Cooper-Standard Holdings Inc.CPS
Cooper-Standard Holdings Inc. Income Taxes Disclosure
Income Taxes
The components of the Company’s loss before income taxes and adjustment for noncontrolling interests were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | (100,433) | $ | (131,954) | $ | (249,582) | |||||||||||
| Foreign | 76,914 | 30,476 | 55,199 | ||||||||||||||
| Total | $ | (23,519) | $ | (101,478) | $ | (194,383) | |||||||||||
The Company’s income tax (benefit) expense consists of the following:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 1,056 | $ | 1,670 | $ | 848 | |||||||||||
| State | 164 | 121 | 41 | ||||||||||||||
| Foreign | 14,695 | 20,327 | 13,857 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (36) | 1,468 | (123) | ||||||||||||||
| State | (33) | 31 | (13) | ||||||||||||||
| Foreign | (35,051) | (46,965) | (5,677) | ||||||||||||||
| Total | $ | (19,205) | $ | (23,348) | $ | 8,933 | |||||||||||
A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate pursuant to the disclosure requirements of ASU 2023-09 for the years ended December 31, 2025, 2024 and 2023 was as follows:
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||
| U.S. federal statutory tax rate | $ | (4,939) | 21.0 | % | $ | (21,310) | 21.0 | % | $ | (40,820) | 21.0 | % | ||||||||||||||
| Foreign tax effects | ||||||||||||||||||||||||||
| Brazil: | ||||||||||||||||||||||||||
| Changes in valuation allowances | — | — | % | (22,922) | 22.6 | % | (2,406) | 1.2 | % | |||||||||||||||||
| Currency impacts | 1,052 | (4.5) | % | (4,369) | 4.3 | % | — | — | % | |||||||||||||||||
| Other | 1,971 | (8.4) | % | 252 | (0.2) | % | 1,565 | (0.8) | % | |||||||||||||||||
| China: | ||||||||||||||||||||||||||
| Changes in valuation allowances | (2,432) | 10.3 | % | (10,625) | 10.5 | % | 170 | (0.1) | % | |||||||||||||||||
| Other | 961 | (4.1) | % | 338 | (0.3) | % | (2,480) | 1.3 | % | |||||||||||||||||
| France: | ||||||||||||||||||||||||||
| Changes in valuation allowances | (23,639) | 100.5 | % | (504) | 0.5 | % | (1,987) | 1.0 | % | |||||||||||||||||
| Other | 133 | (0.6) | % | (390) | 0.4 | % | 1,241 | (0.6) | % | |||||||||||||||||
| Germany: | ||||||||||||||||||||||||||
| Tax rate change | 11,687 | (49.7) | % | — | — | % | — | — | % | |||||||||||||||||
| Changes in valuation allowances | (8,652) | 36.8 | % | 1,370 | (1.4) | % | 384 | (0.2) | % | |||||||||||||||||
| Other | (1,405) | 6.0 | % | 1,259 | (1.2) | % | (723) | 0.4 | % | |||||||||||||||||
| Mexico: | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items | (5,137) | 21.8 | % | 3,116 | (3.1) | % | (5,473) | 2.8 | % | |||||||||||||||||
| Other | 3,211 | (13.7) | % | 331 | (0.3) | % | 2,390 | (1.2) | % | |||||||||||||||||
| Netherlands: | ||||||||||||||||||||||||||
| Nondeductible items | 4,646 | (19.8) | % | 5,772 | (5.7) | % | 5,289 | (2.7) | % | |||||||||||||||||
| Other | (457) | 1.9 | % | (637) | 0.6 | % | (1,716) | 0.9 | % | |||||||||||||||||
| Poland: | ||||||||||||||||||||||||||
| Changes in valuation allowances | — | — | % | (9,121) | 9.0 | % | (1,370) | 0.7 | % | |||||||||||||||||
| Other | (1,571) | 6.7 | % | (1,849) | 1.8 | % | (67) | — | % | |||||||||||||||||
| Spain: | ||||||||||||||||||||||||||
| Changes in valuation allowances | (17,672) | 75.1 | % | (802) | 0.8 | % | (1,807) | 0.9 | % | |||||||||||||||||
| Other | (126) | 0.5 | % | 85 | (0.1) | % | 1,523 | (0.8) | % | |||||||||||||||||
| Other foreign jurisdictions | (1,125) | 4.8 | % | 2,274 | (2.2) | % | 2,142 | (1.1) | % | |||||||||||||||||
| Global intangible low-taxed income ("GILTI") | 11,825 | (50.3) | % | 307 | (0.3) | % | 9,541 | (4.9) | % | |||||||||||||||||
| Other effects of cross border transactions | 2,145 | (9.1) | % | (3,911) | 3.9 | % | (279) | 0.1 | % | |||||||||||||||||
| Tax credits | (5,524) | 23.5 | % | (6,181) | 6.1 | % | (5,838) | 3.0 | % | |||||||||||||||||
| Changes in valuation allowances | 13,199 | (56.1) | % | 37,978 | (37.4) | % | 50,623 | (26.0) | % | |||||||||||||||||
| Nontaxable or nondeductible items | 872 | (3.7) | % | 1,674 | (1.6) | % | 644 | (0.3) | % | |||||||||||||||||
| Changes in unrecognized tax benefits | 1,383 | (5.9) | % | 4,072 | (4.0) | % | 28 | — | % | |||||||||||||||||
| Other adjustments | 389 | (1.7) | % | 445 | (0.4) | % | (1,641) | 0.8 | % | |||||||||||||||||
| Effective tax rate | $ | (19,205) | 81.7 | % | $ | (23,348) | 23.0 | % | 8,933 | (4.6) | % | |||||||||||||||
