ALTISOURCE PORTFOLIO SOLUTIONS S.A.ASPS
ALTISOURCE PORTFOLIO SOLUTIONS S.A. Income Taxes Disclosure
INCOME TAXES
The components of loss before income taxes and non-controlling interests consist of the following for the years ended December 31:
| (in thousands) | 2025 | 2024 | ||||||||||||
| Domestic - Luxembourg | $ | (14,147) | $ | (34,896) | ||||||||||
| Foreign - U.S. | (4,347) | (283) | ||||||||||||
| Foreign - non-U.S. | 4,348 | 2,312 | ||||||||||||
| Total | $ | (14,146) | $ | (32,867) | ||||||||||
The income tax benefit (provision) consists of the following for the years ended December 31:
| (in thousands) | 2025 | 2024 | ||||||||||||
| Current: | ||||||||||||||
| Foreign - U.S. | (129) | (241) | ||||||||||||
| Foreign - non-U.S. | 15,010 | (3,024) | ||||||||||||
| 14,881 | (3,265) | |||||||||||||
| Deferred: | ||||||||||||||
| Domestic - Luxembourg | $ | 387 | $ | — | ||||||||||
| Foreign - U.S. | 712 | 341 | ||||||||||||
| Foreign - non-U.S. | 94 | 343 | ||||||||||||
| 1,193 | 684 | |||||||||||||
| Total: | ||||||||||||||
| Domestic - Luxembourg | $ | 387 | $ | — | ||||||||||
| Foreign - U.S. | 583 | 100 | ||||||||||||
| Foreign - non-U.S. | 15,104 | (2,681) | ||||||||||||
| Income tax benefit (provision) | $ | 16,074 | $ | (2,581) | ||||||||||
On June 30, 2024, we exited the Uruguay free trade zone and, as a result, no longer benefit from the Uruguay tax holiday. The impact of this tax holiday decreased foreign taxes by $0.1 million (less than $0.01, per diluted share) for the year ended December 31 2024.
The Company accounts for certain income and expense items differently for financial reporting purposes and income tax purposes. We recognize deferred income tax assets and liabilities for these differences between the financial reporting basis and the tax basis of our assets and liabilities as well as expected benefits of utilizing net operating loss and credit carryforwards. We measure deferred income tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect to recover or settle those temporary differences.
A summary of the tax effects of the temporary differences is as follows for the years ended December 31:
| (in thousands) | 2025 | 2024 | ||||||||||||
| Non-current deferred tax assets: | ||||||||||||||
| Net operating loss carryforwards | $ | 498,892 | $ | 527,180 | ||||||||||
| Other non-U.S. deferred tax assets | 11,073 | 12,346 | ||||||||||||
| Share-based compensation | 1,095 | 1,308 | ||||||||||||
| Accrued expenses | 2,461 | 2,308 | ||||||||||||
| U.S. federal and state tax credits | 482 | 622 | ||||||||||||
| Depreciation | 8 | 14 | ||||||||||||
| Non-current deferred tax liabilities: | ||||||||||||||
| Intangible assets | (8,755) | (9,141) | ||||||||||||
| Other | (278) | (611) | ||||||||||||
| 504,978 | 534,026 | |||||||||||||
| Valuation allowance | (507,277) | (537,425) | ||||||||||||
| Non-current deferred tax liabilities, net | $ | (2,299) | $ | (3,399) | ||||||||||
A valuation allowance is provided when it is deemed more likely than not that some portion or all of a deferred tax asset will not be realized. In determining whether a valuation allowance is needed requires an extensive analysis of positive and negative evidence regarding realization of the deferred tax assets and, inherent in that, an assessment of the likelihood of sufficient future taxable income. When there is a cumulative pretax loss for financial reporting for the current and two preceding years (i.e., a three year cumulative loss), this is a significant element of negative evidence that would be difficult to overcome on a more likely than not or any other basis. Therefore, the Company’s valuation allowance was $507.3 million and $537.4 million as of December 31, 2025 and 2024, respectively.
The Company does not recognize deferred taxes on cumulative earnings of its U.S. and certain other non-Luxembourg subsidiaries because the Company intends for those earnings to be indefinitely reinvested. There are no cumulative earnings in the Company’s U.S. subsidiaries. The other non-Luxembourg earnings that are indefinitely reinvested as of December 31, 2025 were approximately $0.5 million which, if distributed, would result in additional tax due totaling $0.02 million.
The Company had a deferred tax asset of $498.9 million as of December 31, 2025 relating to Luxembourg, U.S. federal, state and foreign net operating losses compared to $527.2 million as of December 31, 2024. As of December 31, 2025 and 2024, a valuation allowance of $497.8 million and $526.6 million, respectively, has been established related to Luxembourg net operating losses (“NOL”). The gross amount of net operating losses available for carryover to future years is approximately $2,088.7 million as of December 31, 2025 and approximately $2,112.5 million as of December 31, 2024. These losses are scheduled to expire between the years 2026 and 2044. The current year Luxembourg deferred tax asset, and related valuation allowance, include a $2.9 million decrease related to a prior year correction of net operating losses. The correction had no impact on the deferred tax asset reported on the balance sheet or income tax expense on the income statement.
In addition, the Company had a deferred tax asset of $0.6 million and $0.8 million, respectively, as of December 31, 2025 and 2024 relating to state tax credits. Some of the state tax credit carryforwards have an indefinite carryforward period.
The effective tax rate differs from the Luxembourg statutory tax rate due to tax rate differences on foreign earnings, changes in uncertain tax positions, state taxes, tax exempt income primarily from the sale of Pointillist and a valuation allowance against deferred tax assets the Company believes it is more likely than not will not be realized.
