BRUKER CORP Income Taxes Disclosure
14. Income Taxes
The following table presents the domestic and foreign components of (loss) income before income taxes for the years ended December 31 (in millions):
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Domestic |
|
$ |
(317.9 |
) |
|
$ |
(250.2 |
) |
|
$ |
0.7 |
|
Foreign |
|
|
339.9 |
|
|
|
457.1 |
|
|
|
543.5 |
|
Total income before provision for income taxes |
|
$ |
22.0 |
|
|
$ |
206.9 |
|
|
$ |
544.2 |
|
The following table presents the components of the income tax provision for the years ended December 31 (in millions):
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current income tax expense (benefit): |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
6.3 |
|
|
$ |
7.3 |
|
|
$ |
2.3 |
|
State |
|
|
2.3 |
|
|
|
3.7 |
|
|
|
2.4 |
|
Foreign |
|
|
125.1 |
|
|
|
144.2 |
|
|
|
138.7 |
|
Total current income tax expense |
|
|
133.7 |
|
|
|
155.2 |
|
|
|
143.4 |
|
Deferred income tax (benefit) expense: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
(59.1 |
) |
|
|
(45.2 |
) |
|
|
(18.1 |
) |
State |
|
|
(10.8 |
) |
|
|
(4.3 |
) |
|
|
(4.8 |
) |
Foreign |
|
|
(34.5 |
) |
|
|
(14.3 |
) |
|
|
(2.8 |
) |
Total deferred income tax benefit |
|
|
(104.4 |
) |
|
|
(63.8 |
) |
|
|
(25.7 |
) |
Income tax provision |
|
$ |
29.3 |
|
|
$ |
91.4 |
|
|
$ |
117.7 |
|
The Company adopted ASU No. 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures, for the year ended December 31, 2025, on a prospective basis and it elected to present the effects of cross-border tax laws net of the related U.S. tax credits for the tabular rate reconciliation required by this ASU.
The following table presents a reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate for the year ended December 31, 2025, in accordance with the guidance per ASU 2023-09 (in millions):
|
|
Amount |
|
|
Percent |
|
||
U.S. federal statutory tax rate |
|
$ |
4.6 |
|
|
|
21.0 |
% |
State and local income tax, net of federal (national) income tax effect (a) |
|
|
(8.9 |
) |
|
|
(40.6 |
)% |
Foreign tax effects |
|
|
|
|
|
|
||
Germany |
|
|
|
|
|
|
||
Statutory tax rate difference between Germany and United States |
|
|
(8.4 |
) |
|
|
(37.9 |
)% |
Contingent liability |
|
|
(8.7 |
) |
|
|
(39.3 |
)% |
Other local taxes |
|
|
21.7 |
|
|
|
98.5 |
% |
Other |
|
|
(0.1 |
) |
|
|
(0.6 |
)% |
Luxembourg |
|
|
|
|
|
|
||
Changes in valuation allowance |
|
|
(4.6 |
) |
|
|
(20.8 |
)% |
Restructuring |
|
|
(2.4 |
) |
|
|
(10.7 |
)% |
Other |
|
|
3.8 |
|
|
|
17.3 |
% |
Malaysia |
|
|
|
|
|
|
||
Statutory tax rate difference between Malaysia and United States |
|
|
(4.7 |
) |
|
|
(21.4 |
)% |
Pillar two |
|
|
2.9 |
|
|
|
13.4 |
% |
Tax holiday |
|
|
(2.5 |
) |
|
|
(11.1 |
)% |
Withholding taxes |
|
|
2.4 |
|
|
|
10.8 |
% |
Other |
|
|
(0.2 |
) |
|
|
(0.7 |
)% |
Switzerland |
|
|
|
|
|
|
||
Statutory tax rate difference between Switzerland and United States |
|
|
5.4 |
|
|
|
24.4 |
% |
R&D credits |
|
|
(5.4 |
) |
|
|
(24.6 |
)% |
Tax impact on repatriation |
|
|
4.0 |
|
|
|
18.0 |
% |
Goodwill impairment |
|
|
3.3 |
|
|
|
14.8 |
% |
Other local taxes |
|
|
4.6 |
|
|
|
20.6 |
% |
Other |
|
|
0.1 |
|
|
|
0.4 |
% |
Other jurisdictions |
|
|
8.0 |
|
|
|
36.1 |
% |
Effect of cross-border tax laws |
|
|
|
|
|
|
||
Global intangible low-taxed income, net of foreign tax credits |
|
|
3.2 |
|
|
|
14.4 |
% |
Other, net of foreign tax credits |
|
|
(0.5 |
) |
|
|
(2.3 |
)% |
Tax credits |
|
|
|
|
|
|
||
R&D credits |
|
|
(3.8 |
) |
|
|
(17.1 |
)% |
Other |
|
|
(1.6 |
) |
|
|
(7.2 |
)% |
Changes in valuation allowances |
