CONSTELLIUM SECSTM
CONSTELLIUM SE Income Taxes Disclosure
NOTE 7 - INCOME TAX
The domestic (France) and foreign components of our income before income tax are as follows:
Year ended December 31, | ||||||
(in millions of U.S. dollars) | 2025 | 2024 | 2023 | |||
Domestic (France) | 202 | 144 | 179 | |||
Foreign | 206 | (9) | 53 | |||
Income before tax | 408 | 135 | 232 | |||
The reconciliation of the French statutory income tax rate to the Group’s effective income tax rate is as follows:
Year ended December 31, | |||||||||
(in millions of U.S. dollars) | 2025 | 2024 | 2023 | ||||||
Income before tax | 408 | 135 | 232 | ||||||
Income tax expense calculated at statutory tax rate | (105) | (25.8)% | (35) | (25.8)% | (60) | (25.8)% | |||
United States | |||||||||
Base Erosion Anti-Abuse Tax | (10) | (2.6)% | (3) | (2.2)% | (3) | (1.3)% | |||
Change in State Effective Tax Rate | — | —% | — | —% | (8) | (3.4)% | |||
Share-based compensation | 1 | 0.2% | 3 | 2.2% | 5 | 2.2% | |||
State and local income tax, net of federal income tax effect | (6) | (1.5)% | (1) | (0.7)% | (2) | (0.9)% | |||
Statutory tax rate difference between France and the United States | 8 | 2.0% | — | —% | 2 | 0.9% | |||
Germany | |||||||||
Valuation Allowances | 1 | 0.2% | (27) | (20.2)% | — | —% | |||
Statutory tax rate difference between France and Germany | — | —% | (2) | (1.5)% | (2) | (0.9)% | |||
Cantonal and local income tax, net of federal income tax effect | — | —% | 3 | 2.2% | 3 | 1.3% | |||
Switzerland | |||||||||
Valuation Allowances | (6) | (1.5)% | (8) | (5.9)% | (4) | (1.7)% | |||
Statutory tax rate difference between France and Switzerland | — | —% | 2 | 1.5% | (2) | (0.9)% | |||
Cantonal and local income tax, net of federal income tax effect | — | —% | (5) | (3.7)% | — | —% | |||
Prior year adjustments | — | —% | — | —% | (5) | (2.2)% | |||
Slovakia | |||||||||
Valuation Allowances | (7) | (1.7)% | — | —% | — | —% | |||
Other | |||||||||
Valuation Allowances | (1) | (0.2)% | — | —% | (3) | (1.3)% | |||
Statutory tax rate difference between France and other jurisdictions | 2 | 0.5% | 1 | 0.7% | 3 | 1.3% | |||
Enactment of new tax laws and rates | (7) | (1.7)% | — | —% | — | —% | |||
Tax credits | 3 | 0.7% | 2 | 1.5% | 2 | 0.9% | |||
Valuation Allowances | — | —% | — | —% | 1 | 0.4% | |||
Nontaxable or nondeductible items | |||||||||
Share-based compensation | (3) | (0.7)% | (3) | (2.2)% | (6) | (2.6)% | |||
Unrecognized Tax Benefits | 1 | 0.2% | 3 | 2.2% | 5 | 2.2% | |||
Investment in Subsidiaries (A) | — | —% | 1 | 0.7% | 11 | 4.7% | |||
Tax audits | — | —% | (1) | (0.7)% | (8) | (3.4)% | |||
Value-added business tax (France only) | (2) | (0.5)% | (2) | (1.5)% | (2) | (0.9)% | |||
Other | (2) | (0.5)% | (3) | (2.2)% | (2) | (0.9)% | |||
Income tax expense at effective income tax rate | (133) | (32.6)% | (75) | (55.6)% | (75) | (32.3)% | |||
(A)For the year ended December 31, 2023, the effect of investment in subsidiaries mainly relates to divestitures that occurred in 2023.
