Global Business Travel Group, Inc.GBTG
Global Business Travel Group, Inc. Income Taxes Disclosure
Income Taxes
As discussed in note 1 – Business Description and Basis of Presentation and note 7 - Certain Corporate Transactions, GBTG, a Delaware corporation and U.S. tax resident, entered into a series of transactions that eliminated the Up-C Structure on July 10, 2023, and resulted in GBTG acquiring full economic ownership of GBT JerseyCo. GBT
JerseyCo’s U.S. tax partnership status was terminated as a result of the Corporate Simplification, and it is now classified as a single member LLC.
Prior to the Corporate Simplification, GBTG owned approximately 16% of GBT JerseyCo and, as a U.S. tax resident shareholder, recognized certain deferred tax assets and liabilities in respect of its proportionate interest in GBT JerseyCo. As a direct result of the Corporate Simplification, 100% of GBT JerseyCo's deferred tax assets and liabilities now flow through to GBTG, in proportion to its increased economic ownership of GBT JerseyCo. These deferred tax items relate primarily to temporary differences arising in GBTG's foreign branches and anticipated future U.S. taxes on branch income which will bear reduced foreign tax credits until the foreign branches NOL carryforwards, which will shield local taxation, but not U.S. taxation, are fully utilized.
A net deferred tax charge of $76 million was recorded within equity during 2023 as a result of the increased ownership and the partnership termination as the entire amount arose as a direct consequence of the Corporate Simplification.
The following table summarizes the Company’s domestic (U.S.) and foreign results (non-U.S.) before income taxes and share of income (losses) from equity method investments.
| Year ended December 31, | ||||||||||||||||||||
| (in $ millions) | 2024 | 2023 | 2022 | |||||||||||||||||
| Domestic | $ | (3) | $ | (37) | $ | (129) | ||||||||||||||
| Foreign | (68) | (108) | (158) | |||||||||||||||||
| Loss before income taxes and share of losses from equity method investments | $ | (71) | $ | (145) | $ | (287) | ||||||||||||||
The components of (provision for) benefit from income taxes consist of the following:
| Year ended December 31, | ||||||||||||||||||||
| (in $ millions) | 2024 | 2023 | 2022 | |||||||||||||||||
| Current taxes: | ||||||||||||||||||||
| Domestic | $ | (11) | $ | (14) | $ | — | ||||||||||||||
| Foreign | (21) | (7) | (4) | |||||||||||||||||
| Current income tax expense | (32) | (21) | (4) | |||||||||||||||||
| Deferred taxes: | ||||||||||||||||||||
| Domestic | (35) | 34 | 35 | |||||||||||||||||
| Foreign | 1 | (4) | 30 | |||||||||||||||||
| Deferred tax (charge) benefit | (34) | 30 | 65 | |||||||||||||||||
| (Provision for) benefit from income taxes | $ | (66) | $ | 9 | $ | 61 | ||||||||||||||
The table below sets forth a reconciliation of amounts computed by applying the U.S. federal statutory income tax rate of 21% to loss before income taxes to (provision for) benefit from income taxes for the years ended December 31, 2024, 2023 and 2022 .
| Year ended December 31, | ||||||||||||||||||||
| (in $ millions, except percentages) | 2024 | 2023 | 2022 | |||||||||||||||||
| Statutory tax rate | 21.00% | 21.00% | 21.00% | |||||||||||||||||
| Tax benefit at statutory tax rate | $ | 15 | $ | 31 | $ | 60 | ||||||||||||||
| Changes in taxes resulting from: | ||||||||||||||||||||
| Foreign branch accounting /Impact of Up-C structure | (28) | 7 | (4) | |||||||||||||||||
| Income not subject to tax | 1 | 1 | 3 | |||||||||||||||||
| Equity-based compensation | (4) | (5) | (3) | |||||||||||||||||
| Fair value movement on earnout and warrant derivative liabilities | (14) | 3 | 1 | |||||||||||||||||
| Transaction costs | (10) | (3) | (3) | |||||||||||||||||
| Other expenses not deductible for tax | (5) | (2) | (10) | |||||||||||||||||
| Minimum taxes | (8) | (4) | — | |||||||||||||||||
| Local, state, and withholding taxes | (1) | (5) | 7 | |||||||||||||||||
| Change in valuation allowance | (2) | (17) | (11) | |||||||||||||||||
| Change in enacted tax rates | 6 | — | — | |||||||||||||||||
| Rate differential in the United Kingdom | — | — | 6 | |||||||||||||||||
| Foreign tax rate differential | 3 | 3 | 1 | |||||||||||||||||
| Return to provision adjustment | (12) | 1 | 13 | |||||||||||||||||
| Tax settlement and uncertain tax positions | (8) | — | 3 | |||||||||||||||||
| Other, net | 1 | (1) | (2) | |||||||||||||||||
| (Provision for) benefit from income taxes | $ | (66) | $ | 9 | $ | 61 | ||||||||||||||
| Effective tax rate | 92.96% | 6.32% | 21.26% | |||||||||||||||||
The Company’s effective tax rate for the year ended December 31, 2024 was significantly higher than the statutory rate of 21% primarily due to expenses not deductible for taxes.
The Company’s effective tax rate for the year ended December 31, 2023 was lower than the statutory tax rate of 21% primarily due to changes in valuation allowances and expenses not deductible for taxes.
