Groupon, Inc.GRPN
Groupon, Inc. Income Taxes Disclosure
INCOME TAXES
The components of pretax income (loss) for the years ended December 31, 2025, 2024 and 2023 were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | (65,613) | $ | 53,852 | $ | 16,285 | |||||||||||
| International | 20,157 | (84,243) | (59,711) | ||||||||||||||
Income (loss) from continuing operations before provision (benefit) for income taxes | $ | (45,456) | $ | (30,391) | $ | (43,426) | |||||||||||
The Provision (benefit) for income taxes for the years ended December 31, 2025, 2024 and 2023 consisted of the following components (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current taxes: | |||||||||||||||||
| U.S. federal | $ | 4,630 | $ | 10,336 | $ | 1,305 | |||||||||||
| State | 1,251 | 2,577 | 2,094 | ||||||||||||||
| International | 32,676 | 8,572 | 4,374 | ||||||||||||||
| Total current taxes | 38,557 | 21,485 | 7,773 | ||||||||||||||
| Deferred taxes: | |||||||||||||||||
| U.S. federal | 34 | 40 | 35 | ||||||||||||||
| State | (7) | 46 | 106 | ||||||||||||||
| International | (2,959) | 4,552 | 1,594 | ||||||||||||||
| Total deferred taxes | (2,932) | 4,638 | 1,735 | ||||||||||||||
Provision (benefit) for income taxes | $ | 35,625 | $ | 26,123 | $ | 9,508 | |||||||||||
For the year ended December 31, 2025, the Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The adoption resulted in enhanced income tax disclosures as presented below.
The items accounting for differences between the income tax provision (benefit) computed at the U.S. federal statutory rate and the Provision (benefit) for income taxes for the year ended December 31, 2025 were as follows (in thousands, except percentages):
| Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
| U.S. federal income tax rate (benefit) provision at statutory rate | $ | (9,546) | 21.0 | % | |||||||
State income taxes, net of federal benefits (1) | 2,002 | (4.4) | % | ||||||||
| State tax credits | 2,100 | (4.6) | % | ||||||||
| Change in valuation allowance - U.S. State | (3,121) | 6.9 | % | ||||||||
| Foreign Tax Effects | |||||||||||
| France | |||||||||||
| Non-deductible stock-based compensation awards | 1,013 | (2.2) | % | ||||||||
| Ireland | |||||||||||
| Change in valuation allowance | 3,277 | (7.2) | % | ||||||||
| Non-deductible interest expense | 2,855 | (6.3) | % | ||||||||
| Local statutory timing differences | (2,503) | 5.5 | % | ||||||||
| Statutory rate difference between Ireland and the United States | 2,331 | (5.1) | % | ||||||||
| FX on non-trade balances | (1,030) | 2.3 | % | ||||||||
| Italy | |||||||||||
| Tax Assessment settlements | 25,259 | (55.6) | % | ||||||||
| Change in valuation allowance | 1,892 | (4.2) | % | ||||||||
| Deductible interest expense | (1,690) | 3.7 | % | ||||||||
| Luxembourg | |||||||||||
| Effects of deferred rate change | 3,685 | (8.1) | % | ||||||||
| Change in valuation allowance | (3,677) | 8.1 | % | ||||||||
| Poland | |||||||||||
| Change in valuation allowance | (1,258) | 2.8 | % | ||||||||
| United Kingdom | |||||||||||
| (Gain) loss on sale of subsidiaries | (1,214) | 2.7 | % | ||||||||
| Group relief adjustment | 790 | (1.7) | % | ||||||||
| Statutory rate difference between the UK and the United States | 433 | (1.0) | % | ||||||||
| Foreign currency | (52) | 0.1 | % | ||||||||
| Other | (46) | 0.1 | % | ||||||||
| Change in valuation allowance - U.S. Federal | (3,255) | 7.2 | % | ||||||||
| Nontaxable or Nondeductible Items | |||||||||||
| Convertible debt extinguishment | 17,024 | (37.5) | % | ||||||||
| Subpart F Income | 2,419 | (5.3) | % | ||||||||
| Non-deductible stock-based compensation expense | 2,091 | (4.6) | % | ||||||||
| Non-deductible or non-taxable items | 68 | (0.1) | % | ||||||||
| Changes in unrecognized tax benefits | (4,222) | 9.3 | % | ||||||||
| Effective tax rate/Provision for income taxes | $ | 35,625 | (78.4) | % | |||||||
(1)State taxes in New York, New Jersey, Illinois and Massachusetts made up the majority (greater than 50%) of the tax effect in this category.
