INTERPARFUMS INC Income Taxes Disclosure
| (15) | Income Taxes |
The components of income before income taxes consist of the following:
| Year ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| U.S. operations | $ | 90,437 | $ | 83,169 | $ | 103,517 | ||||||
| Foreign operations | 180,895 | 185,222 | 146,076 | |||||||||
| $ | 271,332 | $ | 268,391 | $ | 249,593 | |||||||
The provision for current and deferred income tax expense (benefit) consists of the following:
| Year ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Current: | ||||||||||||
| Federal | $ | 14,107 | $ | 15,123 | $ | 18,356 | ||||||
| State and local | 3,017 | 2,627 | 2,297 | |||||||||
| Foreign | 44,856 | 49,814 | 42,691 | |||||||||
| 61,980 | 67,564 | 63,344 | ||||||||||
| Deferred: | ||||||||||||
| Federal | (523 | ) | (1,246 | ) | 484 | |||||||
| State and local | (154 | ) | (162 | ) | 81 | |||||||
| Foreign | 1,884 | (1,198 | ) | (2,092 | ) | |||||||
| 1,207 | (2,606 | ) | (1,527 | ) | ||||||||
| Total income tax expense | $ | 63,187 | $ | 64,958 | $ | 61,817 | ||||||
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Net deferred tax assets: | ||||||||
| Inventory and accounts receivable | $ |
4,852 | $ | 4,505 | ||||
| Profit sharing | 2,612 | 2,274 | ||||||
| Stock option compensation | 86 | 314 | ||||||
| Effect of inventory profit elimination(1) | — | — | ||||||
| Other | 2,490 | 2,290 | ||||||
| Total gross deferred tax assets, net | 10,040 | 9,383 | ||||||
| Valuation allowance | — | — | ||||||
| Net deferred tax assets | 10,040 | 9,383 | ||||||
| Deferred tax liabilities (long-term): | ||||||||
| Building expenses | (332 | ) | (1,196 | ) | ||||
| Trademarks and licenses | (4,075 | ) | (2,104 | ) | ||||
| Unrealized gain on marketable equity securities | (837 | ) | (560 | ) | ||||
| Other | (562 | ) | (58 | ) | ||||
| Total deferred tax liabilities | (5,806 | ) | (3,918 | ) | ||||
| Net deferred tax assets | $ | 4,234 | $ | 5,465 | ||||
(1) As described in Note 1, Correction of Immaterial Misstatements in Prior Period Financial Statements, the Company revised certain prior-period income tax disclosures to correct the classification of prepaid expenses that were previously presented as a deferred tax asset.
No valuation allowances have been provided for deferred tax assets in 2025 as management believes that it is more likely than not that the asset will be realized in the reduction of future taxable income.
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows:
| Year ended December 31, 2025 | ||||||||
| (in thousands) | Percent | |||||||
| Tax at U.S. Statutory Rate | $ |
56,980 | 21.00 | % | ||||
| State and Local Income Taxes(1) | 1,812 | 0.67 | % | |||||
| Foreign Tax Effects | ||||||||
| France | ||||||||
| Foreign Rate Differential | 7,540 | 2.78 | % | |||||
| Other | 1,419 | 0.52 | % | |||||
| Other Foreign Jurisdictions | (230 | ) | (0.09) | |||||
| Effects of Cross-Border Tax Laws | (1,657 | ) | (0.61) | % | ||||
| Tax Credits | (349 | ) | (0.13) | % | ||||
| Nontaxable or Nondeductible Items | 366 | 0.13 | ||||||
| Changes in Unrecognized Tax Benefits | 450 | 0.17 | ||||||
| Other Adjustments | ||||||||
| Amended Return Impacts | (3,000 | ) | (1.11) | % | ||||
| Other | (144 | ) | (0.04) | % | ||||
| $ | 63,187 | 23.29 | % | |||||
(1) The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include New York State, New Jersey, and California.
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before taxes for years prior to the adoption of ASU 2023-09 is as follows:
| Year ended December 31, |
||||||||
| 2024 | 2023 | |||||||
| Statutory rates | 21.0 | % | 21.0 | % | ||||
| State and local taxes, net of Federal benefit | 0.7 | 0.8 | ||||||
| Windfall benefit from exercise of stock options | (0.3 | ) | (0.4 | ) | ||||
| Benefit of Foreign Derived Intangible Income | (0.9 | ) | (0.9 | ) | ||||
| Effect of foreign taxes greater than U.S. statutory rates | 3.5 | 4.1 | ||||||
| Other | 0.2 | 0.2 | ||||||
| Effective rates | 24.2 | % | 24.8 | % | ||||
Below is a tabular reconciliation of the total amounts of unrecognized tax benefits ("UTBs").
| Year ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Gross increases - tax positions in prior period | $ | — | $ | — | $ | — | ||||||
| Gross increases - tax positions in prior period | — | — | — | |||||||||
| Gross decreases - tax positions in prior period | — | — | — | |||||||||
| Gross increases - tax positions in current period | 571 | — | — | |||||||||
| Settlement | — | — | — | |||||||||
| Lapse of statute of Limitations | — | — | — | |||||||||
| UTBs - December 31 | $ | 571 | $ | — | $ | — | ||||||
Included in the balance of UTBs are tax benefits that, if recognized, would effect the effective tax rate are $0.45 million, $0 million and $0 million as of December 31, 2025, 2024 and 2023, respectively.
The Company accrued interest and penalties of $0 during 2025 and in total, as of December 31, 2025, recognized a liability related to the UTBs noted above for interest and penalties of $0.
The Company and its subsidiaries file income tax returns in the U.S. federal, and various states and foreign jurisdictions.
A mutual agreement procedure between the French and United States tax authorities in 2025 resulted in a $3 million favorable outcome in which we were able to reclaim the tax assessment of €2.8 million ($3.1 million) paid in France in 2023. The Company’s French subsidiary is no longer subject to foreign tax examination for years before 2022. Beginning in 2025, the Company's French subsidiary is undergoing an audit for tax years 2022 and 2023. They have not been notified of any additional upcoming audits.
The Company is no longer subject to U.S. federal, state, and local income tax examinations by tax authorities for years before 2022.
The amount of cash income taxes paid by the Company were as follows:
| Year ended December 31, 2025 |
||||
| (in thousands) | ||||
| Federal | $ |
15,629 | ||
| State and Local | 938 | |||
| Foreign | ||||
| France | 53,520 | |||
| Italy | 4,985 | |||
| All other foreign | 2,639 | |||
| Income taxes, net of amounts refunded | $ | 77,711 | ||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 10, 2026 | Showing above |
| 2024 | Mar 11, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 13, 2018 | |
| 2016 | Mar 13, 2017 | |
| 2015 | Mar 14, 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.