Cosmos Health Inc. Income Taxes Disclosure

NOTE 8 – INCOME TAXES

The Company provides for income taxes using an asset and liability approach under which deferred income taxes are provided for based upon enacted tax laws and rates applicable to periods in which the taxes become payable.

The domestic and foreign components of income (loss) before (benefit from) provision for income taxes were as follows:

The components of the (benefit from) provision for income taxes are as follows:

The reconciliation of income tax expense computed at the U.S. federal statutory rate to the income tax provision for the years ended December 31, 2024 and 2023 is as follows:

Companies subject to the Global Intangible Low-Taxed Income provision (GILTI) have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for outside basis temporary differences expected to reverse as GILTI. We have elected to account for GILTI as a period cost.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities consist of the following:

As of December 31, 2025, the Company had total net operating loss ("NOL") carryforwards of approximately $55,136,575. Of this amount, $15,624,388 relates to the Group’s foreign entities, while $37,512,187 pertains to its U.S. entities. These NOL carryforwards may be utilized to offset future taxable income, subject to potential limitations under Internal Revenue Code (IRC) Section 382. Of the $37.5 million U.S. Federal NOL carryforwards, $2.5 million are pre-2018 and begin to expire in 2031. The remaining balance of 35 million is limited to utilization of 80% of taxable income but do not have an expiration. On December 31, 2025, the Company had Greek NOL carryforwards of $13,411,516 and UK NOL carryforwards of $2,212,872. The utilization of these NOL carryforwards may be subject to certain limitations as follows:

Greece: Under Greek tax law, NOL carryforwards may be carried forward for a period of five years from the year in which the loss was incurred. The ability to utilize these carryforwards may be further limited in the event of a significant change in ownership or a substantial change in the nature of the Company's business operations, as defined under Greek tax legislation.

United Kingdom: Under UK tax law, NOL carryforwards (referred to as trading losses) may be carried forward indefinitely; however, their utilization is subject to the loss restriction rules introduced in April 2017, which limit the amount of profit that can be offset by carried-forward losses to 50% of annual taxable profits, subject to a £5 million deductions allowance per group. The ability to utilize these carryforwards may also be restricted following a change in ownership if there is a major change in the nature or conduct of the Company's trade within a relevant period.

A valuation allowance exists for all operations, based on a more likely than not criterion and in consideration of all available positive and negative evidence.

ASC 740 requires that the tax benefit of NOLs, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period. Because of the Company’s history of domestic operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance, on all our deferred tax asset. Management considered all available evidence to when evaluating the realizability of foreign deferred tax assets by jurisdiction and concluded primarily based upon a strong earnings history that these deferred tax assets were more-likely-than-not to not be realizable.

The Company applied the “more-likely-than-not” recognition threshold to all tax positions taken or expected to be taken in a tax return, which resulted in no unrecognized tax benefits as of December 31, 2025 and December 31, 2024, respectively. We recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense.

The Company files income tax returns in Illinois, United States, and in foreign jurisdictions including Greece and the United Kingdom. As of December 31, 2025, all domestic tax years are open to tax authority examination due to the availability of net operating loss deductions, 2010 through 2025. In Greece, the statute of limitations is open for five years, 2020 through 2025. In the United Kingdom, the statute of limitations is open for four years, 2021 through 2025. Currently, there are no ongoing tax authority income tax examinations other than those disclosed in Note 15, Commitments and Contingencies.