The Company’s effective tax rate for the year ended December 31, 2022 was broadly in line with respective statutory tax rate.
The significant components of the Company’s deferred tax assets and liabilities are as follows:
| As of December 31, | ||||||||||||||
| (in $ millions) | 2024 | 2023 | ||||||||||||
| Deferred tax assets: | ||||||||||||||
| Net operating loss carryforwards | 339 | $ | 396 | |||||||||||
| Pension liability | 68 | 79 | ||||||||||||
| Interest expense deduction restriction | 64 | 61 | ||||||||||||
| Operating lease liabilities | 26 | 25 | ||||||||||||
| Equity-based compensation | 20 | 28 | ||||||||||||
| Property and equipment | 15 | 17 | ||||||||||||
| Accrued liabilities | 35 | 26 | ||||||||||||
| Goodwill | 166 | 180 | ||||||||||||
Other intangible assets | 95 | 70 | ||||||||||||
| Other | 3 | 3 | ||||||||||||
| Valuation allowance | (149) | (146) | ||||||||||||
| Deferred tax assets | 682 | 739 | ||||||||||||
| Netted against deferred tax liabilities | (414) | (458) | ||||||||||||
| Deferred tax assets as presented in the consolidated balance sheets | $ | 268 | $ | 281 | ||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Foregone foreign branch/deferred tax assets | $ | (288) | $ | (299) | ||||||||||
| Other intangible assets | (122) | (136) | ||||||||||||
| Operating lease ROU assets | (21) | (18) | ||||||||||||
| Property and equipment | (4) | (1) | ||||||||||||
| Goodwill | (2) | (4) | ||||||||||||
| Other | (13) | (5) | ||||||||||||
| Deferred tax liabilities | (450) | (463) | ||||||||||||
| Netted against deferred tax assets | 414 | 458 | ||||||||||||
| Deferred tax liabilities as presented in the consolidated balance sheets | $ | (36) | $ | (5) | ||||||||||
The Company recognizes deferred taxes on the undistributed earnings of foreign subsidiaries, as these earnings are not deemed to be indefinitely reinvested. Foreign deferred taxes liabilities of approximately $3 million and $3 million as of December 31, 2024, and 2023 , respectively, have been provided on these earnings.
The Company has net operating loss (“NOL”) carryforwards related to its global operations of approximately $1,330 million, of which $1,296 million have an indefinite life. The remaining NOL carryforwards will expire as follows:
(in $ millions) | Amount | |||||||
| 2025-2029 | $ | 10 | ||||||
| 2030-2034 | 21 | |||||||
| 2035-2044 | 3 | |||||||
As of December 31, 2024 and 2023 , the Company had valuation allowance on its deferred tax assets of $149 million and $146 million, respectively, that is related primarily to unrealized NOLs. As of December 31, 2024, a valuation allowance has been created against deferred tax assets relating to approximately $419 million of the total gross losses, where the Company believes it is less likely that it will be able to utilize these assets in the future. For the deferred tax assets related to remaining NOLs against which there is no valuation allowance, the Company believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize these deferred tax assets.
Many jurisdictions are introducing or have recently introduced tax legislation that aims to restrict the tax deduction of expenditure in certain circumstances and to impose minimum taxation in an attempt to raise taxes (e.g. OECD’s Base Erosion and Profit Shifting ("BEPS") measures and the U.S. Inflation Reduction Act ("IRA")). The Company does not expect a material impact from the implementation of this legislation but continues to monitor and assess any future impacts.
As of December 31, 2024 and 2023, the Company has accrued for a tax liability of $16 million and $11 million, respectively, associated with uncertain tax positions, including interest and penalties thereon, arising from differences between amounts recorded in the consolidated financial statements and amounts expected to be included in tax returns. The majority of uncertain tax positions are under discussions with tax authorities and the Company does not believe that the outcome of current and future examinations will have a material impact on its consolidated financial statements. The movement of uncertain tax position liability is as follows:
| As of December 31, | ||||||||||||||||||||
(in $ millions) | 2024 | 2023 | 2022 | |||||||||||||||||
| Balance, beginning of the year | $ | 11 | $ | 4 | $ | 7 | ||||||||||||||
| Increases to tax positions related to the current year | 8 | 8 | 1 | |||||||||||||||||
| Decrease in tax positions related to prior years | — | (1) | — | |||||||||||||||||
| Release due to expiry of statute of limitations | (2) | — | (4) | |||||||||||||||||
| Foreign exchange movement | (1) | — | — | |||||||||||||||||
| Balance, end of the year | $ | 16 | $ | 11 | $ | 4 | ||||||||||||||
There were no settlements of uncertain tax position liability during any of the years presented. As of December 31, 2024, the Company does not expect the unrecognized tax benefits to significantly increase or decrease within the next twelve months.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits as part of the provision for income taxes in its consolidated statement of operations. During the year ended December 31, 2024, the Company accrued $3 million of interest and penalties. There were no material amounts of interest or penalty charged (credited) to the Company’s consolidated statements of operations for the years ended December 31, 2023 and 2022.
The Company is subject to taxation in various countries in which the Company operates. As of December 31, 2024, tax years for 2015 through 2024 are open to examination by the tax authorities in the major tax jurisdictions, mainly 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.