CLARIVATE PLCCLVT
CLARIVATE PLC Income Taxes Disclosure
Income Taxes
The components of the Provision (benefit) for income taxes by jurisdiction were as follows:
Year Ended December 31, | |||||
2025 | 2024 | 2023 | |||
Current | |||||
U.K. | $3.1 | $2.3 | $(1.2) | ||
U.S. federal | (5.6) | 19.0 | 14.5 | ||
U.S. state | (2.0) | 3.1 | 4.4 | ||
Other | 53.0 | 36.8 | (40.8) | ||
Total current | 48.5 | 61.2 | (23.1) | ||
Deferred | |||||
U.K. | 1.9 | 0.8 | (0.4) | ||
U.S. federal | (1.4) | (20.0) | (30.5) | ||
U.S. state | (5.5) | (3.2) | (4.4) | ||
Other | (36.3) | 44.1 | (42.9) | ||
Total deferred | (41.3) | 21.7 | (78.2) | ||
Provision (benefit) for income taxes | $7.2 | $82.9 | $(101.3) | ||
The components of Income (loss) before income taxes were as follows:
Year Ended December 31, | |||||
2025 | 2024 | 2023 | |||
U.K. income (loss) | $(123.6) | $(155.4) | $(180.1) | ||
U.S. income (loss) | (80.9) | (437.8) | (477.9) | ||
Other income (loss) | 10.6 | 39.4 | (354.5) | ||
Income (loss) before income taxes | $(193.9) | $(553.8) | $(1,012.5) | ||
Effective tax rate reconciliation
While we are a public limited company incorporated under the laws of Jersey, Channel Islands, we are a tax resident of the
United Kingdom.
The following tables present reconciliations between the statutory U.K. income tax rate and our effective tax rate (“ETR”) for
the years ended December 31, 2025, 2024, and 2023. The 2025 reconciliation is presented in accordance with ASU 2023-09,
Improvements to Income Tax Disclosures, which we adopted on a prospective basis during the year ended December 31,
2025.
Year Ended December 31, 2025 | |||
Amount | Percent | ||
U.K. statutory tax rate | $(48.5) | 25.0% | |
Foreign tax effects: | |||
United States: | |||
Legal entity restructuring | (51.7) | 26.7% | |
Waived deductions under Section 59A | 43.8 | (22.6)% | |
Valuation allowance | 15.0 | (7.7)% | |
BEAT | (7.1) | 3.7% | |
State and local income taxes, net of federal benefit | (7.1) | 3.7% | |
Share-based compensation | 6.6 | (3.4)% | |
R&D credits | (5.4) | 2.8% | |
Foreign branch | 4.8 | (2.5)% | |
Statutory income tax rate differential | 3.2 | (1.7)% | |
Subpart F income | 2.7 | (1.4)% | |
Other | 0.8 | (0.4)% | |
Germany: | |||
Local trade tax | (10.9) | 5.6% | |
Effect of different tax rates | 7.9 | (4.1)% | |
Other | 1.7 | (0.9)% | |
Israel: | |||
Effect of different tax rates | (4.9) | 2.5% | |
Other | 0.6 | (0.3)% | |
Mexico: | |||
Valuation allowance | 3.7 | (1.9)% | |
Other | (0.6) | 0.3% | |
Brazil: | |||
Withholding tax | 2.8 | (1.4)% | |
Other | (0.4) | 0.2% | |
Other foreign jurisdictions | 5.6 | (2.9)% | |
Changes in valuation allowances | 31.1 | (16.0)% | |
Effect of cross-border tax laws | 2.5 | (1.3)% | |
Nontaxable or nondeductible items | 2.2 | (1.1)% | |
Changes in unrecognized tax benefits | 9.6 | (5.0)% | |
Other adjustments | (0.8) | 0.4% | |
Effective tax rate | $7.2 | (3.7)% | |
Year Ended December 31, | |||
2024 | 2023 | ||
Income (loss) before income taxes | $(553.8) | $(1,012.5) | |
Provision (benefit) for income taxes | 82.9 | (101.3) | |
Statutory rate | 25.0% | 23.5% | |
Effect of different tax rates | (0.6)% | —% | |
BEAT | (1.2)% | (0.7)% | |
Change in tax law | (9.6)% | —% | |
Valuation allowances | (2.2)% | (4.4)% | |
Share-based compensation | (2.4)% | (1.3)% | |
