Booking Holdings Inc.BKNG

Booking Holdings Inc. Income Taxes Disclosure

10-KFiled Feb 18, 20268 min read
INCOME TAXES
 
The composition of pre-tax income (loss) is as follows:
Year Ended December 31,
(In millions)202520242023
International$9,493 $8,029 $6,119 
U.S. (2,661)(737)(638)
Total$6,832 $7,292 $5,481 

Provision for Income Taxes

The composition of income tax expense is as follows: 
Year Ended December 31,
(In millions)202520242023
Current income tax expense (benefit):
International$1,856 $1,545 $1,371 
U.S. Federal42 (235)291 
U.S. State46 2 8 
Current income tax expense1,944 1,312 1,670 
Deferred income tax (benefit) expense:
International(48)25 (47)
U.S. Federal(413)51 (411)
U.S. State(55)22 (20)
Deferred income tax (benefit) expense(516)98 (478)
Income tax expense (benefit):
International1,808 1,570 1,324 
U.S. Federal(371)(184)(120)
U.S. State(9)24 (12)
Income tax expense$1,428 $1,410 $1,192 
 
Income tax liabilities of $928 million and $905 million are included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets at December 31, 2025 and 2024, respectively.
The following table summarizes cash paid for income taxes, net of refunds received, by jurisdiction:
Year Ended December 31,
(In millions)202520242023
Foreign jurisdictions:
Netherlands$1,700 $1,499 $1,122 
France (1)
172 
Other foreign jurisdictions223 177 112 
Total Foreign jurisdictions1,923 1,676 1,406 
U.S. Federal 322 236 360 
U.S. State34 20 23 
Cash paid for taxes, net of refunds received$2,279 $1,932 $1,789 
(1)    The cash paid for income taxes, net of refunds received, for the years ended December 31, 2025 and 2024 do not meet the 5% disaggregation threshold.

U.S. Tax Reform

In December 2017, the Tax Act was enacted into law in the U.S. The Tax Act made significant changes to U.S. federal tax law, including a one-time deemed repatriation tax on accumulated unremitted international earnings, to be paid over eight years. In 2024, the Company reduced its income tax expense that was recorded during the year ended December 31, 2018 by $416 million relating to its federal one-time deemed repatriation liability. The reduction in expense resulted from a 2024 U.S. Tax Court decision in Varian Medical Systems, Inc. vs. Commissioner. Under the Tax Act, the Company's future cash generated by the Company's international operations can generally be repatriated without further U.S. federal income tax, but will be subject to U.S. state income taxes and international withholding taxes, which have been accrued by the Company. The Tax Act also introduced in 2018 a tax on 50% of GILTI and a base erosion and anti-abuse tax. The Company has adopted an accounting policy to treat taxes on GILTI as period costs.

In July 2025, the One Big Beautiful Bill Act (the "BBB Act") was enacted into law in the United States. The BBB Act made changes to certain international, foreign tax credit, and domestic tax provisions in the United States effective in 2025 and 2026. There was not a significant impact to the Company's income tax expense or effective tax rate for the year ended December 31, 2025 as a result of the BBB Act.

Several countries outside the U.S. have adopted rules, effective January 1, 2024, that impose a 15% minimum global tax. This is in response to the framework set forth by the Organisation for Economic Co-operation and Development with respect to its base erosion and profit shifting project. The impact of these rules has been reflected in the Company's 2025 and 2024 income tax expense.

Deferred Income Taxes

The Company utilized $309 million of its U.S. NOLs to reduce its U.S. federal tax liability for the deemed repatriation tax. After utilization of available NOLs, at December 31, 2025, the Company had U.S. federal NOLs of $464 million, the majority of which do not have an expiration date, and U.S. state NOLs of $382 million, which mainly begin to expire in years ending December 31, 2032 and forward. In addition, at December 31, 2025, the Company had $894 million of non-U.S. NOLs, the majority of which do not have an expiration date, and $54 million of U.S. research tax credit and foreign tax credit carryforwards available to reduce future tax liabilities.

The utilization of these NOLs and credits is dependent upon the Company's ability to generate sufficient future taxable income and the tax laws in the jurisdictions where the losses were generated. The Company periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of these deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. The Company considers many factors when assessing the likelihood of future realization of the deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future income, tax planning strategies, the carryforward periods available for tax reporting purposes and other relevant factors.
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows:
December 31,
(In millions)20252024
Deferred tax assets:  
Net operating loss carryforward — U.S.$116 $117 
Net operating loss carryforward — International169 156 
Accrued expenses97 83 
Stock-based compensation62 55 
Unrealized losses on investments56 67 
Foreign currency translation adjustments14 103 
Tax credits50 45 
Euro-denominated debt299 — 
Operating lease liabilities15 22 
Property and equipment295 234 
Embedded derivative liability— 123 
Total deferred tax assets1,173 1,005 
Valuation allowance on deferred tax assets(126)(111)
Deferred tax assets, net1,047 894 
Deferred tax liabilities:
Debt discount on convertible notes— (123)
Intangible assets and other(19)(110)
Euro-denominated debt— (144)
Operating lease assets(14)(22)
Installment sale liability(82)(118)
Other(9)(4)
Deferred tax liabilities(124)(521)
Net deferred tax assets (1)
$923 $373 
(1)    Includes deferred tax assets of $940 million and $662 million at December 31, 2025 and 2024, respectively, included in "Other assets, net" in the Consolidated Balance Sheets.