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the items accounting for differences between the income tax provision (benefit) computed at the U.S. federal statutory rate and the Provision (benefit) for income taxes were as follows (in thousands):
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| U.S. federal income tax provision (benefit) at statutory rate | $ | (6,382) | $ | (9,120) | |||||||
Foreign income and losses taxed at different rates (1) | 8,348 | 6,842 | |||||||||
| State income taxes, net of federal benefits, and state tax credits | 6,592 | 3,709 | |||||||||
| Change in valuation allowances | 3,589 | 87,993 | |||||||||
| Effect of income tax rate changes on deferred items | 449 | (104) | |||||||||
| Adjustments related to uncertain tax positions | (1,133) | (5,117) | |||||||||
| Non-deductible stock-based compensation expense | 3,527 | 1,728 | |||||||||
| Tax (windfalls)/shortfalls on stock-based compensation awards | (370) | 1,606 | |||||||||
| Federal research and development credits, net of adjustments | — | — | |||||||||
| Forgiveness of intercompany liabilities | — | (43) | |||||||||
| Tax attribute expiration | — | — | |||||||||
| Asset impairments | — | (82,988) | |||||||||
| Non-deductible or non-taxable items | 8,847 | 5,002 | |||||||||
Convertible debt payoff | 2,656 | — | |||||||||
| Provision (benefit) for income taxes | $ | 26,123 | $ | 9,508 | |||||||
(1)Tax rates in foreign jurisdictions were generally lower than the U.S. federal statutory rate through December 31, 2025. This resulted in an adverse impact to the Provision (benefit) for income taxes in this rate reconciliation for the years ended December 31, 2025, 2024 and 2023 prior to the impact of valuation allowances, due to the net pretax losses from operations in certain foreign jurisdictions with lower tax rates.
Income taxes paid, net of refunds received, summarized by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 are as follows (in thousands):
| Year Ended December 31, | |||||
| 2025 | |||||
| United States - Federal | $ | 4,587 | |||
| United States - State and Local | 1,368 | ||||
| Foreign | |||||
| Italy | 22,599 | ||||
| United Kingdom | 6,020 | ||||
| Czech Republic | 3,438 | ||||
| Poland | (1,585) | ||||
| Other | 344 | ||||
| Total income tax payments | $ | 36,771 | |||
For the years ended December 31, 2024 and 2023, income taxes paid, net of refunds received were $15.5 million and $7.9 million.
The deferred income tax assets and liabilities consisted of the following components as of December 31, 2025 and 2024 (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Accrued expenses and other liabilities | $ | 33,620 | $ | 31,104 | |||||||
| Stock-based compensation | 9,436 | 2,584 | |||||||||
| Net operating loss and tax credit carryforwards | 233,215 | 214,944 | |||||||||
| Property, equipment and software, net | 8,984 | 14,022 | |||||||||
| Intangible assets, net | 22,526 | 20,368 | |||||||||
Right-of-use assets | 647 | 628 | |||||||||
| Investments | 5,756 | 5,802 | |||||||||
| Convertible senior notes | 5,487 | 2,047 | |||||||||
| Unrealized foreign currency exchange losses | 264 | 1,510 | |||||||||
Capitalized research and development costs | 14,278 | 16,259 | |||||||||
| Other | 25 | 274 | |||||||||
| Total deferred tax assets | 334,238 | 309,542 | |||||||||
| Less: Valuation allowances | (306,315) | (286,827) | |||||||||
| Deferred tax assets, net of valuation allowance | 27,923 | 22,715 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Prepaid expenses and other assets | (14,052) | (11,201) | |||||||||
Operating lease obligation | (46) | (31) | |||||||||
| Deferred revenue | (6,242) | (7,330) | |||||||||
| Total deferred tax liabilities | (20,340) | (18,562) | |||||||||
| Net deferred tax asset (liability) | $ | 7,583 | $ | 4,153 | |||||||
We recognize deferred tax assets to the extent that they will be realizable through future reversals of existing taxable temporary differences, through taxable income in carryback years for the applicable jurisdictions or based on projections of future income for those jurisdictions that have achieved sustained profitability. In evaluating the need for a valuation allowance, management considers both positive and negative evidence that could affect its view of the future realization of deferred tax assets and places greater weight on recent and objectively verifiable current information.
For the years ended December 31, 2025 and 2024, we continue to maintain a valuation allowance against substantially all of our U.S. federal and state and foreign deferred tax assets.
Given the Company’s recent history of U.S. taxable earnings, we believe that there is a possibility that within the next twelve months sufficient positive evidence may become available to allow the Company to reach a conclusion that a significant portion of the U.S. federal and state valuation allowance recorded will no longer be needed. The reversal would result in an income tax benefit for the quarterly and annual fiscal period in which the Company releases the valuation allowance. However, the exact timing and amount of the valuation allowance release, if at all, are subject to significant judgment and are dependent on the level of profitability and likelihood of future utilization of attributes that we are able to actually achieve.
We had $14.0 million of federal net operating loss carryforwards as of December 31, 2025 which will begin expiring in 2027. We had $33.5 million of state net operating loss carryforwards as of December 31, 2025, which will begin expiring in 2026. As of December 31, 2025, we had $972.4 million of foreign net operating loss carryforwards, a significant portion of which carry forward for an indefinite period.
