17. Income Taxes

As noted above in Note 1, Organization and Description of Business, on December 30, 2025, the Company completed the Redomiciliation Transaction. Pursuant to the Redomiciliation Transaction, the Company’s tax residency changed from Germany to the United States.

Loss Before Income Taxes and Loss from Equity Method Investments

Total Benefit From (Provision For) Income Taxes

The total current tax benefit from (provision for) income taxes for December 31, 2025 and 2024 is comprised of corporate income taxes incurred in United States, United Kingdom and Australia.

Statutory Income Tax Rate Reconciliation

As of December 31, 2025 the company is headquartered in New York City, United States and has subsidiaries in Germany, Australia, the United Kingdom, and Canada as well as minority investments in Canada, Germany, and the United Kingdom. The Company incurred tax losses in most jurisdictions, however, generated taxable profits in certain United States subsidiaries and Australian subsidiaries. The weighted-average United States corporate income tax rate for year ended December 31, 2025 and 2024 was 21.00%. The weighted-average combined German corporate income tax rate for the year ended December 31, 2025 and 2024 was 30.18% (inclusive of a corporate income tax rate of 15.00%, solidarity surcharge of 0.83%, and trade tax rate of 14.35%). The weighted-average Australia corporate income tax rate for the year ended December 31, 2025 and 2024 was 25%. In 2025 it was noted that Atai Therapeutics Pty Ltd, Kures Australia Pty Ltd, and Empathbio Australia Pty Ltd. would not qualify for the reduced rate under the base rate entity ("BRE") test as the amount of passive income exceeds 90% of total income. These entities were therefore subject to a 30% tax rate. The weighted-average United Kingdom corporate income tax rate for the year ended December 31, 2025 and 2024 was 25.00%. The combined Canada federal and provincial corporate income tax rate for the year ended December 31, 2025 and 2024 was 26.5%. The weighted-average Netherlands corporate income tax rate for the year ended December 31, 2025 was 16.00%.

Deferred Income Taxes

Deferred income taxes are provided for the effects of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax purposes.

The valuation allowance provided against net deferred tax assets as of December 31, 2025 and 2024 was $147.6 million and $139.5 million, respectively. The valuation allowance recorded at both periods was primarily related to United States and foreign tax loss carryforwards, capitalized research and experimental costs, and stock-based compensation timing differences that, in the judgment of management, are not more-likely-than-not, to be realized.

As relevant to certain United States subsidiaries, the Tax Cuts and Jobs Act of 2017 requires taxpayers to capitalize and amortize certain research and experimental (“R&D”) expenditures under Internal Revenue Code ("IRC") Section 174 for tax years beginning after December 31, 2021 resulting in the capitalization of certain R&D costs within the Company's tax provision in 2024. IRC Section 174 costs attributable to R&D performed in the United States and outside of the United States are amortizable over 5 years and 15 years, respectively. The majority of the Company's R&D costs incurred in 2024 were performed outside of the United States and are amortizable over a 15 year period.

On July 4, 2025, the One Big Beautiful Bill Act of 2025 (the “Tax Act”) was signed into law. The Tax Act includes substantial changes to the U.S. federal tax code and broader fiscal policy for tax years 2025 and forward. The Company has recorded any applicable impacts to its tax provision for the year ended December 31, 2025, and determined that the impact is not significant. There are several provisions of the Tax Act that do not go into effect until future tax years but are also not expected to have significant impact on tax positions as currently recorded.

In assessing the realizability of deferred tax assets, management regularly considers whether it is more-likely-than-not that some or all of the recorded deferred tax assets will be realized. The future realization of deferred tax assets is subject to the existence of sufficient taxable income of the appropriate character (e.g., ordinary income or capital gain) as provided under the carryforward provisions of local tax law. Additionally, deferred tax assets with respect to tax losses in the United States may be subject to limitation as a result of ownership changes within the meaning of Section 382 of the IRC. Management considers the Company’s limited history and historical tax losses, future projected taxable income, including the character and jurisdiction of such income, the scheduled reversal of deferred tax liabilities (including the effect in available carryback and carryforward periods), and tax-planning strategies in making this assessment. In the event that there is a change in the ability to recover deferred tax assets, the Company’s income tax provision would increase or decrease in the period in which the assessment is changed.

The Company has limited prior earnings history and, due to the early stages of its development and research activities, is expected to generate losses for the next several years and cannot accurately estimate future profit projections beyond such time. As such, management believes that it is more likely than not that the Company will not realize the benefits of such tax loss carryforwards and deductible differences.

As of December 31, 2025 and 2024 the Company did not have any significant unremitted earnings in its foreign subsidiaries.

The Company's tax loss carryforwards have an indefinite carryforward period, however, for tax years 2021 and beyond, in the United States, utilization of certain tax losses may not exceed 80% of United States taxable income in any one year, computed without regard a deduction for tax losses utilized.

The Company's 2021 through 2024 tax returns are currently open to audit. The 2021 tax return for Perception Neuroscience Holdings, Inc. was under routine audit by the Internal Revenue Service and was settled in 2024. The 2021 atai Life Sciences GmbH, the 2022 atai Life Sciences N.V., and the 2022 Kures Australia Pty Ltd tax returns are currently under audit.

Unrecognized tax benefits arise when the estimated benefit recorded in the financial statements differs from the amounts taken or expected to be taken in a tax return because of the uncertainties described above. As of December 31, 2025 and 2024, the Company notes the following unrecognized tax benefits (in thousands).

The balances of unrecognized tax benefits as of December 31, 2025 is $1.5 million, which relates to expected loss of tax attributes due to an in process audit examination. The unrecognized tax benefits as of December 31, 2024 were decreased as the company has settled the audit of the 2021 tax return for Perception.