Fluence Energy, Inc.FLNC
Fluence Energy, Inc. Income Taxes Disclosure
Income Taxes
The following table presents the components of income (loss) before income tax (in thousands):
| in thousands | Fiscal Year Ended September 30, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | (121,163) | $ | (33,983) | $ | (100,356) | |||||||||||
| Foreign | 76,091 | 73,556 | 87 | ||||||||||||||
Income (loss) before income taxes | $ | (45,072) | $ | 39,573 | $ | (100,269) | |||||||||||
The major components of income tax expense/(benefit) were as follows:
| in thousands | Fiscal Year Ended September 30, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Current income tax expense: | |||||||||||||||||
| Domestic | $ | 165 | $ | 1,948 | $ | — | |||||||||||
| Foreign | 14,343 | 13,700 | 1,349 | ||||||||||||||
| Deferred income tax expense (benefit): | |||||||||||||||||
| Domestic | — | — | — | ||||||||||||||
| Foreign | 6,293 | (6,719) | 2,541 | ||||||||||||||
| Withholding income tax expense: | |||||||||||||||||
| Domestic | — | — | — | ||||||||||||||
| Foreign | 2,115 | 277 | 659 | ||||||||||||||
Total income tax expense | $ | 22,917 | $ | 9,206 | $ | 4,549 | |||||||||||
The following table summarizes a reconciliation of the U.S. statutory federal income tax rate to the Company’s effective tax rate.
| in thousands | Fiscal Year Ended September 30, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Statutory rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
| State taxes | 2.9 | % | (1.9) | % | 3.1 | % | |||||||||||
Rate change | (34.2) | % | 52.6 | % | (15.5) | % | |||||||||||
| Flow-through losses | (15.2) | % | 3.3 | % | (9.3) | % | |||||||||||
| Foreign rate differential | (13.0) | % | 14.3 | % | 2.2 | % | |||||||||||
| Withholding taxes | (4.7) | % | 0.7 | % | (0.7) | % | |||||||||||
| Valuation allowance | 1.4 | % | (118.6) | % | (12.9) | % | |||||||||||
| Permanent differences | (13.1) | % | (12.2) | % | 7.8 | % | |||||||||||
| U.S. tax on foreign earnings | 2.0 | % | 50.6 | % | — | % | |||||||||||
| Return to provision adjustments | 3.7 | % | 14.2 | % | (1.0) | % | |||||||||||
| Other items, net | (1.6) | % | (0.7) | % | 0.8 | % | |||||||||||
Effective tax rate | (50.8) | % | 23.3 | % | (4.5) | % | |||||||||||
In fiscal year 2025, the effective tax rate differs from the U.S. statutory tax rate of 21% primarily due to profitability in foreign jurisdictions with statutory tax rates higher than the U.S. and continued U.S. pre-tax losses that are fully offset with a valuation allowance.
Deferred income tax is generated by Fluence Energy, Inc. and its foreign subsidiaries and is comprised of the following:
| in thousands | September 30, | ||||||||||
| 2025 | 2024 | ||||||||||
Deferred Tax Assets | |||||||||||
| Inventory | $ | 147,457 | $ | 129,341 | |||||||
| Investment in Fluence Energy, LLC | 311,957 | 333,489 | |||||||||
| Deferred revenue | 35,804 | 27,374 | |||||||||
| Tax loss carryforwards | 66,641 | 47,765 | |||||||||
| Unrealized foreign exchange losses | 5,301 | 5,270 | |||||||||
| Share-based compensation | 3,450 | 3,843 | |||||||||
| Other deferred tax assets | 4,957 | 2,047 | |||||||||
| Total deferred tax assets | 575,569 | 549,129 | |||||||||
| Valuation allowance | (367,323) | (377,218) | |||||||||
Net deferred tax assets | 208,246 | 171,911 | |||||||||
Deferred Tax Liabilities | |||||||||||
| Trade receivables | (8,698) | (20,043) | |||||||||
| Intangible assets | (3,676) | (3,697) | |||||||||
| Accrued and other liabilities | (192,983) | (140,401) | |||||||||
| Unrealized foreign exchange gains | (7,950) | (5,612) | |||||||||
| Other deferred tax liabilities | (423) | (392) | |||||||||
| Total deferred tax liabilities | (213,730) | (170,145) | |||||||||
Total net deferred tax assets (liabilities) | $ | (5,484) | $ | 1,766 | |||||||
As of September 30, 2025 and 2024, the Company did not have material undistributed foreign earnings. The Company has not recorded a deferred tax liability on the undistributed earnings from its foreign subsidiaries, as such earnings are considered to be indefinitely reinvested.
The foreign net operating loss carryforwards as of September 30, 2025 and 2024 are approximately $215.6 million and $186.2 million, respectively. Approximately $20.2 million of the foreign net operating losses will expire between fiscal year 2026 and fiscal year 2035. The federal and state net operating loss carryforwards as of September 30, 2025 and 2024 are approximately $208.9 million ($115.9 million federal and $93.1 million state) and $135.8 million ($51.1 million federal and $84.7 million state), respectively. The federal and state net operating loss carryforwards are attributable to Fluence Energy, Inc., a corporate entity which, upon IPO on November 1, 2021, became the holding company of Fluence Energy, LLC. The federal net operating losses have an unlimited carryforward period. Approximately $82.5 million of state net operating losses will expire between fiscal year 2032 and fiscal year 2045.
As of September 30, 2025 and 2024, the Company had recorded a valuation allowance of $367.3 million and $377.2 million, respectively. In fiscal year 2024, the valuation allowances were recorded against deferred tax assets of the Company’s German, Philippines, Taiwan, and Netherlands subsidiaries, as well as Fluence Energy, Inc. As a holding company, Fluence Energy, Inc. recorded deferred tax assets primarily related to its investment in Fluence Energy, LLC. In fiscal year 2025, the Company maintains that based on the weight of available evidence, including cumulative losses, it is more likely-than-not that the net deferred tax assets of Fluence Energy, Inc. and subsidiaries in Germany, Philippines, Taiwan, and Netherlands will not be realized and recorded a valuation allowance against such deferred tax assets.
The net decrease in the valuation allowance of $9.9 million in fiscal year 2025 is due to a $1.1 million increase recorded through equity, a $11.7 million decrease in valuation allowance related to current year activity in jurisdictions with full valuation allowances of $11.7 million, and a $0.7 million increase related to currency translation adjustments. Further, a future reversal of $2.5 million of the valuation allowance on deferred tax assets as of September 30, 2025, would be accounted for as an increase in equity. For fiscal year 2024, the net increase in the valuation allowance was $5.5 million.
As of September 30, 2025 and 2024, the Company has not recorded any unrecognized tax benefits. All tax jurisdictions remain subject to examination by foreign, federal, and state taxing authorities with the exception of Germany for the tax periods 2018 to 2020 for which the entity was issued a Cancellation Reservation of Review, which permanently closed these periods for audit. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 25, 2025 | Showing above |
| 2024 | Nov 29, 2024 | |
| 2023 | Nov 29, 2023 | |
| 2022 | Dec 14, 2022 | |
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.