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Income Taxes | 12 Months Ended
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Mar. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company is incorporated in Switzerland but operates in various countries with differing tax laws and rates. Further, a portion of the Company's income (loss) before taxes and the provision for (benefit from) income taxes is generated outside of Switzerland. Income from continuing operations before income taxes for fiscal years 2020, 2019 and 2018 is summarized as follows (in thousands):
|  | Years Ended March 31,
|  | 2020 |  | 2019 |  | 2018
Swiss |  | $ | 238,303 |  |  | $ | 212,986 |  |  | $ | 177,935 |
Non-Swiss |  | 86,023 |  |  | 58,147 |  |  | 54,330 |
Income before taxes |  | $ | 324,326 |  |  | $ | 271,133 |  |  | $ | 232,265 |
The provision for (benefit from) income taxes is summarized as follows (in thousands):
|  | Years Ended March 31,
|  | 2020 |  | 2019 |  | 2018
Current: |  |  |  |  |  |
Swiss |  | $ | 5,474 |  |  | $ | 1,364 |  |  | $ | 3,526 |
Non-Swiss |  | 29,078 |  |  | 24,334 |  |  | 13,142 |
Deferred: |  |  |  |  |  |
Swiss |  | (153,210 | ) |  | — |  |  | — |
Non-Swiss |  | (6,739 | ) |  | (12,138 | ) |  | 7,055 |
Provision for (benefit from) income taxes |  | $ | (125,397 | ) |  | $ | 13,560 |  |  | $ | 23,723 |
The difference between the provision for (benefit from) income taxes and the expected tax provision (tax benefit) at the statutory income tax rate of 8.5% is reconciled below (in thousands):
|  | Years Ended March 31,
|  | 2020 |  | 2019 |  | 2018
Expected tax provision at statutory income tax rates |  | $ | 27,568 |  |  | $ | 23,046 |  |  | $ | 19,743 |
Income taxes at different rates |  | (5,592 | ) |  | (10,113 | ) |  | (9,611 | )
Research and development tax credits |  | (4,692 | ) |  | (5,432 | ) |  | (4,124 | )
Executive compensation |  | 1,582 |  |  | 3,344 |  |  | 1,835 |
Stock-based compensation |  | (2,735 | ) |  | (7,288 | ) |  | (9,376 | )
Deferred tax effects from Tax Act |  | — |  |  | — |  |  | 22,325 |
Deferred tax effects from TRAF |  | (206,792 | ) |  | — |  |  | — |
Valuation allowance |  | (538 | ) |  | 1,891 |  |  | 533 |
Restructuring charges / (credits) |  | 12 |  |  | 961 |  |  | (10 | )
Unrecognized tax benefits |  | 64,683 |  |  | 8,269 |  |  | 3,627 |
Other, net |  | 1,107 |  |  | (1,118 | ) |  | (1,219 | )
Provision for (benefit from) income taxes |  | $ | (125,397 | ) |  | $ | 13,560 |  |  | $ | 23,723 |
Deferred income tax assets and liabilities consist of the following (in thousands):
|  | March 31,
|  | 2020 |  | 2019
Deferred tax assets: |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 17,065 |  |  | $ | 16,323 |
Tax credit carryforwards |  | 56,910 |  |  | 52,263 |
Accruals |  | 57,923 |  |  | 52,304 |
Depreciation and amortization |  | 4,831 |  |  | 5,716 |
Tax step-up of goodwill from TRAF |  | 151,220 |  |  | — |
Share-based compensation |  | 10,947 |  |  | 8,703 |
Gross deferred tax assets |  | 298,896 |  |  | 135,309 |
Valuation allowance |  | (29,171 | ) |  | (28,375 | )
Gross deferred tax assets after valuation allowance |  | 269,725 |  |  | 106,934 |
Deferred tax liabilities: |  |  |  |  |  |
Acquired intangible assets and other |  | (31,128 | ) |  | (18,176 | )
Gross deferred tax liabilities |  | (31,128 | ) |  | (18,176 | )
Deferred tax assets, net |  | $ | 238,597 |  |  | $ | 88,758 |
On May 19, 2019, the Swiss electorate approved TRAF, a major reform to better align the Swiss tax system with international tax standards. The legislation was subsequently published in the Federal Register on August 6, 2019 to take effect as of January 1, 2020. TRAF specifies mandatory and voluntary provisions that are implemented through the modification of the cantonal tax law. Major mandatory federal tax provisions include abolishment of preferential cantonal tax regimes, introduction of patent box regime and tax-free step-up of intangible assets, including goodwill created under a privileged tax regime. The canton of Vaud completed the legislative process to enact TRAF on March 10, 2020 to take effect as of January 1, 2020. The Company benefited from a longstanding tax ruling from the canton of Vaud through December 31, 2019. The Company reached an agreement with the Vaud Tax Administration that would allow for a tax step-up of goodwill under TRAF to be amortized over ten years beginning on January 1, 2020 as a transition measure. The Company elected an accounting policy to treat the increase in tax goodwill as a separate unit of account apart from existing goodwill arising from prior business combinations. As a result, the Company recorded an income tax benefit of $151.7 million, net of unrecognized tax benefits to account for the book and tax basis difference of the step-up upon enactment. The deferred income tax benefit from other temporary differences resulting from the Swiss tax reform, net of three-month amortization of the tax step-up amounted to $1.5 million. The aggregate deferred income tax impact in fiscal year 2020 as a result of the enactment of TRAF was $153.2 million. Management regularly assesses the ability to realize deferred tax assets recorded in the Company's entities based upon the weight of available evidence, including such factors as recent earnings history and expected future taxable income. In the event that the Company changes its determination as to the amount of deferred tax assets that can be realized, the Company will adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made. The Company had a valuation allowance against deferred tax assets