|
|
6.8 |
|
|
|
30.9 |
% |
Nontaxable or nondeductible items |
|
|
|
|
|
|
||
Contingent liability |
|
|
3.3 |
|
|
|
14.8 |
% |
Share based compensation |
|
|
2.3 |
|
|
|
10.5 |
% |
Other |
|
|
0.4 |
|
|
|
1.8 |
% |
Changes in unrecognized tax benefits |
|
|
4.3 |
|
|
|
19.8 |
% |
Effective tax rate |
|
$ |
29.3 |
|
|
|
133.2 |
% |
The following table presents a reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate for the years ended December 31 (in millions):
|
|
2024 |
|
|
2023 |
|
||
Statutory tax rate |
|
|
21.0 |
% |
|
|
21.0 |
% |
Foreign tax rate differential |
|
|
6.6 |
% |
|
|
3.5 |
% |
Permanent differences |
|
|
3.3 |
% |
|
|
2.1 |
% |
Contingent liability |
|
|
4.8 |
% |
|
|
— |
|
U.S. tax on foreign earnings |
|
|
5.4 |
% |
|
|
1.0 |
% |
Stock compensation |
|
|
(0.6 |
)% |
|
|
(0.3 |
)% |
Tax contingencies |
|
|
2.2 |
% |
|
|
— |
|
Change in tax rates |
|
|
(1.0 |
)% |
|
|
0.1 |
% |
Repatriation of foreign earnings |
|
|
1.7 |
% |
|
|
1.0 |
% |
State income taxes, net of federal benefits |
|
|
(1.0 |
)% |
|
|
(0.6 |
)% |
Research and development credits |
|
|
(8.6 |
)% |
|
|
(2.0 |
)% |
Tax impact on bargain purchase gain |
|
|
0.8 |
% |
|
|
(5.6 |
)% |
Return to provision adjustments |
|
|
3.1 |
% |
|
|
0.3 |
% |
Withholding taxes and other taxes |
|
|
3.2 |
% |
|
|
— |
|
Other |
|
|
1.1 |
% |
|
|
(0.2 |
)% |
Change in valuation allowance |
|
|
2.2 |
% |
|
|
1.3 |
% |
Effective tax rate |
|
|
44.2 |
% |
|
|
21.6 |
% |
The tax effect of temporary items that gave rise to significant portions of the deferred tax assets and liabilities were as follows (in millions):
|
|
2025 |
|
|
2024 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Accrued expenses |
|
$ |
7.2 |
|
|
$ |
9.8 |
|
Compensation |
|
|
31.8 |
|
|
|
32.7 |
|
Deferred revenue |
|
|
5.1 |
|
|
|
— |
|
Section 174 capitalization |
|
|
92.5 |
|
|
|
68.2 |
|
Disallowed interest carryforwards |
|
|
68.4 |
|
|
|
56.7 |
|
Net operating loss carryforwards |
|
|
206.6 |
|
|
|
200.8 |
|
Foreign tax and other tax credit carryforwards |
|
|
27.5 |
|
|
|
24.3 |
|
Unrealized currency gain/loss |
|
|
17.5 |
|
|
|
24.4 |
|
Inventory |
|
|
22.0 |
|
|
|
3.3 |
|
Hedge unrealized FX gain/loss |
|
|
61.4 |
|
|
|
1.5 |
|
Lease liabilities |
|
|
38.2 |
|
|
|
35.6 |
|
Other |
|
|
14.2 |
|
|
|
10.4 |
|
Gross deferred tax assets |
|
|
592.4 |
|
|
|
467.7 |
|
Less valuation allowance |
|
|
(74.9 |
) |
|
|
(60.4 |
) |
Total deferred tax assets |
|
|
517.5 |
|
|
|
407.3 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
|
5.5 |
|
|
|
— |
|
Deferred revenue |
|
|
— |
|
|
|
0.7 |
|
Fixed assets |
|
|
0.4 |
|
|
|
16.4 |
|
Foreign patent reserves |
|
|
0.8 |
|
|
|
0.8 |
|
Intangibles |
|
|
147.6 |
|
|
|
172.1 |
|
Accrued expenses |
|
|
4.8 |
|
|
|
4.5 |
|
Accrued withholding tax |
|
|
8.3 |
|
|
|
9.6 |
|
Right-of-use asset |
|
|
38.1 |
|
|
|
35.5 |
|
Other |
|
|
2.8 |
|
|
|
— |
|
Total deferred tax liabilities |
|
|
208.3 |
|
|
|
239.6 |
|
Net deferred tax assets |
|
$ |
309.2 |
|
|
$ |
167.7 |
|
The Company uses the liability method to account for income taxes. Under this method, deferred income taxes are recognized for the future tax consequences of differences between the tax and financial accounting bases of assets and liabilities at each reporting period. Deferred income taxes are based on enacted tax laws and statutory tax rates applicable for the period in which these differences are expected to affect taxable income. A valuation allowance is established when necessary to reduce deferred tax assets to the expected realizable amounts.
