v3.26.1
Income Taxes
 12 Months Ended
Mar. 31, 2026
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 income taxes is generated outside of Switzerland.
Income from continuing operations before income taxes for fiscal years 2026, 2025 and 2024 is summarized as follows (in thousands):
 Years Ended March 31,
 202620252024
Swiss$550,787 $492,941 $502,291 
Non-Swiss275,732 213,931 119,305 
Income before taxes$826,519 $706,872 $621,596 
The provision for income taxes is summarized as follows (in thousands):
Years Ended March 31,
202620252024
Current:
Swiss$54,644 $(14,673)$26,833 
Non-Swiss30,866 33,473 25,044 
Deferred:
Swiss38,192 45,283 (47,517)
Non-Swiss(8,370)11,260 5,093 
Provision for income taxes$115,332 $75,343 $9,453 
The following table is presented in accordance with ASU 2023-09, which the Company adopted in fiscal year 2026. The Company has adopted this standard prospectively. See Note 2 for additional information. The difference between the provision for income taxes and the expected tax provision at the Swiss statutory income tax rate of 8.5% for the current period is reconciled below (in thousands):
 
Year Ended March 31,
 2026
As a percent
Pretax book income at Statutory rate$70,250 8.5 %
Domestic federal reconciling items:
Federal Tax Deduction(4,436)(0.5)%
Participation Exemption(33,617)(4.1)%
Domestic state and local income taxes:
Vaud43,812 5.3 %
Zurich415 0.1 %
Domestic other, net4,213 0.5 %
Foreign reconciling items:
U.S.:
Statutory tax rate difference between United States and Switzerland13,948 1.7 %
Foreign derived intangible income(4,192)(0.5)%
State tax expense, net of federal benefit4,189 0.5 %
Tax credits(6,022)(0.7)%
Non-deductible executive compensation4,314 0.5 %
Other, net346 — %
China:
Statutory tax rate difference between China and Switzerland8,931 1.1 %
Other, net118 — %
Hong Kong - Tax exempt dividends(7,402)(0.9)%
Other foreign jurisdictions45,138 5.5 %
Changes in unrecognized tax benefits(24,673)(3.0)%
Effective Tax Rate$115,332 14.0 %
The effective income tax rate in 2026 includes the tax effect of the expiration of statutes of limitation of uncertain tax positions and non-taxable dividend distributions, offset by foreign earnings taxed at different rates than the statutory rate.
The difference between the provision for income taxes and the expected tax provision at the Swiss statutory income tax rate of 8.5% is reconciled for prior periods as previously disclosed prior to the adoption of ASU 2023-09 (in thousands):
 
Years Ended March 31,
 20252024
Expected tax provision at statutory income tax rates$60,084 $52,836 
Income taxes at different rates68,212 47,595 
Research and development tax credits(6,797)(9,738)
Swiss Tax Benefits
— (50,051)
Executive compensation980 407 
Stock-based compensation(2,162)4,019 
Deferred tax effects from TRAF— (33,926)
Valuation allowance1,000 4,780 
Restructuring credits
(817)— 
Unrecognized tax benefits/ Audit resolution and statute lapse
(43,333)11,535 
FDII deduction(1,424)(18,675)
Other, net(400)671 
Provision for income taxes$75,343 $9,453 
The effective income tax rate in 2025 includes the tax effect of audit resolutions and the expiration of statutes of limitation of uncertain tax positions totaling $53.3 million, offset by the increase to unrecognized tax benefits in 2025 of $10.0 million. The effective tax rate in 2024 includes the discrete tax benefits recognized in fiscal year 2024 for the benefit of future Swiss tax deductions, the remeasurement of the tax basis of goodwill under TRAF (as defined below), FDII (as defined below) incentive provided by the Tax Cuts and Jobs Act and remeasurement of the Company's Swiss deferred tax assets due to a change in tax rate.
On March 28, 2024, the Swiss canton of Vaud confirmed a future tax benefit to be recognized for ten years. This resulted in the Company recording an income tax benefit of $50.1 million during the fiscal year ended March 31, 2024, which will be utilized over a ten-year period.
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 increased 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 remeasured the tax basis of goodwill under TRAF, 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 then 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.
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 U.S. 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 to fiscal years 2021, 2022 and 2023. 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.
On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was enacted into law in the United States and most relevant provisions will be effective for the Company beginning in fiscal year 2027. The OBBBA includes numerous provisions that affect corporate taxation, impacting areas such as R&D expensing, bonus depreciation, and international tax provisions. The Company has reviewed the provisions of the OBBBA to determine the potential impact on the Company's financial statements. Based on this review, and considering the Company's current tax position and operations, at this time the Company does not expect the OBBBA to have a material impact on its income taxes, including current and deferred tax balances and the effective tax rate.
For the fiscal year ended March 31, 2026, the Company assessed its exposure to the OECD Pillar Two global minimum tax rules. The Company has determined that, for the fiscal year 2026, most jurisdictions in which it operates should qualify for the transitional Country-by-Country Reporting ("CbCR") safe harbor, as outlined in the OECD Administrative Guidance and enacted domestic legislation. The Company's CbCR has been prepared in accordance with the requirements for a Qualified CbCR, using qualified financial statements. Based on this data, most jurisdictions continue to meet safe harbor qualifications at 16% tax rates, and therefore, the Company is only required to perform a detailed Pillar Two top-up tax calculation for limited jurisdictions. The estimated top up tax for fiscal year 2026 is de minimis.