We are subject to taxation in the United States, state jurisdictions and foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes and recording the related income tax assets and liabilities. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting
the more-likely-than-not criterion, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.
The following table summarizes activity related to our gross unrecognized tax benefits, excluding interest and penalties, for the years ended December 31, 2025, 2024 and 2023 (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning Balance | $ | 22,424 | $ | 33,599 | $ | 39,172 | |||||||||||
| Increases related to prior year tax positions | 17,187 | 1,450 | — | ||||||||||||||
| Decreases related to prior year tax positions | (762) | (858) | — | ||||||||||||||
| Increases related to current year tax positions | 712 | 658 | 790 | ||||||||||||||
| Decreases based on settlements with taxing authorities | (20,043) | (1,965) | — | ||||||||||||||
| Decreases due to lapse of statute limitations | (643) | (10,234) | (6,743) | ||||||||||||||
| Foreign currency translation | 878 | (226) | 380 | ||||||||||||||
| Ending Balance | $ | 19,753 | $ | 22,424 | $ | 33,599 | |||||||||||
The total amount of unrecognized tax benefits as of December 31, 2025, 2024 and 2023 that, if recognized, would affect the effective tax rate are $12.1 million, $11.9 million and $7.6 million, respectively.
We recognized $0.8 million of interest and penalties benefit and $0.7 million and $0.6 million of interest and penalties expense within on our Consolidated Statements of Operations for the years ended December 31, 2025, 2024 and 2023. Total accrued interest and penalties as of December 31, 2025 and 2024 were $1.1 million and $1.9 million, respectively, and are included within Other non-current liabilities in our Consolidated Balance Sheets.
We are currently under audit by several foreign jurisdictions. It is likely that the examination phase of some of those audits will conclude in the next 12 months. There are many factors, including factors outside of our control, which influence the progress and completion of those audits.
We are subject to claims for tax assessments by foreign jurisdictions. On August 5, 2025, Groupon S.r.l. and the Italian Tax Authority reached an agreement in principle to resolve the Italy 2012 and 2017 Assessments. On December 29, 2025, Groupon S.r.l. and the Italian tax authorities entered into a binding framework agreement that definitively resolves all outstanding tax disputes involving Groupon S.r.l. Under the terms of the agreement, the total settlement amount was approximately $25.3 million (€21.5 million). Of this amount, $10.4 million (€8.9 million) had previously been paid through installment plans. As a result, Groupon S.r.l. paid an additional $14.8 million (€12.6 million) in December 2025, representing the net amount due after accounting for the refund of prior payments. An immaterial additional amount was paid in the first quarter of 2026. Following these payments, the Company considers the matters covered by the Italy 2012 and 2017 Assessments to be effectively settled as of December 31, 2025, and the Company does not expect any further material obligations relating to these assessments.
In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in those operations or remit such earnings in a tax-efficient manner. Additionally, an actual repatriation from our non-U.S. subsidiaries could be subject to foreign and U.S. state income taxes. Aside from limited exceptions for which the related deferred tax liabilities recognized as of December 31, 2025 and 2024 are immaterial, we do not intend to distribute earnings of foreign subsidiaries for which we have an excess of the financial reporting basis over the tax basis of our investments and therefore have not recorded any deferred taxes related to such amounts. The actual tax cost resulting from a distribution would depend on income tax laws and circumstances at the time of distribution. Determination of the amount of unrecognized deferred tax liability related to the excess of the financial reporting basis over the tax basis of our foreign subsidiaries is not practical due to the complexities associated with the calculation.
Enactment of the One Big Beautiful Bill Act
On July 4, 2025, the OBBB Act was enacted into law in the U.S. The OBBB Act introduces significant changes to the federal income tax code, including changes to the deductibility of R&D expenses, bonus depreciation, limitation on interest deductibility, international taxation and minimum tax rules.
We have included the impact of the OBBB Act in our financial statements as of December 31, 2025. This resulted in a benefit to our annual effective tax rate for the year ended December 31, 2025, primarily due to the elimination of the requirement to capitalize and amortize U.S. based R&D expenditures. The application of this provision resulted in favorable cash tax impacts for the 2025 tax year, as more R&D costs were deductible in the current period, reducing taxable income and current tax payments. In addition, the immediate deductibility of US based R&D expenditures reduced our US deferred tax assets that had been recorded under the prior rule requiring capitalization and amortization of those costs. This decrease was offset by a corresponding reduction in our valuation allowance.
We will continue to evaluate the implications of the OBBB Act, including potential state income tax conformity, and will adjust estimates and the impact to our income tax provision as additional guidance is issued.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 10, 2026 | Showing above |
| 2024 | Mar 11, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 18, 2020 | |
| 2018 | Feb 12, 2019 | |
| 2017 | Feb 14, 2018 | |
| 2016 | Feb 15, 2017 | |
| 2015 | Feb 12, 2016 | |
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.