Numerous countries have agreed to a statement in support of the Organization for Economic Co-operation and Development model rules that propose a global minimum tax rate of 15%, and European Union member states have agreed to implement the global minimum tax. Certain countries, including European Union member states, enacted legislation in 2024, with further implementation of a global minimum tax in various jurisdictions during 2025. The Company has recorded the impact of the global minimum tax as currently enacted in the consolidated financial statements for taxable years ending December 31, 2025 and December 31, 2024. The amounts recorded have not had a significant impact on the consolidated financial statements in either period, however as further legislation becomes effective in countries in which the Company does business, the Company’s provision for income taxes could be impacted. The Company will continue to monitor pending legislation and implementation by individual countries and adjust its calculations accordingly.
On July 4, 2025, the United States enacted a budget reconciliation package known as the One Big Beautiful Bill Act of 2025 (“OBBBA”) into law. The OBBBA includes a broad range of tax reform provisions, including extending and modifying various provisions of the Tax Cuts and Jobs Act and expanding certain incentives in the Inflation Reduction Act while accelerating the phase-out of other incentives. The legislation has multiple effective dates, with some provisions that took effect in 2025 and others being implemented through 2027. The tax reform provisions of the OBBBA did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2025. Additionally, based on current guidance, we do not expect the tax reform provisions of the OBBBA to have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2026.
Cash taxes paid, net of refunds, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the years ended December 31, 2025, 2024 and 2023 were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal | $ | 881 | $ | — | $ | (136) | |||||||||||
| State | 158 | (195) | 65 | ||||||||||||||
| Foreign: | |||||||||||||||||
| Brazil | 2,169 | 3,823 | 1,003 | ||||||||||||||
| Canada | 2,111 | 1,269 | (1,585) | ||||||||||||||
| Mexico | 4,444 | 9,279 | 9,119 | ||||||||||||||
| Poland | (2,586) | 2,535 | (1,486) | ||||||||||||||
| Other foreign jurisdictions | 1,870 | 2,374 | 3,321 | ||||||||||||||
| Total | $ | 9,047 | $ | 19,085 | $ | 10,301 | |||||||||||
Deferred tax assets and liabilities reflect the estimated tax effect of accumulated temporary differences between the basis of assets and liabilities for tax and financial reporting purposes, as well as net operating losses, tax credit and other carryforwards. The significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 were as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Pension, postretirement and other benefits | $ | 39,054 | $ | 36,949 | |||||||
| Capitalized expenditures | 46,329 | 50,724 | |||||||||
| Net operating loss and tax credit carryforwards | 283,572 | 265,568 | |||||||||
| Operating lease liabilities | 21,014 | 22,125 | |||||||||
| Interest expense carryforwards | 76,372 | 74,799 | |||||||||
| All other items | 51,593 | 51,825 | |||||||||
| Total deferred tax assets | 517,934 | 501,990 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property, plant and equipment | (5,858) | (6,276) | |||||||||
| Operating lease right-of-use assets | (19,888) | (21,300) | |||||||||
| All other items | (13,482) | (9,793) | |||||||||
| Total deferred tax liabilities | (39,228) | (37,369) | |||||||||
| Valuation allowances | (379,069) | (405,182) | |||||||||
| Net deferred tax assets | $ | 99,637 | $ | 59,439 | |||||||
As of December 31, 2025, the Company’s U.S. and foreign subsidiaries, primarily in France, Brazil, Italy and Germany, had operating loss carryforwards aggregating $611,000, with indefinite expiration periods. Other foreign subsidiaries in China, Mexico, Netherlands, Spain, Czech Republic and Korea had operating loss carryforwards aggregating $276,000, with expiration dates beginning in 2026. The Company has research tax credit carryforwards and foreign tax credit carryforwards totaling $65,000 in the U.S. with expiration dates beginning in 2029. The Company and its domestic subsidiaries have anticipated tax benefits of state net operating losses and credit carryforwards of $16,000 with expiration dates beginning in 2026.
