Cushman & Wakefield Ltd.CWK
Cushman & Wakefield Ltd. Income Taxes Disclosure
Note 14: Income Taxes
Cushman & Wakefield Ltd. is a Bermuda exempted company limited by shares and is not considered to be a tax resident in any other jurisdiction or country. The significant components of earnings (loss) before income taxes and the provision for income taxes were as follows (in millions):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| United States | $ | (48.5) | $ | 32.8 | $ | (116.8) | |||||
| Other countries | 162.7 | 143.0 | 86.8 | ||||||||
Earnings (loss) before income taxes | $ | 114.2 | $ | 175.8 | $ | (30.0) | |||||
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| United States federal: | |||||||||||
| Current | $ | 4.9 | $ | 28.9 | $ | 10.5 | |||||
| Deferred | (24.5) | (32.2) | (44.0) | ||||||||
| Total United States federal income taxes | (19.6) | (3.3) | (33.5) | ||||||||
| United States state and local: | |||||||||||
| Current | 10.6 | 7.0 | 7.5 | ||||||||
| Deferred | (7.5) | (3.8) | (5.9) | ||||||||
| Total United States state and local income taxes | 3.1 | 3.2 | 1.6 | ||||||||
| All other countries: | |||||||||||
| Current | 55.9 | 39.9 | 39.8 | ||||||||
| Deferred | (13.4) | 4.7 | (2.5) | ||||||||
| Total all other countries income taxes | 42.5 | 44.6 | 37.3 | ||||||||
| Total provision for income taxes | $ | 26.0 | $ | 44.5 | $ | 5.4 | |||||
In 2025, we adopted the expanded disclosure requirements under ASU 2023-09 related to the effective tax rate reconciliation. We elected a prospective approach, applying the new guidance beginning with the year ended December 31, 2025 and for all future periods. Differences between income tax expense reported for financial reporting purposes and tax expense computed based upon the application of the United States federal tax rate to the reported earnings (loss) before income taxes were as follows (in millions):
Reconciliation of Effective Tax Rate | Year Ended December 31, 2025 | |||||||
Amount | Percentage | |||||||
U.S. federal statutory tax rate | $ | 24.0 | 21.0 | % | ||||
Domestic tax effects | ||||||||
Changes in valuation allowances | (5.0) | (4.4) | % | |||||
Tax credits | ||||||||
Foreign tax credits | (4.1) | (3.6) | % | |||||
Research and development | (1.8) | (1.6) | % | |||||
| Other | (0.4) | (0.4) | % | |||||
Nontaxable or nondeductible items | ||||||||
Compensation | 2.7 | 2.4 | % | |||||
Meals and entertainment | 1.8 | 1.6 | % | |||||
Other | 1.2 | 1.1 | % | |||||
Effect of cross-border tax laws | ||||||||
Foreign derived intangible income | (2.0) | (1.8) | % | |||||
Other | 0.5 | 0.4 | % | |||||
State and local income taxes, net of federal income tax effect(1) | 0.9 | 0.8 | % | |||||
Other adjustments | 0.2 | 0.2 | % | |||||
Reconciliation of Effective Tax Rate (continued) | Year Ended December 31, 2025 | |||||||
Amount | Percentage | |||||||
Foreign tax effects | ||||||||
| United Kingdom | ||||||||
| Changes in valuation allowances | (17.1) | (15.0) | % | |||||
| Nontaxable or nondeductible items | ||||||||
| Compensation | 5.0 | 4.4 | % | |||||
| Other | 1.2 | 1.1 | % | |||||
Deferred tax and other adjustments | 2.6 | 2.3 | % | |||||
| Foreign tax rate differential | 2.1 | 1.8 | % | |||||
| Australia | ||||||||
| Changes in valuation allowances | (9.2) | (8.1) | % | |||||
| Foreign tax rate differential | 2.7 | 2.4 | % | |||||
| Other | (0.7) | (0.6) | % | |||||
| Canada | ||||||||
| Withholding tax | 1.2 | 1.1 | % | |||||
| Other | 0.6 | 0.5 | % | |||||
| China | 1.3 | 1.1 | % | |||||
| Germany | ||||||||
| Changes in valuation allowances | 3.8 | 3.3 | % | |||||
| Foreign tax rate differential | (1.3) | (1.1) | % | |||||
| Other | 0.8 | 0.7 | % | |||||
| India | ||||||||
| Withholding tax | 3.1 | 2.7 | % | |||||
| Other | 1.3 | 1.1 | % | |||||
| Japan | ||||||||
| Foreign tax rate differential | 3.1 | 2.7 | % | |||||
| Belgium | ||||||||
| Changes in valuation allowances | (1.7) | (1.5) | % | |||||
| Other | 0.5 | 0.4 | % | |||||
| Brazil | ||||||||
| Changes in valuation allowances | (1.2) | (1.1) | % | |||||
| Other | 0.5 | 0.4 | % | |||||
| Cayman Islands | ||||||||
| Foreign tax rate differential | (1.4) | (1.2) | % | |||||
| Italy | 1.4 | 1.2 | % | |||||
| Mexico | 1.5 | 1.3 | % | |||||
| Poland | ||||||||
| Changes in valuation allowances | (1.5) | (1.3) | % | |||||
Deferred tax and other adjustments | 2.0 | 1.8 | % | |||||
| Other | 2.8 | 2.5 | % | |||||
| Singapore | ||||||||
| Changes in valuation allowances | 2.8 | 2.5 | % | |||||
Nontaxable or nondeductible items | ||||||||
| Intra-regional expense allocation | 1.4 | 1.2 | % | |||||
| Other | 1.2 | 1.1 | % | |||||
| Withholding tax | 1.4 | 1.2 | % | |||||
| Other | (0.6) | (0.5) | % | |||||
| Other foreign jurisdictions | 0.7 | 0.6 | % | |||||
Changes in unrecognized tax benefits | (2.3) | (2.0) | % | |||||
Provision for income taxes / Effective tax rate | $ | 26.0 | 22.8 | % | ||||
(1) States taxes in Texas, North Carolina, California and Virginia represent greater than 50% of the tax expense effect in this category.
