Aptiv PLCAPTV
Aptiv PLC Income Taxes Disclosure
INCOME TAXES
In connection with the change of tax residency described in Note 1. General, in December 2024, Aptiv established a new publicly-listed Jersey parent company, New Aptiv, which is resident for tax purposes in Switzerland. Following consummation of the Transaction, Aptiv PLC became a wholly-owned subsidiary of New Aptiv and New Aptiv was renamed “Aptiv PLC.”
Income before income taxes and equity income for U.S. and non-U.S. operations are as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| U.S. (loss) income | $ | (635) | $ | (78) | $ | (162) | |||||||||||
| Non-U.S. income | 1,554 | 2,229 | 1,499 | ||||||||||||||
| Income before income taxes and equity loss | $ | 919 | $ | 2,151 | $ | 1,337 | |||||||||||
The provision (benefit) for income taxes is comprised of:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Current income tax expense (benefit): | |||||||||||||||||
| U.S. federal | $ | 10 | $ | (25) | $ | 25 | |||||||||||
| Non-U.S. | 290 | 277 | 208 | ||||||||||||||
| U.S. state and local | 6 | 5 | 3 | ||||||||||||||
| Total current | 306 | 257 | 236 | ||||||||||||||
| Deferred income tax expense (benefit), net: | |||||||||||||||||
| U.S. federal | (37) | (67) | (62) | ||||||||||||||
| Non-U.S. | 435 | 35 | (2,091) | ||||||||||||||
| U.S. state and local | (4) | (2) | (11) | ||||||||||||||
| Total deferred | 394 | (34) | (2,164) | ||||||||||||||
| Total income tax provision (benefit) | $ | 700 | $ | 223 | $ | (1,928) | |||||||||||
Cash paid or withheld for income taxes by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 was:
| Year Ended December 31, | |||||
| 2025 | |||||
| (in millions) | |||||
| Swiss federal | $ | — | |||
| Swiss cantonal | 2 | ||||
| Foreign: | |||||
| China | 74 | ||||
| Mexico | 51 | ||||
| India | 21 | ||||
| Ireland | 19 | ||||
| South Korea | 17 | ||||
| Other (1) | 71 | ||||
| Cash paid or withheld | $ | 255 | |||
(1)Includes jurisdictions below the threshold for the period presented.
Cash paid or withheld for income taxes for the years ended December 31, 2024 and 2023 was $249 million and $307 million, respectively.
The Company is a Swiss resident taxpayer as of December 31, 2024. Prior to December 2024, the Company was an Irish resident taxpayer. As further described in Note 2. Significant Accounting Policies, the Company has elected to prospectively adopt the guidance in ASU 2023-09. The following table is a reconciliation of the Swiss federal statutory tax rate to the Company’s effective rate pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025:
| Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
| (in millions) | |||||||||||
| Amount | Percent | ||||||||||
| Swiss federal statutory tax rate | $ | 72 | 8 | % | |||||||
| State and local income taxes (1) | 396 | 43 | % | ||||||||
| Foreign tax effects | |||||||||||
| Brazil | |||||||||||
| Statutory rate difference | 10 | 1 | % | ||||||||
| Other | 1 | — | % | ||||||||
| Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
| (in millions) | |||||||||||
| Amount | Percent | ||||||||||
| China | |||||||||||
| Withholding taxes | 58 | 6 | % | ||||||||
| Statutory rate difference | 26 | 3 | % | ||||||||
| R&D super-deduction | (18) | (2) | % | ||||||||
| Valuation allowance adjustments | (9) | (1) | % | ||||||||
| Other | 1 | — | % | ||||||||
| France | |||||||||||
| Valuation allowance adjustments | (19) | (2) | % | ||||||||
| Other | 14 | 2 | % | ||||||||
| Germany | |||||||||||
| Valuation allowance adjustments | (25) | (3) | % | ||||||||
| State and local taxes | (21) | (2) | % | ||||||||
| Separation taxes | 11 | 1 | % | ||||||||
| India | |||||||||||
| Statutory rate difference | 11 | 1 | % | ||||||||
| Other | 3 | — | % | ||||||||
| Ireland | |||||||||||
