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Income Taxes | 12 Months Ended
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Mar. 31, 2024
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 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 2024, 2023 and 2022 is summarized as follows (in thousands):
|  | Years Ended March 31,
|  | 2024 |  | 2023 |  | 2022
Swiss |  | $ | 502,291 |  |  | $ | 282,970 |  |  | $ | 579,258 |
Non-Swiss |  | 119,305 |  |  | 180,552 |  |  | 196,560 |
Income before taxes |  | $ | 621,596 |  |  | $ | 463,522 |  |  | $ | 775,818 |
The provision for (benefit from) income taxes is summarized as follows (in thousands):
|  | Years Ended March 31,
|  | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |  |
Swiss |  | $ | 26,833 |  |  | $ | 19,405 |  |  | $ | 59,659 |
Non-Swiss |  | 25,044 |  |  | 48,829 |  |  | 44,094 |
Deferred: |  |  |  |  |  |
Swiss |  | (47,517) |  |  | 26,629 |  |  | 29,198 |
Non-Swiss |  | 5,093 |  |  | 4,085 |  |  | (1,646) |
Provision for income taxes |  | $ | 9,453 |  |  | $ | 98,947 |  |  | $ | 131,305 |
The difference between the provision for (benefit from) income taxes and the expected tax provision (tax benefit) at the Swiss statutory income tax rate of 8.5% is reconciled below (in thousands):
|  | Years Ended March 31,
|  | 2024 |  | 2023 |  | 2022
Expected tax provision at statutory income tax rates |  | $ | 52,836 |  |  | $ | 39,399 |  |  | $ | 65,945 |
Income taxes at different rates |  | 47,595 |  |  | 38,467 |  |  | 61,296 |
Research and development tax credits |  | (9,738) |  |  | (152) |  |  | (5,957) |
Swiss Tax Ruling |  | (50,051) |  |  | — |  |  | — |
Executive compensation |  | 407 |  |  | 749 |  |  | 4,683 |
Stock-based compensation |  | 4,019 |  |  | 5,736 |  |  | (9,141) |
Deferred tax effects from TRAF |  | (33,926) |  |  | — |  |  | — |
Valuation allowance |  | 4,780 |  |  | 908 |  |  | 887 |
Impairment |  | — |  |  | 1,881 |  |  | — |
Restructuring charges / (credits) |  | — |  |  | (1,764) |  |  | — |
Unrecognized tax benefits |  | 11,535 |  |  | 13,284 |  |  | 16,577 |
Audit settlement |  | — |  |  | — |  |  | (3,655) |
FDII deduction |  | (18,675) |  |  | — |  |  | — |
Other, net |  | 671 |  |  | 439 |  |  | 670 |
Provision for income taxes |  | $ | 9,453 |  |  | $ | 98,947 |  |  | $ | 131,305 |
The canton of Vaud completed the legislative process to enact the Swiss Federal Act on Tax Reform and AHV Financing (“TRAF”), a reform to better align the Swiss tax system to international tax standards on March 20, 2020 that took effect as of January 1, 2020. In March 2020, the Company reached an agreement with the Vaud Tax Administration that would allow for an increase in the tax basis of goodwill, as a transition measure under TRAF, to be amortized over ten years beginning on January 1, 2020. During the fiscal year ended March 31, 2024, the Company reached an agreement to remeasure the tax basis of goodwill under TRAF with the canton of Vaud, which resulted in an income tax benefit of $25.1 million, net of assessment for uncertain tax positions. The remeasurement of the step-up will be amortized over the remaining ten-year amortization period. On December 29, 2023, a change to the cantonal tax legislation was published. According to the law approved by the Vaud parliament, a progressive scale will be applicable for cantonal tax purposes resulting in an increase from the current tax rate of 13.61% to 14.28% effective fiscal year 2025. The increase in tax rate resulted in a tax benefit of $5.1 million due to a remeasurement of the Company's Swiss deferred tax assets in the fiscal year ended March 31, 2024. On March 28, 2024, the Company executed a Swiss Tax Ruling with the canton of Vaud that provides future tax benefit for ten years. The Swiss Tax Ruling resulted in an income tax benefit of $50.1 million, which will be utilized over a ten-year period. The Tax Cuts and Jobs Act enacted Section 250, which provides for a deduction with respect to Global Intangible Low-Taxed Income ("GILTI") and Foreign-Derived Intangible Income ("FDII") in the US. The application of this tax incentive is inherently complex. During the fiscal year ended March 31, 2024, the Company analyzed the applicability of FDII and determined that this tax incentive applies in fiscal 2021 to 2023 tax years. As a result, the Company realized a tax benefit of $18.7 million related to FDII. The Company has also concluded that any GILTI tax since the enactment of Tax Cuts and Jobs Act is immaterial. Deferred income tax assets and liabilities consist of the following (in thousands):