On January 5, 2026, the OECD released an Administrative Guidance package. This package includes a “Side-by-Side” System designed to align the U.S. tax regime with Pillar Two for U.S.-parented multinational groups, effective for tax years beginning on or after January 1, 2026. As the Company is a non-U.S. headquartered multinational, the “Side-by-Side” System itself does not apply to the Company’s tax profile. However, the broader guidance package also introduces a new permanent safe harbor (to replace the transitional CbCR safe harbor for fiscal years beginning in 2027) and a one-year extension of the transitional CbCR safe harbor that may potentially impact the Company’s Pillar Two compliance and reporting. The Company continues to monitor these developments but does not expect a material change to its Pillar Two liability.
Deferred income tax assets and liabilities consist of the following (in thousands):
 March 31,
 20262025
Deferred tax assets:  
Tax attributes carryforward$42,408 $43,536 
Future tax deduction from Swiss Tax Benefits50,630 48,267 
Accruals67,963 72,114 
Tax step-up of goodwill from TRAF73,512 86,519 
Share-based compensation20,228 15,411 
Gross deferred tax assets254,741 265,847 
Valuation allowance(36,922)(36,537)
Deferred tax assets after valuation allowance$217,819 $229,310 
Deferred tax liabilities:  
Acquired intangible assets and other$(23,975)$(27,788)
Deferred tax liabilities(23,975)(27,788)
Deferred tax assets, net$193,844 $201,522 
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 $36.9 million at March 31, 2026, compared to $36.5 million at March 31, 2025. The Company had a valuation allowance of $36.8 million as of March 31, 2026 against deferred tax assets in the state of California, an increase from $36.4 million as of March 31, 2025 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, 2026, the Company had net operating loss carryforwards in Switzerland for income tax purposes of $30.8 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 $0.4 million and $61.1 million, respectively, as of March 31, 2026. The 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 and have no expiration. The tax credit carryforwards will begin to expire in fiscal year 2027.
For the fiscal year ended March 31, 2026, individual jurisdictions are separately presented where the net amount of income taxes paid is equal to or greater than 5% of total income taxes paid. As the Company adopted ASU 2023-09 on a prospective basis, comparative jurisdictional information for prior periods is not presented.
The following table presents income taxes, including withholding taxes, paid, net of refunds received, disaggregated by federal, state, and foreign jurisdictions (in thousands):
Year Ended March 31,
2026
Switzerland - Federal$19,028 
Switzerland - Cantonal:
Vaud$21,851 
Zurich116 
Total Cantonal$21,967 
Foreign:
United States$6,502 
China9,466 
Japan5,283 
Brazil5,059 
Sweden4,551 
Other14,497 
Total Foreign$45,358 
Total$86,353 
For fiscal years ended March 31, 2025 and 2024, total income taxes paid, net of refunds received was $67.5 million and $50.9 million, respectively.
The Company has accumulated earnings in non-Swiss subsidiaries that are primarily intended to support operations outside of Switzerland. Deferred income taxes have not been recognized on a portion of these earnings with respect to Swiss income taxes and foreign withholding taxes, as such earnings are expected to be reinvested outside of Switzerland to fund local working capital requirements. If repatriated, the Company would generally be subject to foreign withholding taxes, which represent the primary source of incremental tax cost, and limited Swiss income tax, due to the Swiss participation exemption.
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, 2026 and 2025, the total amount of unrecognized tax benefits due to uncertain tax positions was $131.4 million and $152.0 million, respectively, all of which would affect the effective income tax rate if recognized.
As of March 31, 2026 and 2025, the Company had $86.3 million and $88.5 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 2026, 2025 and 2024 were as follows (in thousands):
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 years705 
Increases in balances related to tax positions taken during the year22,332 
March 31, 2024$210,215 
Lapse of statute of limitations(25,075)
Settlements with taxing authorities(32,314)
Increases (decreases) in balances related to tax positions taken during prior years
(3,055)
Increases in balances related to tax positions taken during the year2,213 
March 31, 2025$151,984 
Lapse of statute of limitations(23,176)
Increases (decreases) in balances related to tax positions taken during prior years
(1,120)
Increases in balances related to tax positions taken during the year3,673 
March 31, 2026$131,361 
The Company recognizes interest and penalties related to unrecognized tax positions as income tax expense. The Company recognized $3.1 million and $(0.6) million, in interest and penalties related to unrecognized tax positions in income tax expense during fiscal years 2026 and 2025, respectively. In 2025, the interest accrual was reduced in excess of the current year accrual build as a result of audit settlements and statute lapses. As of March 31, 2026 and 2025, the Company had $8.3 million and $7.2 million, respectively, of accrued interest and penalties related to uncertain tax positions.
The Company’s unrecognized tax benefits decreased by $20.6 million during the fiscal year ended March 31, 2026, primarily due to the expiration of the statutes of limitations for certain U.S. federal positions. In the United States, the federal and state tax agencies have the authority to examine periods prior to fiscal year 2022, to the extent allowed by law, but only to the extent tax attributes were generated, carried forward, and are being utilized in subsequent years. The statute of limitations in the United States otherwise lapsed for fiscal year 2022 in fiscal year 2026. The Company is under examination in several foreign tax jurisdictions. If the examinations are resolved unfavorably, there is a possibility they may have a 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.