The valuation allowance on deferred tax assets at December 31, 2025 includes $39 million related to international operations and $87 million primarily related to certain unrealized losses on equity securities. The valuation allowance on deferred tax assets at December 31, 2024 includes $31 million related to international operations and $80 million primarily related to certain unrealized losses on equity securities. The increase in the valuation allowance is primarily related to certain state deferred tax assets.

The Company does not intend to indefinitely reinvest its international earnings that were subject to U.S. taxation pursuant to the mandatory deemed repatriation or subject to U.S. taxation as GILTI.

Reconciliation of U.S. Federal Statutory Income Tax Rate to Effective Income Tax Rate

A significant portion of the Company's taxable earnings is generated in the Netherlands. According to Dutch corporate income tax law, income generated from qualifying innovative activities is taxed at a rate of 9% ("Innovation Box Tax") rather than the Dutch statutory rate of 25.8%. A portion of Booking.com's earnings during the years ended December 31, 2025, 2024, and 2023 qualified for Innovation Box Tax treatment, which had a significant beneficial impact on the Company's effective tax rate for those years.
 
The effective income tax rate ("ETR") of the Company is different from the amount computed using the expected U.S. statutory federal rate of 21% as a result of the following items:
Year Ended December 31,
202520242023
(In millions, except for percentages)AmountETR ImpactAmountETR ImpactAmountETR Impact
Income tax expense at federal statutory rate $1,435 21.0 %$1,531 21.0 %$1,151 21.0 %
Adjustment due to:
State tax (1)
(18)(0.3)%— — %(7)(0.1)%
Foreign Tax Effects:
Netherlands:
Tax rate differential 432 6.3 %354 4.9 %291 5.3 %
Innovation box (747)(10.9)%(607)(8.3)%(544)(9.9)%
Fines and penalties — — %— — %144 2.6 %
Stock-based compensation78 1.1 %71 1.0 %57 1.0 %
Other 4 0.1 %6 0.1 %9 0.2 %
Other foreign jurisdictions 49 0.7 %59 0.8 %73 1.3 %
Effect of changes in tax laws or rates enacted in the current period — — %— — %— — %
Effect of cross-border tax laws:
Tax Act - U.S. transition tax — — %(416)(5.7)%1 — %
GILTI - Federal 90 1.3 %82 1.1 %24 0.4 %
Other (1)— %(3)— %4 0.1 %
Tax Credits (13)(0.2)%(10)(0.1)%(18)(0.3)%
Valuation allowance (3)— %(6)(0.1)%(3)— %
Nondeductible items:
Loss related to the conversion option on convertible senior notes 76 1.1 %167 2.3 %— — %
Other 28 0.4 %(8)(0.1)%(4)(0.1)%
Uncertain tax position 18 0.3 %190 2.6 %14 0.3 %
Income tax expense$1,428 20.9 %$1,410 19.3 %$1,192 21.8 %
(1)    For the tax year ended December 31, 2025, state taxes in Connecticut and New York made up the majority (greater than 50 percent) of the tax effect in this category. For the tax year ended December 31, 2023, state taxes in Connecticut made up the majority (greater than 50 percent) of the tax effect in this category.

Uncertain Tax Positions

The following is a reconciliation of the total beginning and ending amount of unrecognized tax benefits: 
Year Ended December 31,
(In millions)202520242023
Unrecognized tax benefit — January 1$260 $67 $184 
Gross increases — tax positions in current period10 5 16 
Gross increases — tax positions in prior periods15 193 22 
Gross decreases — tax positions in prior periods(9)(4)(5)
Reduction due to lapse in statute of limitations(3)— (3)
Reduction due to settlements during the current period(23)(1)(147)
Unrecognized tax benefit — December 31$250 $260 $67 
 
The decrease in unrecognized tax benefits during the year ended December 31, 2025 primarily relates to the settlement by Booking.com of certain Italian tax matters (see Note 16). The majority of unrecognized tax benefits are included in "Other assets, net" in the Consolidated Balance Sheet as of December 31, 2025. The amount of unrecognized tax benefits, if recognized, that would affect the effective tax rate are $243 million as of December 31, 2025. As of December 31, 2025 and 2024, total gross interest and penalties accrued was $7 million and $6 million, respectively. See Note 16 for more information regarding tax contingencies.

The Company's major taxing jurisdictions include: the Netherlands, U.S., Singapore, and the United Kingdom (the "UK"). The statutes of limitations that remain open related to these major tax jurisdictions are: the Company's Netherlands returns for 2020 and forward, U.S. federal returns for 2018, as well as 2022 and forward, Singapore returns from 2021 and forward, and UK returns for 2022 and forward.

Historical Timeline

Fiscal YearFiled
2025Feb 18, 2026Showing above
2024Feb 20, 2025
2023Feb 22, 2024
2022Feb 23, 2023
2021Feb 23, 2022
2020Feb 24, 2021
2019Feb 26, 2020
2018Feb 27, 2019
2017Feb 27, 2018
2016Feb 27, 2017
2015Feb 17, 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.

Other Available Disclosures

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