v3.25.2
Provision for Income Taxes
 6 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
Provision for Income Taxes
12.
Provision for Income Taxes

 

The components of provision for income taxes are as follows (in millions):

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Income tax provision (benefit)

 

$

(3.1

)

 

$

16.1

 

 

$

5.6

 

 

$

35.9

 

Effective tax rates (a)

 

Not meaningful

 

 

 

67.4

%

 

 

21.9

%

 

 

37.6

%

Penalties and interest (recorded in provision for
   income taxes for unrecognized tax benefits)

 

$

0.8

 

 

$

(3.4

)

 

$

1.2

 

 

$

(2.2

)
a)
For the three months ended June 30, 2025, the rate is not meaningful and was due to one-time favorable discrete events recorded during the period. The decrease in the Company's effective tax rate for the six months June 30, 2025 was primarily due to changes in jurisdictional mix and net favorable discrete activities.

 

The table below summaries unrecognized tax benefits and accrued interest and penalties components (in millions):

 

 

 

June 30,
2025

 

 

December 31,
2024

 

Unrecognized tax benefits (a)

 

$

72.1

 

 

$

63.7

 

Accrued interest and penalties (b)

 

$

6.6

 

 

$

5.3

 
a)
This excludes penalties and interest. If these unrecognized tax benefits were recognized, there would be a reduction of the Company's effective tax rate.
b)
These are related to uncertain tax positions and were included in other long-term liabilities on the Company's unaudited condensed consolidated balance sheets.

 

The Company files tax returns in the United States, which include federal, state and local jurisdictions, and many foreign jurisdictions with varying statutes of limitations. The Company considers Germany, the United States, and Switzerland to be its significant tax jurisdictions. The majority of the Company’s earnings are derived in Germany and Switzerland. Accounting for the various federal and local taxing authorities, the statutory rates for 2025 are approximately 30.0% and 20.0% for Germany and Switzerland, respectively. The mix of earnings in those two jurisdictions resulted in an increase of approximately 7.5% from the U.S. statutory rate of 21.0% in the six months ended June 30, 2025.

The Organization for Economic Co-operation and Development (“OECD”) introduced its Pillar Two Framework Model Rules (“Pillar 2”), which provides guidance for a global minimum tax. Various countries have either enacted or are in the process of enacting legislation to implement this framework. The Company's income tax provision for the three and six months ended June 30, 2025, reflects currently enacted legislation and guidance related to the model rules. This enacted legislation and guidance had an impact on the Company's income tax provision, resulting in an increase to its effective tax rate of 2.3% for the six months ended June 30, 2025. The Company continues to monitor the countries in which it operates as they enact legislation implementing Pillar 2.

 

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

 

On July 18, 2025, the German Federal Council enacted legislation to gradually reduce the corporate income tax rate from 15% to 10% over the period 2028 to 2032.

 

The Company will assess the impact of these changes on its consolidated financial statements and will record them during the third quarter of 2025, which is the period of enactment.