| Year Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
Reconciliation of Effective Tax Rate | ||||||||
Earnings (loss) before income taxes | $ | 175.8 | $ | (30.0) | ||||
| Taxes at the statutory rate | 36.9 | (6.3) | ||||||
| Adjusted for: | ||||||||
| State taxes, net of the federal benefit | 1.8 | 0.2 | ||||||
| Other permanent nondeductible items | 44.0 | 13.4 | ||||||
| Foreign tax rate differential | 7.4 | (2.6) | ||||||
| Change in valuation allowance | (31.7) | 9.4 | ||||||
| Impact of repatriation | (10.3) | (0.2) | ||||||
| Uncertain tax positions | 0.4 | (13.1) | ||||||
| Deferred tax inventory adjustment | (9.9) | 6.5 | ||||||
| Tax credits | (5.5) | (3.5) | ||||||
| Other, net | 11.4 | 1.6 | ||||||
| Provision for income taxes | $ | 44.5 | $ | 5.4 | ||||
The parent company is domiciled in Bermuda and prior to the Redomiciliation in 2025, the parent company was domiciled in the U.K. The statutory tax rate in the U.S. was 21.0% for years ended December 31, 2025, 2024 and 2023. Although our parent company is domiciled outside of the U.S., we have historically used the U.S. statutory tax rate as the Company generates approximately 70% of total revenue in the U.S. and the majority of our investors are U.S.-based. By contrast, Bermuda has no revenue. Furthermore, the majority of our industry peers are U.S.-based companies with reconciliations also utilizing 21.0%. As a result, we believe reconciling our effective tax rate from 21.0% is more meaningful for investors and improves comparability with our peers.
The Organization for Economic Co-Operation and Development (“OECD”) has directed its 38 member countries to act to prevent what it refers to as base erosion and profit shifting. The OECD announced a consensus around further changes in traditional international tax principles to address, among other things, the perceived need for a minimum global effective tax rate of 15% (“Pillar Two”). On July 11, 2023, following the Pillar Two directive, the U.K. enacted legislation to transpose the Pillar Two directive into domestic law for years beginning after December 31, 2023. Similarly, on December 27, 2023, Bermuda enacted the Bermuda Corporate Income Tax Act 2023 in response to Pillar Two, which became effective for tax years starting on January 1, 2025. Other OECD countries, as well as countries not in the OECD, have taken similar actions to propose and implement Pillar Two legislation, pursuant to the directive. We have assessed the impact of the Pillar Two laws and identified certain jurisdictions in which Pillar Two impacts exist, however, this did not have a material impact on the Company’s financial position, income taxes or results of operations for the years ended December 31, 2025 or 2024.
Income taxes paid, net of refunds, during the year were as follows (in millions):
| 2025 | |||||
U.S. Federal | $ | 12.9 | |||
U.S. State | 10.1 | ||||
Foreign | 36.3 | ||||
Total | $ | 59.3 | |||
Income taxes paid, net of refunds, by jurisdiction during the year were as follows (in millions):
| 2025 | |||||
| United States | $ | 23.0 | |||
| India | 7.4 | ||||
Japan | 6.3 | ||||
Canada | 3.9 | ||||
| United Kingdom | 3.6 | ||||
All other jurisdictions | 15.1 | ||||
Total | $ | 59.3 | |||
The tax effects of temporary differences that gave rise to deferred tax assets and liabilities were as follows (in millions):
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Deferred tax assets | ||||||||
| Liabilities | $ | 132.0 | $ | 143.7 | ||||
| Property, plant and equipment | 2.4 | 7.0 | ||||||
| Deferred expenditures | 142.4 | 154.6 | ||||||
| Employee benefits | 107.4 | 103.4 | ||||||
| Tax losses / credits | 166.3 | 179.3 | ||||||
| Intangible assets | 13.4 | 13.3 | ||||||
Income recognition | 19.2 | — | ||||||
| Other | 2.4 | — | ||||||
| Deferred tax assets | 585.5 | 601.3 | ||||||
| Less: valuation allowance | (155.1) | (167.7) | ||||||
| Net deferred tax assets | $ | 430.4 | $ | 433.6 | ||||
| Deferred tax liabilities | ||||||||
| Intangible assets | $ | (239.4) | $ | (235.6) | ||||
| Right-of-use asset | (55.8) | (62.9) | ||||||
Income recognition | — | (25.5) | ||||||
| Other | — | (29.1) | ||||||
| Total deferred tax liabilities | $ | (295.2) | $ | (353.1) | ||||
| Net deferred tax assets | $ | 135.2 | $ | 80.5 | ||||
The Company had total valuation allowances of $155.1 million and $167.7 million as of December 31, 2025 and 2024, respectively, as it was determined that it was more likely than not that certain deferred tax assets may not be realized. These valuation allowances relate to tax loss carryforwards, other tax attributes and temporary differences that are generally available to reduce future tax liabilities in jurisdictions including but not limited to the U.K., Australia, Singapore, the U.S., Poland and Brazil.