| Statutory rate difference | (15) | (2) | % | ||||||||
| Other | (8) | (1) | % | ||||||||
| Korea | 9 | 1 | % | ||||||||
| Luxembourg | |||||||||||
| Intercompany reorganizations | (408) | (45) | % | ||||||||
| Valuation allowance adjustments | 398 | 43 | % | ||||||||
| Separation taxes | 25 | 3 | % | ||||||||
| Other | (4) | — | % | ||||||||
| Mexico | |||||||||||
| Statutory rate difference | 34 | 4 | % | ||||||||
| Separation taxes | 15 | 2 | % | ||||||||
| Foreign exchange impacts | (11) | (1) | % | ||||||||
| Withholding taxes | 9 | 1 | % | ||||||||
| Other | (7) | (1) | % | ||||||||
| Poland | |||||||||||
| R&D super-deduction | (43) | (5) | % | ||||||||
| Valuation allowance adjustments | 35 | 4 | % | ||||||||
| Loss utilization | 10 | 1 | % | ||||||||
| Other | 1 | — | % | ||||||||
| United States | |||||||||||
| Non-deductible impairment | 136 | 15 | % | ||||||||
| Statutory rate difference | (84) | (9) | % | ||||||||
| Tax credits | (9) | (1) | % | ||||||||
| Others | (2) | — | % | ||||||||
| All other foreign jurisdictions | 49 | 6 | % | ||||||||
| Effect of changes in tax laws | — | — | % | ||||||||
| Effect of cross-border taxes | 1 | — | % | ||||||||
| Tax credits | — | — | % | ||||||||
| Changes in valuation allowances | 362 | 39 | % | ||||||||
| Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
| (in millions) | |||||||||||
| Amount | Percent | ||||||||||
| Non-taxable or non-deductible items | — | — | % | ||||||||
| Changes in unrecognized tax benefits | 9 | 1 | % | ||||||||
| Other adjustments | |||||||||||
| Intercompany reorganizations | (321) | (35) | % | ||||||||
| Other | 8 | 1 | % | ||||||||
| Effective tax rate | $ | 700 | 76 | % | |||||||
(1)Comprised of income taxes in the canton of Schaffhausen, primarily related to valuation allowances.
The following table is a reconciliation of the notional U.S. federal income tax rate to the Company’s effective rate for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| (in millions) | |||||||||||
| Notional U.S. federal income taxes at statutory rate | $ | 452 | $ | 281 | |||||||
| Income taxed at other rates | (236) | (131) | |||||||||
| Change in valuation allowance | (12) | 1 | |||||||||
| Other change in tax reserves | 16 | (7) | |||||||||
| Intercompany reorganizations | (27) | (2,082) | |||||||||
| Withholding taxes | 62 | 57 | |||||||||
| Tax credits | (32) | (19) | |||||||||
| Change in tax law | — | (17) | |||||||||
| Other adjustments | — | (11) | |||||||||
| Total income tax expense (benefit) | $ | 223 | $ | (1,928) | |||||||
| Effective tax rate | 10 | % | (144) | % | |||||||
The Company’s tax rate is affected by the fact that its parent entity is a Swiss resident taxpayer, and was an Irish resident taxpayer prior to the December 2024 reorganization transaction, the tax rates in Switzerland, Ireland and other jurisdictions in which the Company operates, the relative amount of income earned by jurisdiction and the relative amount of losses or income for which no tax benefit or expense was recognized due to a valuation allowance. Included in the non-U.S. income taxed at other rates are tax incentives obtained in various non-U.S. countries, primarily various incentives in Morocco and the High and New Technology Enterprise (“HNTE”) status in China, which totaled $33 million in 2025, $27 million in 2024 and $23 million in 2023, as well as tax benefit for income earned, and no tax benefit for losses incurred, in jurisdictions where a valuation allowance has been recorded. The Company currently benefits from tax holidays in various non-U.S. jurisdictions with expiration dates from 2026 through 2044. The income tax benefits attributable to these tax holidays are approximately $4 million ($0.02 per share) in 2025, $5 million ($0.02 per share) in 2024 and $7 million ($0.03 per share) in 2023.