For the years ended December 31, 2025, the effects of the One Big Beautiful Bill Act enacted in July 2025 were fully
included in the Company’s financial statements as well as the French surtax enacted in February 2025 and the German tax rate
changes enacted in July 2025.
The Group has reviewed its corporate structure in light of the introduction of Pillar Two Model Rules in the jurisdictions
where it operates based on the most recent tax filings and financial statements. Based on this assessment, the Group has
determined that it is not liable to Pillar Two “top-up” taxes for the year ended December 31, 2025.
The components of our income tax provision are as follows:
Year ended December 31, | ||||||
(in millions of U.S. dollars) | 2025 | 2024 | 2023 | |||
Domestic (France) | (49) | (28) | (42) | |||
Foreign | (24) | (16) | (16) | |||
Current tax expense | (73) | (44) | (58) | |||
Domestic (France) | (14) | (9) | — | |||
Foreign | (46) | (22) | (17) | |||
Deferred tax (expense) / benefit | (60) | (31) | (17) | |||
Income tax expense | (133) | (75) | (75) | |||
Unrecognized Tax Benefits
As of December 31, 2025, and 2024, and 2023, the total amount of unrecognized benefits that, if recognized, would
affect the effective income tax rate in future periods based on anticipated settlement dates is $16 million, $12 million and $16
million, respectively. Our tax returns for certain past years are still subject to examination by taxing authorities in the various
countries where we operate.
Our reserves for unrecognized tax benefits, as well as reserves for interest and penalties were:
Year ended December 31, | ||||||
(in millions of U.S. dollars) | 2025 | 2024 | 2023 | |||
Unrecognized tax benefits at January 1, (A) | 12 | 16 | 21 | |||
Additions for tax position of the current year | 3 | 2 | 2 | |||
Additions for tax position of prior years | 4 | — | 4 | |||
Reductions for tax positions of prior years (B) | — | (5) | — | |||
Settlements with tax authorities | — | (1) | (9) | |||
Reductions for expiration of statute of limitations | (5) | — | (2) | |||
Translation effect | 2 | — | — | |||
Unrecognized tax benefits at December 31, (A) | 16 | 12 | 16 | |||
(A)Including interest and penalties
(B)Excluding reduction for settlements with tax authorities
Our policy is to record interest and penalties related to unrecognized tax benefits in income tax (benefit) provision on our
consolidated statements of operations. As of December 31, 2025, 2024, and 2023, we accrued for interest and penalties of $0
million, $0 million, and $1 million, respectively.
We conduct business globally and, as a result, file income tax returns in multiple jurisdictions that are subject to
examination by taxing authorities throughout the world. With few exceptions, we are no longer subject to French income tax
examinations for years before 2023. In the US, there are currently no Internal Revenue Service audits in progress for the US
entities but are no longer subject to examination for years prior to 2012. We are currently under audit by German and Slovak
authorities for certain fiscal years. In February 2026, we received notification that a tax examination will begin for two of our
French entities on fiscal years 2023 and 2024.
The Company believes appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all
open years.