|  | March 31,
|  | 2024 |  | 2023
Deferred tax assets: |  |  |  |
Tax attributes carryforward |  | $ | 43,846 |  |  | $ | 36,700 |
Future tax deduction from Swiss Tax Ruling |  | 49,755 |  |  | — |
Accruals |  | 77,181 |  |  | 85,786 |
Depreciation and amortization |  | 121 |  |  | 707 |
Tax step-up of goodwill from TRAF |  | 105,942 |  |  | 100,514 |
Share-based compensation |  | 13,718 |  |  | 11,093 |
Gross deferred tax assets |  | 290,563 |  |  | 234,800 |
Valuation allowance |  | (35,536) |  |  | (30,766) |
Deferred tax assets after valuation allowance |  | 255,027 |  |  | 204,034 |
Deferred tax liabilities: |  |  |  |
Acquired intangible assets and other |  | (30,901) |  |  | (34,848) |
Deferred tax liabilities |  | (30,901) |  |  | (34,848) |
Deferred tax assets, net |  | $ | 224,126 |  |  | $ | 169,186 |
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 $35.5 million at March 31, 2024, compared to $30.8 million at March 31, 2023. The Company had a valuation allowance of $35.3 million as of March 31, 2024 against deferred tax assets in the state of California, an increase from $30.8 million as of March 31, 2023 from activities during the year. 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, 2024, the Company had net operating loss carryforwards in Switzerland for income tax purposes of $15.0 million which will begin to expire in fiscal year 2028. The Company had net operating loss and tax credit carryforwards in the United States for income tax purposes of $55.0 million and $79.7 million, respectively, as of March 31, 2024. Unused net operating loss carryforwards will expire at various dates beginning in fiscal year 2030. 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 2028. 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, 2024, the cumulative amount of unremitted earnings of non-Swiss subsidiaries for which no income taxes have been provided is approximately $426.2 million. The amount of unrecognized deferred income tax liability related to these earnings is estimated to be approximately $16.0 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, 2024 and 2023, the total amount of unrecognized tax benefits due to uncertain tax positions was $192.7 million and $186.8 million, respectively, all of which would affect the effective income tax rate if recognized. As of March 31, 2024 and 2023, the Company had $112.6 million and $106.4 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 2024, 2023 and 2022 were as follows (in thousands).
March 31, 2021 |  | $ | 163,253 |
Lapse of statute of limitations |  | (4,232) |
Settlements with taxing authorities |  | (2,015) |
Increases in balances related to tax positions taken during the year |  | 22,366 |
March 31, 2022 |  | $ | 179,372 |
Lapse of statute of limitations |  | (3,586) |
Increases in balances related to tax positions taken during the year |  | 15,214 |
March 31, 2023 |  | $ | 191,000 |
Lapse of statute of limitations |  | (3,863) |
Settlements with taxing authorities |  | 41 |
Increases in balances related to tax positions taken during prior years |  | 705 |
Increases in balances related to tax positions taken during the year |  | 22,332 |
March 31, 2024 |  | $ | 210,215 |
The Company recognizes interest and penalties related to unrecognized tax positions in income tax expense. The Company recognized $1.7 million and $2.7 million, in interest and penalties related to unrecognized tax positions in income tax expense during fiscal years 2024 and 2023, respectively. As of March 31, 2024 and 2023, the Company had $7.8 million, and $6.1 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 2019. For other material foreign jurisdictions such as the United States and China, the Company is generally not subject to tax examinations for years prior to fiscal year 2020 and calendar year 2020, respectively. In the United States, the federal and state tax agencies have the authority to examine periods prior to fiscal year 2020, to the extent allowed by law, where tax attributes were generated, carried forward, and being utilized in subsequent years. The Company is under examination 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 changes in tax law in various jurisdictions, due to lapse in statute of limitations and other factors, it is not possible to provide a range of potential changes.

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