The Company can only recognize a deferred tax asset to the extent it is more likely than not that these assets will be realized. Judgments around realizability depend on the availability and weight of both positive and negative evidence. Changes in the valuation allowance for deferred tax assets were as follows (in millions):
Balance at December 31, 2022 |
|
$ |
6.6 |
|
Increases recorded as an expense to income tax provision |
|
|
7.2 |
|
Balance at December 31, 2023 |
|
|
13.8 |
|
Increases recorded as an expense to income tax provision |
|
|
3.8 |
|
Increases recorded through purchase accounting |
|
|
42.8 |
|
Balance at December 31, 2024 |
|
|
60.4 |
|
Increases recorded as an expense to income tax provision |
|
|
5.2 |
|
Increases recorded through purchase accounting |
|
|
9.3 |
|
Balance at December 31, 2025 |
|
$ |
74.9 |
|
During 2025, the Company recorded a valuation allowance of $9.3 million through purchase accounting on cumulative losses that were not likely to be realized. The majority of the valuation allowance of $9.3 million related to the acquisition of Biocrates Life Sciences GmbH.
As of December 31, 2025, the Company had approximately $605.3 million of U.S. federal net operating loss carryforwards, of which $35.2 million begin to expire at various dates beginning in 2033, and the remaining amount of $570.1 million will be carried forward indefinitely. The Tax Cuts and Jobs Act (“TCJA”) enacted on December 22, 2017, limits a taxpayer’s ability to utilize the Net Operating Losses (“NOL”) deduction in a year to 80% of taxable income for federal NOL arising in tax years beginning after 2017. As of December 31, 2025, the Company had approximately $214.6 million of state NOL carryforwards available to reduce state taxable income which are expected to expire at various times beginning in 2026. As of December 31, 2025, the Company also had approximately $145.4 million of German Trade Tax and Corporate Income Tax NOL and approximately $168.9 million of other foreign NOL that are carried forward indefinitely. As of December 31, 2025, the Company had $1.1 million of U.S. federal foreign tax credit carried forwards, which will begin to expire in 2034, as well as $9.0 million and $11.6 million U.S. federal and state research and development tax credits, which will begin to expire in 2043 and 2034, respectively. Utilization of these credits and net operating losses may be subject to annual limitations due to the ownership percentage change limitations provided by Code Section 382 and similar state provisions. In the event of a deemed change in control under Code Section 382, an annual limitation on the utilization of NOL and credits may result in the expiration of all or a portion of the NOL and credit carryforwards. Additionally, as of December 31, 2025, the Company had $196.8 million of gross interest expense carryforward as provided by Code Section 163(j) that can be carried forward indefinitely.
At December 31, 2025, the Company recorded state income and foreign withholding taxes on the cash and liquid assets portion of the unremitted earnings and profits (“E&P”) of foreign subsidiaries expected to be repatriated to the United States, except for amounts from certain subsidiaries, which the Company has asserted to be indefinitely reinvested. If the E&P is distributed to the United States in the form of dividends, the Company would likely be subject to additional withholding tax. The Company estimates the amount of unrecognized deferred withholding taxes on the undistributed E&P to be approximately $143.4 million as of December 31, 2025.
The Company had gross unrecognized tax benefits, excluding interest, of approximately $72.8 million as of December 31, 2025, that if recognized, would reduce the Company’s effective tax rate. In the next twelve months it is reasonably possible that the Company will reduce its unrecognized tax benefits by an immaterial amount due to the expiration of statutes of limitations.
