173.5 million) of such losses and temporary differences. No deferred tax asset has been recognized in respect of the remaining CHF 569.8 million (2007: CHF 484.1 million) due to the unpredictability of future profits streams. The amount of unused tax losses carry forward which has not been capitalized as deferred tax assets, with their expiry dates, is as follows:
| In CHF million | 2008 | 2007 |
|---|---|---|
| Expiration within: | ||
| One year | 0.2 | 1.6 |
| Two years | 0.2 | 8.7 |
| Three years | - | 25.1 |
| Four years | - | - |
| Five years | 5.2 | 0.7 |
| More than five years | 564.2 | 448.0 |
| Total | 569.8 | 484.1 |