Immunovant, Inc.IMVT
Immunovant, Inc. Income Taxes Disclosure
Income Taxes
The loss before income taxes and the related tax provision are as follows (in thousands):
| Years Ended March 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| (Loss) income before income taxes | |||||||||||||||||
| United States | $ | 100,991 | $ | (17,730) | $ | (16,180) | |||||||||||
| Switzerland | (606,288) | (395,119) | (242,518) | ||||||||||||||
| Bermuda | (39) | (100) | (71) | ||||||||||||||
| United Kingdom | (55) | — | — | ||||||||||||||
| Total loss before income taxes | $ | (505,391) | $ | (412,949) | $ | (258,769) | |||||||||||
| Current taxes | |||||||||||||||||
| United States – Federal | $ | — | $ | 880 | $ | 562 | |||||||||||
| United States – State | 215 | 11 | 5 | ||||||||||||||
Total current tax expense | 215 | 891 | 567 | ||||||||||||||
| Deferred tax expense | — | — | — | ||||||||||||||
Total provision for income taxes | $ | 215 | $ | 891 | $ | 567 | |||||||||||
For the year ended March 31, 2026, the Company adopted ASU 2023-09 on a prospective basis. Accordingly, the following table is a reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate for the year ended March 31, 2026 in accordance with the guidance in ASU 2023-09 (amounts in thousands):
Year ended March 31, 2026 | |||||||||||
| Amount | Percent | ||||||||||
| U.S. federal statutory tax rate | $ | (106,132) | 21.00 | % | |||||||
State and local income taxes, net of federal income tax effect (1) | 170 | (0.03) | |||||||||
| Foreign tax effects | |||||||||||
| Switzerland | |||||||||||
| Statutory tax rate difference | 75,786 | (15.00) | |||||||||
| Intercompany reorganization | 138,465 | (27.40) | |||||||||
| Deductible federal taxes | (6,852) | 1.35 | |||||||||
| Change in valuation allowances | (80,199) | 15.87 | |||||||||
Other (2) | (58) | 0.01 | |||||||||
| Effects of cross-border tax laws | |||||||||||
| Foreign loss | (64,511) | 12.76 | |||||||||
| Tax credits | |||||||||||
| Research and development tax credit | (10,748) | 2.13 | |||||||||
| Orphan drug credit | (3,948) | 0.78 | |||||||||
| Change in valuation allowances | 50,376 | (9.97) | |||||||||
| Nontaxable or nondeductible items | |||||||||||
| Section 162(m) | 8,768 | (1.73) | |||||||||
| Other adjustments | (902) | 0.19 | |||||||||
| Effective tax rate | $ | 215 | (0.04) | % | |||||||
___________
(1) The state taxes in Florida and South Carolina make up the majority of the state tax effect in this category (greater than 50%).
(2) The cantonal taxes in Swiss canton of Basel-Stadt make up the majority of the state tax effect in this category (greater than 50%).
A reconciliation of the provision for income taxes computed at the U.S. federal statutory rate of 21% for the years ended March 31, 2025 and 2024 to the provision for income taxes reflected in the consolidated statements of operations is presented below (in thousands) in accordance with the guidance prior to the prospective adoption of ASU 2023-09. As such, certain items in the effective tax rate reconciliation above may have been reclassified between categories compared to prior periods; however, such reclassifications did not have a material impact on any individual line items or the overall effective tax rate.
| Years Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Income tax benefit at statutory rate | $ | (86,719) | $ | (54,341) | ||||||||||
| Foreign rate differential | 31,499 | 19,321 | ||||||||||||
| Research and development credits | (17,972) | (8,096) | ||||||||||||
| Valuation allowance | 74,541 | 46,389 | ||||||||||||
| Non-deductible expense | 5,826 | 7,518 | ||||||||||||
| Excess tax benefits from stock-based compensation | (6,282) | (9,204) | ||||||||||||
| Other | (2) | (1,020) | ||||||||||||
Total provision for income taxes | $ | 891 | $ | 567 | ||||||||||
The Company’s effective tax rate was (0.04)%, (0.22)% and (0.22)% for the years ended March 31, 2026, 2025 and 2024 respectively, primarily driven by the Company’s jurisdictional earnings by location, certain non-deductible expenditures, research and development credits, and a valuation allowance that eliminates the Company’s global net deferred tax assets.
