The main elements contributing to the difference between the Group’s overall expected tax expense/rate and the effective tax expense/rate are:

The 2018 tax rate was helped by transactions with shareholdings of non-consolidated companies and by the recognition of deferred tax assets on losses generated in previous years in France. Additionally the tax rate compares favorably to the one of the prior year, where part of the US tax asset had to be written down as a result of the US tax reform.

The movement of the net deferred income tax balance is as follows:

Of the deferred tax assets capitalized on tax losses, CHF 53 million refer to tax losses of the US-subsidiaries (2017: CHF 68 million), CHF 7 million to tax losses of the Spanish subsidiaries (2017: CHF 9 million), CHF 6 million to tax losses of the Canadian subsidiaries (2017: CHF 6 million), CHF 10 million to tax losses of the Indian subsidiaries (2017: CHF 7 million), and CHF 3 million to tax losses of the Italian subsidiaries (2017: CHF 6 million). Clariant considers it probable that these tax losses can be recovered.

Deferred income tax liabilities have not been established for withholding tax and other taxes that would be payable on the unremitted earnings of certain foreign subsidiaries, as such amounts are currently regarded as permanently reinvested. These unremitted earnings totaled CHF 2 559 million at the end of 2018 (2017: CHF 2 193 million).

The change compared to the prior year is primarily the result of Group-internal transactions.

The tax losses on which no deferred tax assets are recognized are reviewed for recoverability at each balance sheet date. The largest part of these tax losses arose in France (with a tax rate of 33.3%), in China (with a tax rate of 25%) and in Luxembourg (with a tax rate of 26.3%). At present their recoverability is not considered probable.

Tax losses on which no deferred tax assets were recognized are as follows:

Tax credits amounting to CHF 10 million were recognized in 2018. They expire in and after 2023.

Temporary differences on which no deferred tax was recognized amount to CHF 672 million in 2018 (2017: CHF 1 005 million).