DIGITAL REALTY TRUST, INC. Income Taxes Disclosure

12. Income Taxes

Digital Realty Trust, Inc. has elected to be treated and believes that it has been organized and has operated in a manner that has enabled it to qualify as a REIT for U.S. federal income tax purposes. As a REIT, Digital Realty Trust, Inc. is generally not subject to corporate level U.S. federal income taxes on taxable income distributed currently to its stockholders. Since inception, Digital Realty Trust, Inc. has distributed at least 100% of its taxable income annually. As such, no provision for U.S. federal income taxes has been included in the Company’s accompanying Consolidated Financial Statements for the years ended December 31, 2025, 2024 and 2023.

The Operating Partnership is a partnership and is generally not required to pay U.S. federal income tax. Instead, taxable income is allocated to its partners, who include such amounts on their U.S. federal income tax returns. As such, no provision for U.S. federal income taxes has been included in the Operating Partnership’s accompanying Consolidated Financial Statements.

We have elected taxable REIT subsidiary (“TRS”) status for some of our consolidated subsidiaries. In general, a TRS may provide services that would otherwise be considered impermissible for REITs to provide and may hold assets that REITs cannot hold directly. Income taxes for TRS entities were accrued, as necessary, for the years ended December 31, 2025, 2024 and 2023.

For our TRS entities and foreign subsidiaries that are subject to U.S. federal, state, local and foreign income taxes, deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance for deferred tax assets is provided if we believe it is more likely than not that the deferred tax asset may not be realized, based on available evidence at the time the determination is made. An increase or decrease in the valuation allowance that results from the change in circumstances that causes a change in our judgment about the realizability of the related deferred tax asset is included in the income statement. Deferred tax assets (net of valuation allowance) and liabilities for our TRS entities and foreign subsidiaries were accrued, as necessary, for the years ended December 31, 2025, 2024 and 2023.

Income (loss) from continuing operations before income taxes is attributable to the following geographic locations (in thousands):

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Income tax expense (benefit) from continuing operations consists of the following components (in thousands):

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The reconciliation of the tax provision at the U.S. federal statutory rate to income tax expense is as follows (in thousands):

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Income taxes paid (net of refunds) consist of the following components (in thousands):

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Income taxes paid (net of refunds) exceeded 5% of total in the following jurisdictions (in thousands):

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As of December 31, 2025 and 2024, we had deferred tax liabilities net of deferred tax assets of approximately $1,110.9 million and $1,081.1 million, respectively, primarily related to our foreign properties, classified within Other assets (deferred tax assets) and separately stated Deferred tax liabilities in the consolidated balance sheets. The majority of our net deferred tax liability relates to differences between foreign tax basis and book basis of the assets acquired in the Teraco Acquisition in August 2022 and Interxion Combination in March 2020. The valuation allowance against the deferred tax assets as of December 31, 2025 and 2024 relate primarily to net operating loss carryforwards, nondeductible interest expense carryforwards and hybrid attributes that we do not expect to utilize attributable to certain foreign jurisdictions.

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Deferred income tax assets and liabilities as of December 31, 2025 and 2024 were as follows (in thousands):

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A reconciliation of the beginning and ending amount of unrecognized tax benefits are as follows (in thousands):

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There is approximately $19 million of unrecognized tax benefit that if recognized would affect the effective tax rate.

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We recognize interest and penalties related to unrecognized tax benefits within income tax expense in the consolidated statements of operations. During the year ended December 31, 2025, we recorded approximately $4 million of interest and penalties through the income tax provision, prior to any reversals for lapses of statutes of limitations and settlements. As of the year ended December 31, 2025, we had accumulated interest and penalties of approximately $5 million attributable to the unrecognized tax benefits.

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As of December 31, 2025, we are under examination for taxable year ended 2021 within the United States. Additionally, we are under examination for various taxable years ended 2017 onward within various foreign jurisdictions.

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As a result of operating as a REIT, we conduct business through domestic and foreign TRSs, as well as other foreign subsidiaries and foreign corporate joint ventures. For foreign subsidiaries, no deferred tax liability has been recorded on potential basis difference as the Company expects any U.S. federal tax liability to be immaterial. We continue to assess foreign withholding taxes but do not expect future distributions to trigger significant withholding tax liabilities. The amount of the unrecognized deferred tax liabilities is not practicably determinable due to ongoing decisions regarding future distribution treatment.