EURONET WORLDWIDE, INC. Income Taxes Disclosure

(15) Income Taxes

The sources of income before income taxes for the years ended December 31, 2025, 2024 and 2023 are presented as follows:

The Company's income tax expense for the years ended December 31, 2025, 2024 and 2023 consisted of the following:

Beginning in 2025 annual reporting, we adopted ASU 2023-09 prospectively. See Note 3 – Summary of Significant Accounting Policies –Recently Adopted Accounting Pronouncements for additional details on the adoption of ASU 2023-09. A reconciliation of the U.S. federal statutory income tax rate to our effective tax rate pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows (in millions, except for percentages):

The following is a reconciliation of the federal statutory income tax rates of 21% to the effective income tax rate for the years ended December 31, 2024, and 2023:

We calculate our provision for federal, state and foreign income taxes based on current tax law.

Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirement of ASU 2023-09 for the year ended December 31, 2025 is as follows (in millions):

The tax effect of temporary differences and carryforwards that give rise to deferred tax assets and liabilities from continuing operations are as follows:

Net deferred tax assets of $61.9 million and $25.3 million as of December 31, 2025 and 2024, respectively, are recorded within "Other assets" on the Consolidated Balance Sheet.

Subsequently recognized tax benefits relating to the valuation allowance for deferred tax assets as of December 31, 2025 are expected to be allocated to income taxes in the Consolidated Statements of Operations. As of December 31, 2025 and 2024, the Company's foreign tax loss carryforwards were $193.8 million and $183.3 million, respectively, and U.S. state tax loss carryforwards were $58.2 million and $81.0 million, respectively.

As of December 31, 2025 and 2024, the Company has U.S. foreign tax credit carryforwards of $43.6 million and $57.1 million respectively, which are largely not expected to be utilized in future periods.

In assessing the Company's ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowances, as of December 31, 2025.

As of December 31, 2025, the Company had foreign tax net operating loss carryforwards of $193.8 million, which will expire as follows:

In addition, the Company's state tax net operating loss carryforwards of $58.2 million will expire periodically from 2026 through 2044, U.S. foreign tax credit carryforwards of $43.6 million will expire periodically from 2027 through 2034 and U.S. federal research and expenditure credit carryforwards of $1.9 million will expire periodically from 2034 through 2044.

The Company has not provided additional deferred taxes with respect to items such as certain foreign exchange gains or losses, foreign withholding taxes or additional state taxes, if any, on undistributed earnings attributable to foreign subsidiaries and it is not practical to determine the income tax liability that would be payable if such earnings were not reinvested indefinitely. Gross undistributed earnings reinvested indefinitely in foreign subsidiaries aggregated approximately $2,987.3 million as of December 31, 2025.

Based upon the current Organization for Economic Co-operation and Development (OECD) rules and administrative guidance, as well as the related legislation of those countries which has been enacted to date, the Company does not anticipate being subject to material minimum foreign taxes. The Company is continuing to monitor the potential impact of the Pillar Two proposals for a minimum effective tax rate and related developments on our Consolidated Financial Statements and related disclosures, including eligibility for any transitional safe harbor rules.

Accounting for uncertainty in income taxes

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2025 and 2024 is as follows:

As of December 31, 2025 and 2024, approximately $41.2 million and $36.4 million, respectively, of the unrecognized tax benefits would impact the Company's provision for income taxes and effective income tax rate, if recognized. Total estimated accrued interest and penalties related to the underpayment of income taxes was $7.0 million and $7.1 million as of December 31, 2025 and 2024, respectively.

The Company is subject to taxation in the U.S. and various state and foreign jurisdictions.  The major jurisdictions which remain subject to examination after 2014 include the U.S., Germany, India, and Spain.

It is reasonably possible that the balance of gross unrecognized tax benefits could significantly change within the next twelve months as a result of the resolution of audit examinations and expirations of certain statutes of limitations and, accordingly, materially affect the Company's operating results. At this time, it is not possible to estimate the range of change due to the uncertainty of potential outcomes.