LyondellBasell Industries N.V.LYB
LyondellBasell Industries N.V. Income Taxes Disclosure
Income Taxes
LyondellBasell Industries N.V. is tax resident in the United Kingdom pursuant to a mutual agreement procedure determination ruling between the Dutch and United Kingdom competent authorities and therefore subject solely to the United Kingdom corporate income tax system. LyondellBasell Industries N.V. has little or no taxable income of its own because, as a holding company, it does not conduct any operations. Through our subsidiaries, we have substantial operations world-wide. Taxes are paid on the earnings generated in various jurisdictions where our subsidiaries operate.
The Company operates in multiple jurisdictions with complex legal and tax regulatory environments and is subject to taxes in the U.S. and non-U.S. jurisdictions. We monitor tax law changes and the potential impact to our results of operations. There continues to be increased attention on the tax practices of multinational companies, in particular in the U.S. and Europe where we operate. In 2020, the Organization for Economic Cooperation and Development released Pillar One and Two proposals focused on taxing rights and minimum taxes. The United Kingdom, as well as certain other jurisdictions in which we operate, enacted legislation implementing the Organization for Economic Cooperation and Development’s Pillar Two Model Rules effective as of January 1, 2024. This legislation, and all subsequent guidance, did not have a material impact on the Consolidated Financial Statements; however, we continue to assess and monitor legislative changes, guidance and interpretations.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law. OBBBA extends and modifies certain key Tax Cuts & Jobs Act provisions. This legislation does not have a material impact on the Consolidated Financial Statements.
The significant components of the provision for income taxes are as follows:
| Year Ended December 31, | |||||||||||||||||
| Millions of dollars | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| U.S. federal | $ | 116 | $ | 419 | $ | 117 | |||||||||||
| Non-U.S. | 145 | 198 | 160 | ||||||||||||||
| State | (7) | 48 | 24 | ||||||||||||||
| Total current | 254 | 665 | 301 | ||||||||||||||
| Deferred: | |||||||||||||||||
| U.S. federal | (205) | (140) | 154 | ||||||||||||||
| Non-U.S. | 11 | (279) | (36) | ||||||||||||||
| State | 10 | 13 | 14 | ||||||||||||||
| Total deferred | (184) | (406) | 132 | ||||||||||||||
| Provision for income taxes before tax effects of other comprehensive income | 70 | 259 | 433 | ||||||||||||||
| Tax effects of elements of other comprehensive income: | |||||||||||||||||
| Pension and post-retirement liabilities | 19 | (1) | (36) | ||||||||||||||
| Financial derivatives | (8) | 38 | (29) | ||||||||||||||
| Foreign currency translation | (91) | 44 | (28) | ||||||||||||||
| Total income tax expense (benefit) in comprehensive income | $ | (10) | $ | 340 | $ | 340 | |||||||||||
Since the proportion of U.S. revenues, assets, operating income and associated tax expense is significantly greater than that of any other single taxing jurisdiction within the worldwide group, the reconciliation of the differences between the provision for income taxes and the statutory rate is presented on the basis of the U.S. statutory federal income tax rate of 21% as opposed to the United Kingdom statutory tax rate of 25% or The Netherlands statutory tax rate of 25.8%. Our effective income tax rate for the year ended December 31, 2025 is (9.8)%.
Our effective income tax rate fluctuates based on, among other factors, changes in pre-tax income in countries with varying statutory tax rates, changes in valuation allowances, changes in foreign exchange gains/losses, the amount of nontaxable income or nondeductible expense, changes in unrecognized tax benefits associated with uncertain tax positions and changes in tax laws.