of $29.2 million at March 31, 2020, compared to $28.4 million at March 31, 2019. The federal valuation allowance against tax credits was reduced from $1.9 million as of March 31, 2019 to $0.9 million as of March 31, 2020 due to a release of $1.0 million from the expiration tax credits. The Company had a valuation allowance of $27.7 million as of March 31, 2020 against deferred tax assets in the state of California, an increase from $25.7 million as of March 31, 2019. The increase primarily relates to $1.3 million from the acquisition of Streamlabs and $0.7 million from activities related to deferred tax assets, respectively. The remaining valuation allowance primarily represents $0.6 million for various tax attribute carryforwards. The Company determined that it is more likely than not that the Company would not generate sufficient taxable income in the future to utilize such deferred tax assets. As of March 31, 2020, the Company had foreign net operating loss and tax credit carryforwards for income tax purposes of $295.8 million and $63.3 million, respectively. Unused net operating loss carryforwards will expire at various dates in fiscal years 2021 to 2039. Certain net operating loss carryforwards in the United States relate to acquisitions and, as a result, are limited in the amount that can be utilized in any one year. The tax credit carryforwards will begin to expire in fiscal year 2021. Swiss income taxes and non-Swiss withholding taxes associated with the repatriation of earnings or for other temporary differences related to investments in non-Swiss subsidiaries have not been provided for, as the Company intends to reinvest the earnings of such subsidiaries indefinitely. If these earnings were distributed to Switzerland in the form of dividends or otherwise, or if the shares of the relevant non-Swiss subsidiaries were sold or otherwise transferred, the Company may be subject to additional Swiss income taxes and non-Swiss withholding taxes. As of March 31, 2020, the cumulative amount of unremitted earnings of non-Swiss subsidiaries for which no income taxes have been provided is approximately $112.8 million. The amount of unrecognized deferred income tax liability related to these earnings is estimated to be approximately $1.0 million. The Company follows a two-step approach in recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. As of March 31, 2020 and 2019, the total amount of unrecognized tax benefits due to uncertain tax positions was $140.8 million and $76.5 million, respectively, all of which would affect the effective income tax rate if recognized. As of March 31, 2020 and 2019, the Company had $40.8 million and $36.4 million, respectively, in non-current income taxes payable, including interest and penalties, related to the Company's income tax liability for uncertain tax positions. The aggregate changes in gross unrecognized tax benefits in fiscal years 2020, 2019 and 2018 were as follows (in thousands). Fiscal year 2020 includes gross unrecognized tax benefits recorded as a result of the enactment of TRAF in Switzerland:
March 31, 2017 |  | $ | 63,667 |
Lapse of statute of limitations |  | (7,505 | )
Decreases in balances related to tax positions taken during prior years |  | (704 | )
Increases in balances related to tax positions taken during the year |  | 13,673 |
March 31, 2018 |  | $ | 69,131 |
Lapse of statute of limitations |  | (2,511 | )
Decreases in balances related to tax positions taken during prior years |  | (1,550 | )
Increases in balances related to tax positions taken during the year |  | 11,479 |
March 31, 2019 |  | $ | 76,549 |
Lapse of statute of limitations |  | (3,501 | )
Decreases in balances related to tax positions taken during prior years |  | (679 | )
Increases in balances related to tax positions taken during the year |  | 71,128 |
March 31, 2020 |  | $ | 143,497 |
The Company recognizes interest and penalties related to unrecognized tax positions in income tax expense. The Company recognized $2.0 million, $0.6 million, and $0.6 million in interest and penalties in income tax expense during fiscal years 2020, 2019 and 2018, respectively. As of March 31, 2020 and 2019, the Company had $4.5 million, and $2.5 million, respectively, of accrued interest and penalties related to uncertain tax positions. The Company files Swiss and foreign tax returns. The Company received final tax assessments in Switzerland through fiscal year 2017. For other foreign jurisdictions such as the United States, the Company is generally not subject to tax examinations for years prior to fiscal year 2017. The Company is under examination and has received assessment notices in foreign tax jurisdictions. If the examinations are resolved unfavorably, there is a possibility they may have a material negative impact on its results of operations. Although the Company has adequately provided for uncertain tax positions, the provisions on these positions may change as revised estimates are made or the underlying matters are settled or otherwise resolved. During the next 12 months, it is reasonably possible that the amount of unrecognized tax benefits could increase or decrease significantly due to chang es in tax law in various jurisdictions, new tax audits and changes in the U.S. Dollar as compared to other currencies. Excluding these factors, uncertain tax positions may decrease by as much as $4.6 million primarily from the lapse of the statutes of limitations in various jurisdictions during the next 12 months.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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