Other permanent differences | (1.2)% | (0.6)% | |
Withholding tax | (0.7)% | (0.5)% | |
Uncertain tax positions | (0.9)% | 7.0% | |
Outside basis difference in foreign subsidiary | (1.6)% | 2.1% | |
Impairments | (18.8)% | (15.4)% | |
Divestitures | (1.1)% | —% | |
Tax credits | 1.8% | 0.6% | |
Other | (1.5)% | (0.3)% | |
Effective tax rate | (15.0)% | 10.0% | |
The income tax provision of $7.2 for the year ended December 31, 2025 was primarily driven by the mix of tax jurisdictions
in which pre-tax profits and losses were recognized. These were partially offset by income tax benefits of $21.7 and $10.9 in
the U.S. and U.K., respectively, that resulted from intra-entity transactions, as well as a $7.1 benefit due to a reduction in the
Base Erosion and Anti-Abuse Tax (“BEAT”).
The income tax provision of $82.9 for the year ended December 31, 2024 was driven by a $53.9 expense related to a new
15% corporate income tax enacted by a tax law change in Jersey, Channel Islands, a $10.2 expense to establish valuation
allowances, and expenses from the mix of tax jurisdictions in which pre-tax profits and losses were recognized. These were
partially offset by benefits of $16.6 and $14.2 associated with the impairment of intangible assets and goodwill, respectively.
Deferred tax assets and liabilities
The tax effects of the significant components of temporary differences giving rise to our deferred income tax assets and
liabilities were as follows:
December 31, | |||
2025 | 2024 | ||
Accounts receivable | $1.3 | $1.9 | |
Accrued expenses | 18.4 | 12.2 | |
Deferred revenue | 2.1 | 0.9 | |
Partnerships outside basis difference | 143.9 | 40.9 | |
Other assets | 19.0 | 24.0 | |
Debt issuance costs | 7.9 | 10.4 | |
Lease liabilities | 11.3 | 8.4 | |
Goodwill | 422.0 | 527.4 | |
Operating losses and tax attributes | 938.2 | 835.4 | |
Fixed assets, net | 1.3 | — | |
Total deferred tax assets | 1,565.4 | 1,461.5 | |
Valuation allowances | (1,340.4) | (1,279.7) | |
Net deferred tax assets | 225.0 | 181.8 | |
Other identifiable intangible assets, net | (385.6) | (365.1) | |
Other liabilities | (25.1) | (20.9) | |
Right-of-use assets | (9.2) | (5.4) | |
Fixed assets, net | — | (15.2) | |
Total deferred tax liabilities | (419.9) | (406.6) | |
Net deferred tax liabilities | $(194.9) | $(224.8) | |
Deferred tax assets and liabilities are presented net in the Consolidated Balance Sheets if they are in the same jurisdiction.
The components of the net deferred tax liability, as reported in the Consolidated Balance Sheets, were as follows:
December 31, | |||
2025 | 2024 | ||
Deferred tax asset | $17.2 | $48.5 | |
Deferred tax liability | (212.1) | (273.3) | |
Net deferred tax liability | $(194.9) | $(224.8) | |
We are required to assess the realization of our deferred tax assets and the need for a valuation allowance. The assessment
requires judgment on the part of management with respect to benefits that could be realized from future taxable income. The
valuation allowance was $1,340.4 and $1,279.7 as of December 31, 2025 and 2024, respectively, against certain deferred tax
assets, as it more likely than not that such amounts will not be fully realized. During the years ended December 31, 2025 and
2024, the valuation allowance increased by $60.7 and $23.1, respectively.