The following table reconciles the expected tax expense (benefit) at the U.S. statutory federal income tax rate to the total income tax provision disaggregated by nature of reconciling items:
| Year Ended December 31, | |||||||||||
| Millions of dollars | 2025 | ||||||||||
| Income (loss) from continuing operations before income taxes: | |||||||||||
| U.S. | $ | (219) | |||||||||
| Non-U.S. | (496) | ||||||||||
| Total | $ | (715) | |||||||||
| Income tax at U.S. statutory rate | $ | (150) | 21.0 | % | |||||||
| State and local income tax, net of federal income tax effect | 14 | (2.0) | % | ||||||||
| Effect of cross-border tax laws: | |||||||||||
| Change in deferred tax on outside basis differences | (13) | 1.8 | % | ||||||||
| Deemed income inclusion | 12 | (1.7) | % | ||||||||
| Deduction of non-U.S. taxes paid | (12) | 1.7 | % | ||||||||
| Tax credits | (5) | 0.7 | % | ||||||||
| Nontaxable or nondeductible items: | |||||||||||
| Export incentive | (46) | 6.4 | % | ||||||||
| Other | 13 | (1.8) | % | ||||||||
| Other adjustments | (2) | 0.3 | % | ||||||||
| Foreign tax effects: | |||||||||||
| China | |||||||||||
| Nondeductible impairment | 11 | (1.5) | % | ||||||||
| Other adjustments | 9 | (1.2) | % | ||||||||
| France | |||||||||||
| Nondeductible impairment | 17 | (2.4) | % | ||||||||
| Statutory income tax rate differential | 8 | (1.1) | % | ||||||||
| Germany | |||||||||||
| State and local income taxes | (33) | 4.6 | % | ||||||||
| Tax refund claim | (24) | 3.4 | % | ||||||||
| Changes in tax laws or rates enacted | (24) | 3.4 | % | ||||||||
| Changes in valuation allowances | 17 | (2.4) | % | ||||||||
| Statutory income tax rate differential | 11 | (1.5) | % | ||||||||
| Other adjustments | (3) | 0.4 | % | ||||||||
| Italy | |||||||||||
| Nondeductible impairment | 8 | (1.1) | % | ||||||||
| Other adjustments | 3 | (0.4) | % | ||||||||
| Malta | |||||||||||
| Statutory income tax rate differential | (101) | 14.1 | % | ||||||||
| Mexico | |||||||||||
| Nondeductible impairment | 30 | (4.2) | % | ||||||||
| Other adjustments | 4 | (0.6) | % | ||||||||
| The Netherlands | |||||||||||
| Nondeductible impairment | 125 | (17.5) | % | ||||||||
| Foreign currency gain or loss | 63 | (8.8) | % | ||||||||
| Changes in valuation allowances | 13 | (1.8) | % | ||||||||
| Nondeductible items | 10 | (1.4) | % | ||||||||
| Statutory income tax rate differential | 9 | (1.3) | % | ||||||||
| United Kingdom | |||||||||||
| Changes in valuation allowances | 85 | (11.9) | % | ||||||||
| Other adjustments | 9 | (1.3) | % | ||||||||
| Other foreign jurisdictions | 7 | (1.0) | % | ||||||||
| Changes in unrecognized tax benefits | 5 | (0.7) | % | ||||||||
| Provision for income taxes | $ | 70 | (9.8) | % | |||||||
The states contributing to the majority (greater than 50%) of the state and local income tax, net of federal income tax effect, as presented above are Louisiana, Texas, Pennsylvania and Tennessee.
Nontaxable or nondeductible items primarily include the tax effect of export incentives. Export incentives relate to tax benefits derived from elections and structures available for U.S. exports. We anticipate the continued favorable treatment for export income based on current law. Prior to the adoption of ASU 2023-09 in 2025, these items were classified in our effective tax rate table with exempt income. Statutory income tax rate differential refers to the tax impact of income taxed at rates different from the U.S. statutory income tax rate.
For the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:
| Year Ended December 31, | |||||||||||
| Millions of dollars | 2024 | 2023 | |||||||||
| Income (loss) from continuing operations before income taxes: | |||||||||||
| U.S. | $ | 1,783 | $ | 1,630 | |||||||
| Non-U.S. | (82) | 669 | |||||||||
| Total | $ | 1,701 | $ | 2,299 | |||||||
| Income tax at U.S. statutory rate | $ | 358 | $ | 483 | |||||||
| Increase (reduction) resulting from: | |||||||||||
| Non-U.S. income/(loss) taxed at different statutory rates | (102) | 4 | |||||||||
| Return to accrual adjustments | (26) | (22) | |||||||||
| State income taxes, net of federal benefit | 55 | 34 | |||||||||
| Exempt income | (101) | (203) | |||||||||
| Uncertain tax positions | 18 | 21 | |||||||||
| Patent box ruling | — | (31) | |||||||||
| Nondeductible impairments | 28 | 62 | |||||||||
| Audit settlement | — | 46 | |||||||||
| Foreign currency gain or loss | (27) | 8 | |||||||||
| Cross border tax effects | 19 | 14 | |||||||||
| Other, net | 37 | 17 | |||||||||
| Provision for income taxes | $ | 259 | $ | 433 | |||||||
Our exempt income primarily includes interest income, export incentives, and equity earnings of joint ventures. Interest income earned by certain of our subsidiaries, through intercompany financings, is taxed at rates substantially lower than the U.S. statutory rate. Export incentives relate to tax benefits derived from elections and structures available for U.S. exports. Equity earnings from our joint ventures, when paid through dividends to certain European subsidiaries, are exempt from all or portions of normal statutory income tax rates. We anticipate the continued favorable treatment for dividends, and export income based on current law.