The following table presents a reconciliation of the Company’s gross unrecognized tax benefits (in millions):
Gross unrecognized tax benefits at December 31, 2022 |
|
$ |
54.9 |
|
Gross decreases—tax positions in prior periods |
|
|
(3.8 |
) |
Gross increases—current period tax positions |
|
|
7.4 |
|
Gross unrecognized tax benefits at December 31, 2023 |
|
|
58.5 |
|
Gross decreases—tax positions in prior periods |
|
|
(1.8 |
) |
Gross increases—current period tax positions |
|
|
7.0 |
|
Gross unrecognized tax benefits at December 31, 2024 |
|
|
63.7 |
|
Gross increases—tax positions in prior periods |
|
|
4.1 |
|
Gross increases—current period tax positions |
|
|
5.0 |
|
Gross increases—tax audit in prior periods |
|
|
5.2 |
|
Reduction related to audit settlements |
|
|
(5.2 |
) |
Gross unrecognized tax benefits at December 31, 2025 |
|
$ |
72.8 |
|
The Company’s policy is to include accrued interest and penalties related to unrecognized tax benefits and income tax liabilities, when applicable, in income tax expense. At December 31, 2025 and 2024, the Company had approximately $6.4 million and $5.3 million, respectively, of accrued interest and penalties related to uncertain tax positions included in other long-term liabilities in the consolidated balance sheets. The Company recorded expense of $0.9 million and $1.1 million during the years ended December 31, 2025, and 2024, respectively, for penalties and interest related to unrecognized tax benefits in the provision for income taxes.
The Company files tax returns in the United States, which includes 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 Company has been subject to tax examinations with the German taxing authorities for the years 2013-2017, and with other various taxing authorities for the years 2013-2023.
The following table presents cash paid for taxes (net of refunds) by jurisdiction for the year ended December 31, 2025 (in millions):
Federal taxes |
|
|
|
|
United States |
|
$ |
13.2 |
|
State taxes |
|
|
|
|
Other state jurisdictions |
|
|
4.3 |
|
Foreign taxes |
|
|
|
|
Germany |
|
|
162.8 |
|
Other foreign jurisdictions |
|
|
42.2 |
|
Total cash taxes paid |
|
$ |
222.5 |
|
In connection with the TCJA of 2017, the Company recorded a toll charge liability of $35.4 million, which has already been paid by the Company. The liability decreased to $20.5 million due to the Company’s amended 2017 tax return filed in 2023, and as a result, the Company has recorded a receivable in the amount of $15.0 million as of December 31, 2025.
In 2020, the Company was granted an income tax holiday for the manufacturing facility in Malaysia through February 28, 2024. The tax holiday ranged between 100% to 70% of the statutory rate in Malaysia. During 2025, the Company was approved for an extension of the tax holiday until 2031. The effect of the tax holiday in Malaysia increased the Company’s net income by $5.9 million, $5.1 million, and $7.6 million or the years ended December 31, 2025, 2024 and 2023, respectively, and increased the Company's net income per diluted common share attributable to Bruker Corporation common shareholders by $0.04, $0.03 and $0.05 for the years ended December 31, 2025, 2024 and 2023, respectively.
On December 15, 2022, the European Union (“EU”) Member States formally adopted the EU’s Pillar Two Directive (“Pillar Two”), which generally provides for a minimum effective tax rate of 15% for large corporations, as established by the Organization for Economic Co-operation and Development (“OECD”) Pillar Two Framework. A number of countries in which we operate have adopted legislation subject to the OECD transitional safe harbor rules, while other countries are still in the process of introducing legislation. The Company’s income tax provision reflects enacted legislation as of December 31, 2025, and guidance related to the model rules. Subsequent to the Company’s year end, and not included in its provision, is the impact of the OECD announcement on January 5, 2026, that a side-by-side agreement was reached with member countries creating safe harbors to exempt U.S. multi-nationals from certain taxes under Pillar Two by recognizing the U.S. tax system as a compatible domestic minimum tax regime. The Company will continue to monitor further developments to determine any potential impact in the countries in which we operate, such as the recently issued administrative guidance on the side-by-side system that will fully exclude U.S. parented groups from certain provisions of the Pillar Two Framework.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law. The OBBBA includes significant changes to U.S. corporate tax provisions of the Tax Cuts and Jobs Act. Notably, it allows an immediate deduction for domestic research and development expenditures, reinstates 100% bonus depreciation, and modifies the international tax framework. The legislation has multiple effective dates, with certain provisions effective starting in 2025 and others in the subsequent years. The OBBBA had an immaterial impact on the Company's financial statements for the year ended December 31, 2025.
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 evaluated and reflected the impact from the German legislation changes on its financial statements for the year ended December 31, 2025, and the impact was not material.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 27, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 16, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 29, 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.