Eve Holding, Inc. Income Taxes Disclosure

Note 16 – Income Taxes

The Company was previously consolidated under the income tax return of the EAH consolidated tax group. For financial reporting purposes of the Company, income tax was calculated using a separate return methodology. Under this method, the Company prepared the financial statements as if it would file separate returns with tax authorities. As a result, the Company’s deferred tax balances and effective tax rate as a stand-alone entity would likely differ significantly from those calculated in the actual consolidated return with EAH.

Following the 2025 Registered Direct Offering, Embraer owns less than 80% of the Company’s outstanding common stock, which under the U.S. tax code, resulted in a tax deconsolidation from EAH. The Company will now begin to file separate tax returns. The tax deconsolidation also terminated the Tax Sharing Agreement (“TSA”) between EAH and the Company and effectuates the Tax Receivable Agreement (“TRA”) between the two parties (collectively, “the Tax Agreements”), which was entered into on May 9, 2022.

Per the terms of the Tax Agreements, for periods in which the Company’s inclusion in the EAH consolidated tax group decreases the tax liability of EAH, tax benefits generated by the Company that are realized by EAH will be recorded in an off-book register and will apply to offset future payments due from the Company to EAH under the TSA. If any tax benefits that have accumulated during the period in which the Company was a member of the EAH consolidated tax group have not been applied to offset payments under the TSA at the time the Company ceases to be a member of the consolidated tax group, such uncompensated tax benefits can be used to offset amounts payable by the Company to EAH under the TRA.

Upon tax deconsolidation, the Company inherits the tax attributes of the entity that has departed from the EAH consolidated tax group. Historically, for U.S. federal income tax purposes, the Company's operating losses were utilized by EAH within its consolidated tax return. Consequently, these tax attributes were not retained by the Company upon tax deconsolidation. The pro-forma net operating loss tax asset, previously recorded on a separate return basis for financial reporting, was therefore written off in 2025. This adjustment is the primary driver for the unfavorable variance presented in the rate reconciliation table under "NOL Write Offs.”

Pursuant to the TRA, the Company will in certain circumstances be required to pay 75% of the net income tax savings realized to EAH as a result of increases in tax basis in the assets or certain of its subsidiaries resulting from the Pre-Closing Restructuring and tax benefits related to entering into the TRA, including tax benefits attributable to payments under the TRA.

Under the separate return methodology, tax loss carryforwards and valuation allowances were reflected in the condensed consolidated financial statements. Upon tax deconsolidation, the tax loss carryforwards and valuation allowance conclusions continue to be appropriate. Finally, under applicable law, the Company will not be permitted to join the filing of a U.S. consolidated federal income tax return with other Embraer subsidiaries for the five-year waiting period.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 for the year ended December 31, 2025, and applied the new disclosure requirements prospectively to the current annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. See Note 16 – Income Taxes in the accompanying notes to the consolidated financial statements for further detail.  

The Company did not incur or pay income taxes in the United States for the year ended December 31, 2025, as it does not have taxable income subject to U.S. federal or state income tax. However, the Company is subject to taxation in Brazil. During the current year, the Company paid $1.3 million, net of refunds, in income taxes to the Government of Brazil in connection with its operations in that jurisdiction.

Our net operating loss carryforward for income tax purposes as of December 31, 2025, after tax deconsolidation from EAH, were approximately $123.8 million before tax effects, generated in 2025. These losses can be carried forward indefinitely for US and may be subject to annual limitations under applicable tax law.

Income before income taxes consisted of the following:

Income taxes consisted of the following:

A reconciliation of the provision for income taxes to the amount computed by applying 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows.

A reconciliation of the statutory U.S. federal tax rate and our effective tax rate is as follows:

The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consisted of the following:

In assessing the realizability of deferred tax assets (“DTA”), 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. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. For Eve Brazil, 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 that the Company will realize the benefits of its deductible differences. The valuation allowance decreased $55.5 million during the year ended December 31, 2025 primarily due to the write-offs of net operating loss for the year. The net operating losses for 2025 and 2024 were generated mainly due to expenditures with R&D projects, administrative expenses and the tax amortization on the step-up. Net operating losses do not expire in both jurisdictions where the Company operates (U.S. and Brazil). 

The Company has no history of tax audits, nevertheless the Company believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits that could result from federal, state and foreign tax audits. The Company regularly assesses the likely outcomes of these audits in order to determine the appropriateness of the tax provision. Open tax years range from fiscal years 2022 to 2025. However, because we are carrying forward income tax attributes, such as net operating losses and tax credits from earlier tax years, these attributes can still be audited when utilized on returns filed in the future. There were no additions, reductions, or settlements of unrecognized tax benefits during 2025. The Company will recognize interest and penalties, if any, related to uncertain tax positions in income tax expense. As of December 31, 2025 no interest or penalties have been accrued due to uncertain tax positions.

Recent Legislation

The One Big Beautiful Bill Act ("the ACT") was enacted into law on July 4, 2025. The ACT provides for modifications to U.S. tax law including changes to interest deductibility, Research and development expenses, bonus depreciation, and various international provisions. The legislation did not have a material impact on our income tax expense or effective income tax rate for the year ended December 31, 2025.