A summary of income taxes paid by jurisdiction, net of refunds, after the adoption of ASU 2023-09 for the year ended March 31, 2026 is as follows (in thousands):
Year ended March 31, 2026 | |||||
U.S. federal | $ | 2,438 | |||
| Other | (52) | ||||
Total | $ | 2,386 | |||
Deferred taxes reflect the tax effects of the differences between the amounts recorded as assets and liabilities for financial reporting purposes and the comparable amounts recorded for income tax purposes. Significant components of the deferred tax assets (liabilities) at March 31, 2026 and 2025 are as follows (in thousands):
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Deferred tax assets | |||||||||||
| Intangible assets | $ | 3,457 | $ | 10,099 | |||||||
| Net operating losses | 77,731 | 153,370 | |||||||||
| Stock-based compensation | 12,065 | 13,643 | |||||||||
| Capitalized research and development costs | 153,532 | — | |||||||||
| Research and development credits | 53,734 | 39,217 | |||||||||
| Accruals and reserves | 11,743 | 3,298 | |||||||||
| Others | 252 | 224 | |||||||||
| Total deferred tax assets | 312,514 | 219,851 | |||||||||
| Valuation allowance | (311,961) | (218,753) | |||||||||
| Deferred tax assets, net of valuation allowance | $ | 553 | $ | 1,098 | |||||||
| Deferred tax liabilities | |||||||||||
| Others | $ | (487) | $ | (948) | |||||||
| Right-of-use assets | (15) | (41) | |||||||||
| Depreciation | (51) | (109) | |||||||||
| Total deferred tax liabilities | (553) | (1,098) | |||||||||
| Total net deferred taxes | $ | — | $ | — | |||||||
In January 2026, the Company completed an internal reorganization and transfer of intellectual property rights related to the Company’s product candidates between two wholly-owned subsidiaries of the Company to align with the business operations of the Company. Ownership and rights to such intellectual property remain with the Company and its subsidiaries.
The Company recorded an income tax benefit predominantly related to the internal reorganization, reducing the provision for income taxes to $0.2 million for the year ended March 31, 2026. Further, a new deferred tax asset was created as reflected above related to capitalized research and development expenses that will be deductible in the U.S. in future periods. As of March 31, 2026, the Company has gross net operating loss carryforwards in Switzerland of $279.0 million, which decreased from $1,094.6 million as of March 31, 2025 primarily due to utilization caused by the transfer of intellectual property, and will begin to expire as of March 31, 2032. Additionally, as of March 31, 2026, the Company has gross net operating loss carryforwards in the U.S. of $195.2 million, which increased from $48.7 million as of March 31, 2025, driven by the internal reorganization and can be carried forward indefinitely with utilization limited to 80% of future taxable income. The Company has research and development and orphan drug credit carryforwards in the U.S. of $53.7 million as of March 31, 2026, which begin to expire as of March 31, 2039.
The Company assesses the realizability of its net deferred tax assets at each balance sheet date based on available positive and negative evidence in order to determine the amount which is more likely than not to be realized and records a valuation allowance as necessary. Despite the one-time partial utilization of the net operating losses within Switzerland as part of the transfer of the intellectual property, the Company remains in a cumulative loss position, which provides significant negative evidence difficult to overcome. Accordingly, the Company has recorded a valuation allowance of $312.0 million and $218.8 million for the years ended March 31, 2026 and 2025, respectively, representing the portion of the net deferred tax assets that is not expected to be realized. The amount of the net deferred tax assets considered realizable could be adjusted for future factors that would impact the assessment of the objective and subjective evidence of the Company. The Company will continue to assess the realizability of net deferred tax assets at each balance sheet date in order to determine the proper amount, if any, required for a valuation allowance.
As of March 31, 2026, the Company does not have undistributed earnings from foreign subsidiaries. The Company regularly evaluates whether foreign earnings are expected to be indefinitely reinvested. This evaluation requires judgment about the future operating and liquidity needs of the Company. Changes in economic and business conditions, foreign or U.S. tax laws or the Company’s financial situation could result in a change to the Company’s position.
The Company is subject to tax and files income tax returns in the U.S. federal, state and local jurisdictions, the United Kingdom and Switzerland. The Company’s tax periods for the fiscal years ended March 31, 2019 through March 31, 2026 remain open for tax examinations in most applicable income tax jurisdictions. Tax audits and examinations can involve complex issues, interpretations and judgments. The resolution of matters may span multiple years particularly if subject to litigation or negotiation. The Company believes it has appropriately recorded its tax position using reasonable estimates and assumptions, however the potential tax benefits may impact the consolidated results of operations or cash flows in the period of resolution, settlement or when the statutes of limitations expire. The Company’s unrecognized tax benefit activity during the years ended March 31, 2026 and 2025 and related liabilities were not material to the Company’s consolidated financial statements as of March 31, 2026 and 2025.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the U.S., which includes a broad range of tax reform provisions. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. The impact of the OBBBA on the Company’s accompanying consolidated financial statements is not material to the Company’s effective tax rate.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 20, 2026 | Showing above |
| 2025 | May 29, 2025 | |
| 2024 | May 29, 2024 | |
| 2023 | May 22, 2023 | |
| 2022 | Jun 8, 2022 | |
| 2021 | Jun 1, 2021 | |
| 2020 | Jun 29, 2020 | |
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.