Income Tax Paid
Year ended December 31, | ||||||
(in millions of U.S. dollars) | 2025 | 2024 | 2023 | |||
France | (32) | (31) | (14) | |||
United States of America | (7) | (5) | (1) | |||
Czech Republic | (7) | (8) | (7) | |||
Switzerland | (2) | (2) | (2) | |||
Canada | (2) | 1 | (2) | |||
China | — | (2) | (3) | |||
Germany | — | — | (3) | |||
Other | — | — | (1) | |||
Income Tax Paid at December 31, | (50) | (47) | (33) | |||
Deferred Income Taxes
The following table presents our net deferred income tax assets / (liabilities):
At December 31, | ||||
(in millions of U.S. dollars) | 2025 | 2024 | ||
Net deferred income tax assets | 270 | 311 | ||
Net deferred income tax liabilities | (70) | (39) | ||
Net deferred taxes | 200 | 272 | ||
The following table presents the components of deferred income tax assets and liabilities as of December 31, 2025 and
December 31, 2024:
At December 31, | ||||
(in millions of U.S. dollars) | 2025 | 2024 | ||
Deferred income tax assets | ||||
Tax losses carried forward | 259 | 258 | ||
Long term assets | 26 | 35 | ||
Pensions | 71 | 76 | ||
Derivative valuation | — | 10 | ||
Interest carried forward | 31 | 52 | ||
Other (A) | 76 | 54 | ||
Total deferred income tax assets | 463 | 485 | ||
Less: valuation allowance | (82) | (73) | ||
Deferred income tax assets, net of valuation allowance | 381 | 412 | ||
Deferred income tax liabilities | ||||
Long-term assets | (144) | (132) | ||
Inventories | (16) | (8) | ||
Derivatives | (10) | — | ||
Other | (11) | — | ||
Deferred income tax liabilities | (181) | (140) | ||
(A)At December 31, 2025 and 2024, Other deferred income tax assets primarily related to temporary differences arising from provisions
which will become tax-deductible in future periods.
Some deferred tax assets in respect of temporary differences and unused tax losses were recognized without being offset
by deferred tax liabilities. In accordance with the accounting policies described in Note 1 of the Consolidated Financial
Statements (Judgments in applying accounting policies and key sources of estimation uncertainty), a detailed assessment was
performed on net deferred tax asset recovery at December 31, 2025 and 2024, with specific focus on tax jurisdictions with
unused tax losses carried forward. Management considered that the deferred tax assets related to tax losses were not expected to
be recurring and did not challenge the profitable long-term structure of its business model. In addition, tax planning
opportunities are available to increase the taxable profit and the use of the long-term limited and unlimited tax losses.
Management concluded that it was more likely than not that the net deferred tax balance of $200 million and $272 million at
December 31, 2025 and 2024, respectively, would be recoverable.
The following table summarizes changes in valuation allowance:
(in millions of U.S. dollars) | 2025 | 2024 | 2023 | |||
At January 1, | 73 | 41 | 50 | |||
Reduction | (14) | (1) | (19) | |||
Addition | 23 | 33 | 10 | |||
At December 31, | 82 | 73 | 41 | |||
Based on the expected taxable income of the entities, the Group believed that it was more likely than not that a total of
$82 million at December 31, 2025, of unused tax losses and deductible temporary differences, would not be used.
Consequently, a valuation allowance was recognized for the corresponding deferred tax assets.
For the year ended December 31, 2025, the changes in valuation allowance mainly relate to the deferred tax assets of our
operating entities in Slovakia, Germany and Switzerland. Germany and Switzerland continue to have valuation allowance on its
deferred tax assets while Management determined that it was more likely than not that the Slovakia deferred tax assets would
not be used in the foreseeable future. For the year ended December 31, 2024, the changes in valuation allowance mainly relates
to the deferred tax assets of our operating entities in Germany as Management determined that it was more likely than not that
these deferred tax assets would not be used in the foreseeable future. Other significant changes relate to the deferred tax assets
in Switzerland and Mexico. For the year ended December 31, 2023, the changes in valuation allowance mainly related to the
deferred tax assets in Switzerland, Mexico and China.
The tax losses carried forward were $259 million at December 31, 2025 and the associated valuation allowance of $49
million was attributable to the following:
At December 31, 2025 | ||||||||
(in millions of U.S. dollars) | Tax Losses Carried Forward | Valuation Allowance | Carryforward Period | Earliest Year of Expiration | ||||
Net operating loss | ||||||||
United States | 138 | — | Indefinite | |||||
United States | 72 | — | 20 years | 2032 | ||||
France | 5 | (5) | Indefinite | |||||
Mexico | 6 | (6) | 10 years | 2027 | ||||
Germany | 11 | (11) | Indefinite | |||||
Switzerland | 23 | (23) | 7 years | 2028 | ||||
Other | 4 | (4) | > 5 years or indefinite | |||||
Total | 259 | (49) | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
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.