The effective tax rate for the year ended December 31, 2025 includes net discrete tax expense of approximately $380 million primarily related to a change in valuation allowance on the Swiss tax incentive, as described below, tax accruals associated with the Separation of the Electrical Distribution Systems business and the tax impact of intercompany reorganizations, partially offset by changes in other valuation allowances. Also included as a discrete item in the effective tax rate for the year ended December 31, 2025 is the unfavorable impact of approximately 32 points resulting from the Wind River non-cash goodwill impairment charge, as described further in Note 7. Intangible Assets and Goodwill, which is non-deductible for tax purposes.
The effective tax rate for the year ended December 31, 2024 includes discrete tax benefits primarily associated with intercompany reorganizations. Also included as a discrete item in the effective tax rate for the year ended December 31, 2024 is the beneficial impact of approximately 4 points resulting from the Motional funding and ownership restructuring transactions, as described further in Note 5. Investments in Affiliates. There was no tax expense associated with these gains as Aptiv’s interest in Motional is exempt from capital gains tax in the jurisdiction in which it is owned.
The effective tax rate for the year ended December 31, 2023 was primarily impacted by the Company’s transfers of intellectual property, as described below.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law. The OBBBA includes changes to U.S. tax law that were applicable to Aptiv beginning in 2025, with additional provisions applying in subsequent years. Included in these changes are favorable adjustments to deductions for interest, qualified property, and research and development expenditures, as well as reforms to the international tax framework. The OBBBA will not have a material impact on the Company’s consolidated financial statements.
On January 15, 2025, the Organisation for Economic Co-operation and Development (the “OECD”) released Administrative Guidance (the “Guidance) on Article 9.1 of the Global Anti-Base Erosion Model Rules (the “Model Rules”) which amends the Pillar Two Framework (the “Framework”) previously adopted by the European Union (the “E.U.”) Member States on December 15, 2022. Jurisdictions that have adopted the Framework, which generally provides for a minimum effective tax rate of 15%, as established by the OECD, may implement and administer their domestic laws consistent with the Model Rules and Guidance. The Guidance eliminates the tax basis in certain deferred tax assets including tax credit carryforwards for purposes of the global minimum tax established under the Framework. As a result, the Company no longer expects to obtain significant benefits from the tax incentive granted to its Swiss subsidiary in 2023, as described below. Accordingly, the Company recognized an increase to valuation allowances of $294 million to reduce the related deferred tax asset during the year ended December 31, 2025. No other deferred tax assets are impacted by the Guidance. The Company has proactively responded to these tax policy changes and will continue to closely monitor developments. Our effective tax rate for the year ended December 31, 2025 includes an unfavorable impact from the enacted Framework.
On December 18, 2025, the Swiss Council of States passed a motion preventing the retroactive application of the OECD’s 2025 Guidance on the Model Rules. While this development has no immediate impact on Aptiv’s tax position, we will continue to monitor potential implications for the recoverability of our Swiss deferred tax assets associated with our Swiss tax incentive.
The Tax Cuts and Jobs Act, which was enacted in the U.S. in 2017, created a provision known as Global Intangible Low-Taxed Income (“GILTI”) that imposes a tax on certain earnings of foreign subsidiaries. U.S. GAAP allows companies to make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred. We have elected to account for GILTI in the year the tax is incurred.
As described above, certain of the Company’s Chinese subsidiaries benefit from a reduced corporate income tax rate as a result of their HNTE status. Aptiv regularly submits applications to reapply for HNTE status as they expire. The Company believes each of the applicable entities will continue to renew HNTE status going forward and has reflected this in calculating total income tax expense.
Intellectual Property Transfer
In response to the Framework, the Company initiated changes to its corporate entity structure, including intercompany transfers of certain intellectual property to one of its subsidiaries in Switzerland, during the second half of 2023.
The Company transferred certain intellectual property during the year ended December 31, 2023 between wholly-owned legal entities in different tax jurisdictions. These transfers were intercompany transactions. Consequently, the resulting gains on these transfers were eliminated for purposes of the consolidated financial statements. However, certain of these transfers resulted in a gain that is subject to income tax in the local jurisdiction, which was offset with the utilization of existing net operating loss carryforwards. A portion of the net operating loss carryforwards were previously reduced by deferred tax liabilities from recapturable deductions, which were eliminated as part of the intercompany transactions, while the remaining net operating loss carryforwards were largely offset by a valuation allowance. Consequently, during the year ended December 31, 2023, the Company recognized a net deferred tax expense of approximately $55 million, which is comprised of deferred tax benefits of approximately $2,075 million related to the release of valuation allowances as a result of the transfers and deferred tax expense of approximately $2,130 million to reflect utilization of the loss carryforwards.