The following table reconciles the Luxembourg statutory tax rate to our effective tax rate for the years ended December 31:
| (in thousands) | 2025 | 2024 | ||||||||||||||||||||||||
| Amount | % of Pretax Income | Amount | % of Pretax Income | |||||||||||||||||||||||
| Statutory tax rate | $ | (3,377) | 23.87 | % | $ | (8,197) | 24.94 | % | ||||||||||||||||||
| Domestic - Luxembourg: | ||||||||||||||||||||||||||
| Nontaxable and nondeductible items (loss on treasury shares) | (802) | 5.67 | (36,991) | 112.55 | ||||||||||||||||||||||
| Nontaxable and nondeductible items (gain on debt) | 1,220 | (8.62) | — | — | ||||||||||||||||||||||
| Nontaxable and nondeductible items (intercompany) | 3,438 | (24.30) | — | — | ||||||||||||||||||||||
| Change in enacted rates | 22,208 | (156.99) | — | — | ||||||||||||||||||||||
| Change in valuation allowance | (30,028) | 212.27 | 45,615 | (138.79) | ||||||||||||||||||||||
| Other | 6,953 | (49.15) | 79 | (0.24) | ||||||||||||||||||||||
| Foreign tax effects: | ||||||||||||||||||||||||||
| India: | ||||||||||||||||||||||||||
| Tax rate differences on foreign earnings | 414 | (2.93) | (148) | 0.45 | ||||||||||||||||||||||
| Local statutory accounting differences | (252) | 1.78 | 234 | (0.71) | ||||||||||||||||||||||
| Effect of cross-border tax laws | 968 | (6.84) | 25 | (0.08) | ||||||||||||||||||||||
| Other | 63 | (0.45) | (98) | 0.30 | ||||||||||||||||||||||
| United States: | ||||||||||||||||||||||||||
| Tax rate differences on foreign earnings | 40 | (0.27) | (95) | 0.29 | ||||||||||||||||||||||
| Excess tax benefits on share-based payments | 458 | (3.24) | 419 | (1.27) | ||||||||||||||||||||||
| Change in valuation allowance | — | — | (9,168) | 27.90 | ||||||||||||||||||||||
| Nontaxable and nondeductible items (unrecognized tax loss) | — | — | 9,168 | (27.90) | ||||||||||||||||||||||
| Other | (42) | 0.30 | 43 | (0.13) | ||||||||||||||||||||||
| Other foreign jurisdictions | (46) | 0.33 | 44 | (0.14) | ||||||||||||||||||||||
| Worldwide changes in unrecognized tax benefits | (17,289) | 122.22 | 1,651 | (5.02) | ||||||||||||||||||||||
| Effective tax rate | $ | (16,074) | 113.65 | % | $ | 2,581 | (7.85) | % | ||||||||||||||||||
The Company follows ASC Topic 740 which clarifies the accounting and disclosure for uncertainty in tax positions. We analyzed our tax filing positions in the domestic and foreign tax jurisdictions where we are required to file income tax returns as well as for all open tax years subject to audit in these jurisdictions. The Company has open tax years in the United States (2018 through 2024), India (2011 through 2025) and Luxembourg (2017 through 2024).
Under Luxembourg legal and regulatory requirements, the public offering of common stock and the share-based compensation are issued out of treasury shares. The difference between the cost of treasury shares when acquired and when reissued results in tax deductible losses of $3.4 million and $26.4 million for the years ended December 31, 2025 and 2024, respectively.
The following table summarizes changes in unrecognized tax benefits during the years ended December 31:
| (in thousands) | 2025 | 2024 | ||||||||||||
| Amount of unrecognized tax benefits as of the beginning of the year | $ | 10,240 | $ | 9,208 | ||||||||||
| Decreases as a result of tax positions taken in a prior period | (7,969) | (191) | ||||||||||||
| Increases as a result of tax positions taken in a prior period | — | 1,009 | ||||||||||||
| Increases as a result of tax positions taken in the current period | 112 | 214 | ||||||||||||
| Amount of unrecognized tax benefits as of the end of the year | $ | 2,383 | $ | 10,240 | ||||||||||
The total amount of unrecognized tax benefits including interest and penalties that, if recognized, would affect the effective tax rate is $3.3 million and $19.2 million as of December 31, 2025 and 2024, respectively. The Company recognizes interest, if any, related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2025 and 2024, the Company had recorded accrued interest and penalties related to unrecognized tax benefits of $1.1 million and $9.1 million, respectively. During the second quarter of 2025, management concluded that certain of its India tax positions for several years were more likely than not to be sustained based on current quarter developments. As a result, the Company recognized a net income tax benefit of $17.7 million, comprised of a $9.6 million reversal of its reserve for uncertain tax positions related to its India operations and a $9.0 million reversal of associated accrued interest, partially offset by related Mauritius Income tax expense of $0.9 million.
The following table summarizes Income taxes paid (net of refunds received) for the years ended December 31:
| (in thousands) | 2025 | 2024 | ||||||||||||
| Foreign: | ||||||||||||||
| India | $ | (915) | $ | 1,228 | ||||||||||
| United States - federal | 640 | 690 | ||||||||||||
| United States - state | 84 | 134 | ||||||||||||
| Other | 178 | 1 | ||||||||||||
| Total income taxes paid, net of refunds received | $ | (13) | $ | 2,053 | ||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 4, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2023 | Mar 7, 2024 | |
| 2022 | Mar 30, 2023 | |
| 2021 | Mar 3, 2022 | |
| 2020 | Mar 11, 2021 | |
| 2019 | Mar 5, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 16, 2017 | |
| 2015 | Mar 15, 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.