As of December 31, 2025, we had gross U.S. federal tax loss carryforwards of $2,115.7, U.K. tax loss carryforwards of
$592.0, U.S. state tax loss carryforwards of $1,001.6, and tax loss carryforwards in other foreign jurisdictions of $59.8. The
carryforward period for U.S. federal tax losses is twenty years for losses generated in tax years ended prior to December 31,
2017. The expiration period for these losses begins in 2036. For U.S. losses generated in tax years beginning after January 1,
2018, the carryforward period is indefinite. The carryforward period for the U.K. tax losses is indefinite. The carryforward
period for U.S. state losses varies, and the expiration period is between 2026 and 2044. The carryforward period of other
losses varies by jurisdiction. As of December 31, 2025, we also had R&D and other tax credit carryforwards of $32.3 that
have various carryforward periods, and the expiration period begins in 2027.
We have provided income taxes and withholding taxes in the amount of $13.5 on the undistributed earnings of foreign
subsidiaries as of December 31, 2025. In general, we are not permanently reinvesting our foreign earnings offshore.
Deferred tax valuation allowance
The following table summarizes the changes in our deferred tax valuation allowance:
December 31, | |||||
2025 | 2024 | 2023 | |||
Beginning balance, January 1 | $1,279.7 | $1,256.6 | $1,179.3 | ||
Change charged to expense/(income) | 26.4 | 31.1 | 51.4 | ||
Change charged to CTA | 34.3 | (8.0) | 25.9 | ||
Ending balance, December 31 | $1,340.4 | $1,279.7 | $1,256.6 | ||
Taxes paid by jurisdiction
The following table presents income taxes paid, net of refunds, by jurisdiction in accordance with ASU 2023-09,
Improvements to Income Tax Disclosures for the year ended December 31, 2025:
Year Ended December 31, 2025 | |
U.K. | $(3.0) |
Foreign: | |
India | 6.7 |
U.S. federal | 6.4 |
Germany federal | 4.5 |
South Korea | 3.8 |
Spain | 3.1 |
Sweden | 2.3 |
Brazil | 2.2 |
Other foreign | 16.1 |
Total | $42.1 |
Uncertain tax positions
Unrecognized tax benefits represent the difference between the tax benefits that we are able to recognize for financial
reporting purposes and the tax benefits that have been recognized, or are expected to be recognized, in filed tax returns. The
total amount of net unrecognized tax benefits that, if recognized, would impact our effective tax rate was $38.3 and $30.8 as
of December 31, 2025 and 2024, respectively.
We recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision. As of
December 31, 2025 and 2024, the amount accrued was $5.3 and $3.2, respectively. Interest and penalties recognized for the
years ended December 31, 2025, 2024, and 2023 were $2.0, $0.7, and $(23.2).
We file income tax returns in the U.K., the U.S., and various other jurisdictions. As of December 31, 2025, our open tax years
subject to examination were 2017 through 2024, which includes the major jurisdictions in the U.K. and the U.S.
The following table summarizes our unrecognized tax benefits, excluding interest and penalties:
December 31, | |||||
2025 | 2024 | 2023 | |||
Beginning balance, January 1 | $30.8 | $26.0 | $83.8 | ||
Increases for tax positions taken in prior years | 5.3 | 3.3 | 1.1 | ||
Increases for tax positions taken in the current year | 2.8 | 2.1 | 1.6 | ||
Decreases for tax positions taken in prior years | (0.4) | (0.5) | (54.1) | ||
Decreases related to settlements with tax authorities | — | — | (6.2) | ||
Decreases due to statute expirations | (0.2) | (0.1) | (0.2) | ||
Ending balance, December 31 | $38.3 | $30.8 | $26.0 | ||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 10, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 2, 2020 | |
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.