The total amount of gross unrecognized tax benefits was $82.2 million and $17.8 million as of December 31, 2025 and 2024, respectively. The increase in current period tax positions was primarily driven by tax positions on U.S. interest carryforwards, and as a result of the Redomiciliation in 2025, there were certain net operating losses in certain jurisdictions, primarily Germany, which we believe are not more likely than not to be available to offset future taxable income. These net operating losses are unrecognized in our deferred tax assets and are presented in the uncertain tax positions table below. Upon future utilization of these net operating losses, we will recognize the associated uncertain tax position in the balance sheet. The increase in prior period tax positions relates to a return to provision adjustment on U.S. interest carryforwards. It is reasonably possible that unrecognized tax benefits may decrease by $0.6 million during the next twelve months due to the lapsing in the statute of limitations. The Company had accrued interest and penalties of $10.0 million and $10.1 million as of December 31, 2025 and 2024, respectively, net of federal and state income tax benefits as applicable. The provision for income taxes includes a benefit for interest and penalties of $0.2 million, an expense of $1.8 million and a benefit of $3.5 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Changes in the Company’s unrecognized tax benefits are (in millions):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Beginning of year | $ | 17.8 | $ | 19.6 | $ | 28.6 | |||||
| Increases from prior period tax positions | 23.6 | 0.2 | 3.3 | ||||||||
| Decreases from prior period tax positions | (0.5) | (0.6) | (1.7) | ||||||||
| Decreases from statute of limitation expirations | (1.7) | (0.8) | (10.7) | ||||||||
| Increases from current period tax positions | 43.6 | 0.1 | 0.1 | ||||||||
| Decreases relating to settlements with taxing authorities | (0.6) | (0.7) | — | ||||||||
| End of year | $ | 82.2 | $ | 17.8 | $ | 19.6 | |||||
The Company is subject to income taxation in various jurisdictions around the world. Generally, the Company’s open tax years include those from 2008 to the present, although audits by taxing authorities for more recent years have been completed or are in process in several jurisdictions. As of December 31, 2025, the Company was under examination by taxing authorities in the U.S., Germany, Belgium, Poland, India, Japan, Philippines, Singapore, Malaysia, Thailand and Vietnam.
As of December 31, 2025 and 2024, the Company had accumulated $11.7 billion and $11.1 billion of undistributed earnings, respectively. As of December 31, 2025 and 2024, the Company had a deferred tax liability of $1.8 million and $1.7 million, respectively, recorded for repatriation of earnings not deemed to be indefinitely reinvested. The deferred tax liability relates to income taxes and withholding taxes on potential future distributions of cash balances in excess of working capital requirements. We believe our policy of reinvesting earnings of foreign subsidiaries does not materially impact our liquidity.
As of December 31, 2025 and 2024, the Company had available operating loss carryforwards of $158.4 million and $165.9 million, respectively, and foreign tax credit carryforwards of $7.9 million and $14.0 million, respectively. Both the operating loss carryforwards and the foreign tax credit carryforwards will begin to expire in 2026. The Company also had U.S. interest expense disallowance carryforwards of $120.2 million and $143.0 million as of December 31, 2025 and 2024, respectively, which have an indefinite carryforward.
Valuation allowances have been provided regarding the tax benefit of certain tax loss carryforwards, other attributes and temporary differences, for which it has been concluded that it is more likely than not that the deferred tax asset will not be realized. The Company assesses both positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets, including an analysis of cumulative losses or income in recent years, as well as projections of future taxable income and potential tax planning strategies.
In 2025, the Company had changes in its valuation allowances for deferred tax assets in various jurisdictions, resulting in a net decrease of $12.6 million. The decrease was primarily driven by the Company’s derecognition of net operating loss carryforwards in Germany and related valuation allowance resulting from the Redomiciliation and the release of valuation allowances in the U.K. on certain deferred tax assets, partially offset by changes in temporary tax adjustments primarily in the U.K.
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.