As a result of the intellectual property transfers during the year ended December 31, 2023, the Company’s Swiss subsidiary, which received the intellectual property, recognized a step-up in tax basis on the fair value of the transferred intellectual property. This resulted in the creation of a temporary difference between the book basis and tax basis of the specified intellectual property. Consequently, the Company recorded a deferred tax benefit of approximately $1,820 million during the year ended December 31, 2023, which was increased from the amounts disclosed as of September 30, 2023, primarily as a result of additional intellectual property transfers in the fourth quarter of 2023.
Furthermore, the Company’s Swiss subsidiary was granted a ten-year tax incentive, beginning in 2024. A deferred tax benefit of approximately $330 million, net of a valuation allowance, was recorded during the year ended December 31, 2023 to reflect the estimated future reductions in tax associated with the incentive. This amount was increased from the amount disclosed as of September 30, 2023, primarily as a result of changes in the estimated utilization of the tax incentive from the additional transfers of intellectual property in the fourth quarter of 2023.
The total income tax benefit recorded as a result of the intercompany transfers of intellectual property and negotiated tax incentive, all as described above, combined with related additional current year tax expense as a result of the transactions, was approximately $2,080 million during the year ended December 31, 2023.
The measurement of certain deferred tax assets, as described above, and associated income tax benefits resulting from these transactions was impacted by tax legislation in Switzerland enacted in the fourth quarter of 2023, which increased the statutory income tax rate, resulting in additional deferred tax benefit impacts of approximately $365 million, net of valuation allowances (which are reflected in the amounts above), during the three months ended December 31, 2023, from the amounts disclosed as of September 30, 2023.
Deferred Income Taxes
The Company accounts for income taxes and the related accounts under the liability method. Deferred income tax assets and liabilities reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and the bases of such assets and liabilities as measured by tax laws. Significant components of the deferred tax assets and liabilities are as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in millions) | |||||||||||
| Deferred tax assets: | |||||||||||
| Pension | $ | 80 | $ | 61 | |||||||
| Employee benefits | 56 | 57 | |||||||||
| Net operating loss carryforwards | 1,654 | 578 | |||||||||
| Warranty and other liabilities | 72 | 72 | |||||||||
| Operating lease liabilities | 120 | 109 | |||||||||
| Capitalized R&D | 129 | 110 | |||||||||
| Tax credit carryforwards | 1,607 | 1,605 | |||||||||
| Intangibles | 1,481 | 1,634 | |||||||||
| Other | 152 | 175 | |||||||||
| Total gross deferred tax assets | 5,351 | 4,401 | |||||||||
| Less: valuation allowances | (3,065) | (1,704) | |||||||||
| Total deferred tax assets (1) | $ | 2,286 | $ | 2,697 | |||||||
| Deferred tax liabilities: | |||||||||||
| Fixed assets | $ | 9 | $ | 27 | |||||||
| Tax on unremitted profits of certain foreign subsidiaries | 130 | 82 | |||||||||
| Intangibles | 470 | 496 | |||||||||
| Operating lease right-of-use assets | 109 | 101 | |||||||||
| Total gross deferred tax liabilities | 718 | 706 | |||||||||
| Net deferred tax assets | $ | 1,568 | $ | 1,991 | |||||||
(1)Reflects gross amount before jurisdictional netting of deferred tax assets and liabilities.
Deferred tax assets and liabilities are classified as long-term in the consolidated balance sheets. Net deferred tax assets and liabilities are included in the consolidated balance sheets as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in millions) | |||||||||||
| Long-term assets | $ | 1,828 | $ | 2,281 | |||||||
| Long-term liabilities | (260) | (290) | |||||||||
| Total deferred tax asset | $ | 1,568 | $ | 1,991 | |||||||
The net deferred tax asset of $1,568 million as of December 31, 2025 is primarily comprised of deferred tax asset amounts in Switzerland, Mexico, Germany, Brazil, China and Ireland, partially offset by deferred tax liabilities primarily in Italy, the U.S. and Singapore.