As of December 31, 2025, the Company has consolidated deferred tax assets of $517,934 with valuation allowances of $379,069 related to tax losses, credit carryforwards, and other deferred tax assets in the U.S. and certain foreign jurisdictions. The Company’s valuation allowance decreased in 2025 primarily from valuation allowance reversals of $23,639 in France, $17,672 in Spain, and $4,124 in one Korean location offset with increases from current year losses generated in the U.S. and certain foreign jurisdictions. Current and future provision for income taxes is significantly impacted by the initial recognition of and changes in valuation allowances in certain countries. The Company intends to maintain these allowances until it is more likely than not that the deferred tax assets will be realized. In the future, provision for income taxes will include no tax benefit with respect to losses incurred and no tax expense with respect to income generated in these countries until the respective valuation allowance is eliminated.
As of December 31, 2025, no material deferred income taxes have been recorded on the undistributed earnings of foreign subsidiaries, since a majority of these earnings will not be taxable upon repatriation to the United States. These earnings will be primarily treated as previously taxed income from either the one time transition tax or GILTI, or they will be offset with a 100% dividends received deduction. The Company has not recorded a deferred tax liability for foreign withholding taxes or state income taxes that may be incurred upon repatriation in the future as such undistributed foreign earnings are considered permanently reinvested or could be remitted with no tax implications.
As of December 31, 2025, the Company had $12,251 ($12,460 including interest and penalties) of total unrecognized tax benefits, of which $9,951 represents the amount of unrecognized tax benefits that, if recognized, would impact the effective income tax rate.
A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
| 2025 | 2024 | ||||||||||
| Balance at beginning of period | $ | 10,640 | $ | 6,296 | |||||||
| Tax positions related to the current period: | |||||||||||
| Gross additions | 214 | 338 | |||||||||
| Tax positions related to prior years: | |||||||||||
| Gross additions | 2,164 | 4,072 | |||||||||
| Gross reductions | (767) | (66) | |||||||||
| Balance at end of period | $ | 12,251 | $ | 10,640 | |||||||
The Company has an ongoing dispute related to its 2015-2018 U.S. federal income tax filings. The Internal Revenue Service (“IRS”) asserts that income earned by a Netherlands subsidiary from its Mexican branch operations should be categorized as foreign based company sales income under Section 954(d) of the Internal Revenue Code and should be recognized currently as taxable income on the Company’s 2015-2018 U.S. federal income tax filings. The Company has been unable to reach resolution though the IRS appeals process but plans to continue to challenge these proposed adjustments through the litigation process in the U.S. Court of Federal Claims in the future, if necessary. The Company believes, after consultation with tax and legal counsel, that it is more likely than not that it will ultimately be successful in defending its position. As such, the Company has not recorded any impact of the IRS’s proposed adjustment in its consolidated financial statements as of December 31, 2025. In the event the Company is not successful in defending its position, the potential income tax expense impact, including interest, related to tax years 2015 through December 31, 2025 is less than $10,000.
The statute of limitations for U.S. state and local jurisdictions is closed for taxable years ending prior to 2015. The Company’s major foreign jurisdictions are Brazil, Canada, China, France, Germany, Italy, Mexico, and Poland. The Company is no longer subject to income tax examinations in major foreign jurisdictions for years prior to 2020 with the exception of Canada which is open for taxable years ending in 2016 forward.
During the next twelve months, it is reasonably possible that, as a result of audit settlements and the completion of current examinations, the Company may decrease the amount of its gross unrecognized tax benefits by approximately $9,310, all of which, if recognized, would impact the effective tax rate.
The Company classifies all income tax related interest and penalties as income tax expense. The Company has liabilities of $209 and $194 recorded as of December 31, 2025 and 2024, respectively, for tax related interest and penalties on its consolidated balance sheets.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 22, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 25, 2019 | |
| 2017 | Feb 20, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 23, 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.