Net Operating Loss and Tax Credit Carryforwards
As of December 31, 2025, the Company has gross deferred tax assets of approximately $1,644 million for non-U.S. net operating loss (“NOL”) carryforwards with recorded valuation allowances of $1,469 million. These NOLs are available to offset future taxable income and realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards. The NOLs primarily relate to Switzerland, Luxembourg and Poland. The NOL carryforwards have expiration dates ranging from one year to an indefinite period.
Deferred tax assets include $1,607 million and $1,605 million of tax credit carryforwards with recorded valuation allowances of $1,558 million and $1,267 million at December 31, 2025 and 2024, respectively. The tax credits are primarily related to Switzerland and the U.S. These tax credit carryforwards expire at various times from 2026 through 2045.
Cumulative Undistributed Foreign Earnings
No income taxes have been provided on indefinitely reinvested earnings of certain foreign subsidiaries at December 31, 2025.
Taxes of $130 million have been accrued on undistributed earnings that are not indefinitely reinvested and are primarily related to China, Honduras, Mexico and Morocco. There are no other material liabilities for income taxes on the undistributed earnings of foreign subsidiaries, as the Company has concluded that either such earnings should not give rise to additional income tax liabilities as a result of the distribution of such earnings or are indefinitely reinvested. If in the future these indefinitely reinvested earnings were to be repatriated to Switzerland, additional tax provisions would be required. It is not practicable to determine the unrecognized deferred tax liability on these temporary differences.
Uncertain Tax Positions
The Company recognizes tax benefits only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards.
A reconciliation of the gross change in the unrecognized tax benefits balance, excluding interest and penalties is as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Balance at beginning of year | $ | 227 | $ | 222 | $ | 224 | |||||||||||
| Additions related to current year | 11 | 3 | 4 | ||||||||||||||
| Additions related to prior years | 64 | 14 | 11 | ||||||||||||||
| Reductions related to prior years | (39) | (9) | (12) | ||||||||||||||
| Reductions due to expirations of statute of limitations | (9) | (1) | (2) | ||||||||||||||
| Settlements | (8) | (2) | (3) | ||||||||||||||
| Balance at end of year | $ | 246 | $ | 227 | $ | 222 | |||||||||||
A portion of the Company’s unrecognized tax benefits would, if recognized, reduce its effective tax rate. The remaining unrecognized tax benefits relate to tax positions that, if recognized, would result in an offsetting change in valuation allowance and for which only the timing of the benefit is uncertain. Recognition of these tax benefits would reduce the Company’s effective tax rate only through a reduction of accrued interest and penalties. As of December 31, 2025 and 2024, the amounts of unrecognized tax benefit that would reduce the Company’s effective tax rate were $220 million and $196 million, respectively. For 2025 and 2024, respectively, $100 million and $92 million of reserves for uncertain tax positions would be offset by the write-off of a related deferred tax asset or income tax receivable, if recognized.
The Company recognizes interest and penalties relating to unrecognized tax benefits as part of income tax expense. Total accrued liabilities for interest and penalties were $54 million and $31 million at December 31, 2025 and 2024, respectively. Total interest and penalties recognized as part of income tax expense were expenses of $21 million, $6 million and $1 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The Company files tax returns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world. Taxing jurisdictions significant to Aptiv include China, Germany, Ireland, Mexico, South Korea, Switzerland, the U.K. and the U.S. Open tax years related to these taxing jurisdictions remain subject to examination and could result in additional tax liabilities. In general, the Company’s affiliates are no longer subject to income tax examinations by foreign tax authorities for years before 2002. It is reasonably possible that audit settlements, the conclusion of current examinations or the expiration of the statute of limitations in several jurisdictions could impact the Company’s unrecognized tax benefits.
Pledged Assets
As of December 31, 2025, we had no assets pledged as collateral against income taxes payable. As of December 31, 2024, we had pledged the assets of certain of our entities in Korea as collateral against approximately $18 million of income taxes payable.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 6, 2026 | Showing above |
| 2024 | Feb 7, 2025 | |
| 2023 | Feb 6, 2024 | |
| 2022 | Feb 8, 2023 | |
| 2021 | Feb 7, 2022 | |
| 2020 | Feb 8, 2021 | |
| 2019 | Feb 3, 2020 | |
| 2018 | Feb 4, 2019 | |
| 2016 | Feb 6, 2017 | |
| 2015 | Feb 8, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.