The deferred tax effects of tax loss, credit and interest carryforwards (“tax attributes”) and the tax effects of temporary differences between the tax basis of assets and liabilities and their reported amounts in the Consolidated Financial Statements, reduced by a valuation allowance where appropriate, are presented below:
| December 31, | |||||||||||
| Millions of dollars | 2025 | 2024 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Accelerated tax depreciation | $ | 2,342 | $ | 2,342 | |||||||
| Investment in joint venture partnerships | 416 | 455 | |||||||||
| Inventory | 101 | 194 | |||||||||
| Operating lease assets | 342 | 330 | |||||||||
| Other liabilities | 53 | 78 | |||||||||
| Total deferred tax liabilities | $ | 3,254 | $ | 3,399 | |||||||
| Deferred tax assets: | |||||||||||
| Tax attributes | $ | 672 | $ | 420 | |||||||
| Employee benefit plans | 186 | 248 | |||||||||
| Operating lease liabilities | 380 | 387 | |||||||||
| Other assets | 205 | 203 | |||||||||
| Total deferred tax assets | 1,443 | 1,258 | |||||||||
| Deferred tax asset valuation allowances | (293) | (135) | |||||||||
| Net deferred tax assets | 1,150 | 1,123 | |||||||||
| Net deferred tax liabilities | $ | 2,104 | $ | 2,276 | |||||||
Balance sheet classification is presented in the following table:
| December 31, | |||||||||||
| Millions of dollars | 2025 | 2024 | |||||||||
| Deferred tax assets—long-term | $ | 212 | $ | 259 | |||||||
| Deferred tax liabilities—long-term | 2,316 | 2,535 | |||||||||
| Net deferred tax liabilities | $ | 2,104 | $ | 2,276 | |||||||
Deferred taxes on the unremitted earnings of certain equity joint ventures and subsidiaries of $41 million and $57 million at December 31, 2025 and 2024, respectively, have been provided. The Company no longer intends to permanently reinvest approximately $600 million of our non-U.S. earnings. Future repatriation of these earnings to the U.S. would result in minimal tax impact.
As of December 31, 2025 and 2024, total tax attributes available amounted to $3,142 million and $1,968 million, respectively, resulting in the recognition of deferred tax assets of $672 million and $420 million as of December 31, 2025 and 2024, respectively.
The scheduled expiration of the tax attributes and the related deferred tax assets, before valuation allowance, as of December 31, 2025 are as follows:
| Millions of dollars | Tax Attributes | Deferred Tax on Tax Attributes | |||||||||
| 2026 | $ | 23 | $ | 2 | |||||||
| 2027 | 32 | 5 | |||||||||
| 2028 | 30 | 8 | |||||||||
| 2029 | 37 | 4 | |||||||||
| 2030 | 27 | 3 | |||||||||
| Thereafter | 758 | 51 | |||||||||
| Indefinite | 2,235 | 599 | |||||||||
| Total | $ | 3,142 | $ | 672 | |||||||
The tax attributes are primarily related to operations in Germany, the United States, the United Kingdom, France, and The Netherlands. The related deferred tax assets by primary jurisdictions are shown below:
| December 31, | |||||||||||||||||
| Millions of dollars | 2025 | 2024 | 2023 | ||||||||||||||
| Germany | $ | 215 | $ | 107 | $ | 3 | |||||||||||
| United States | 128 | 114 | 151 | ||||||||||||||
| United Kingdom | 112 | 105 | 91 | ||||||||||||||
| France | 109 | 21 | 23 | ||||||||||||||
| The Netherlands | 67 | 35 | 18 | ||||||||||||||
| Other | 41 | 38 | 21 | ||||||||||||||
| Total | $ | 672 | $ | 420 | $ | 307 | |||||||||||
To fully realize these net deferred tax assets, we will need to generate sufficient future taxable income in the countries where these tax attributes exist during the periods in which the attributes can be utilized. Based upon forecasts of expected taxable income over the periods in which the attributes can be utilized and/or temporary differences are expected to reverse, we believe it is more likely than not that $379 million of these deferred tax assets at December 31, 2025 will be realized.
As of each reporting date, we consider the weight of all evidence, both positive and negative, to determine if a valuation allowance is necessary for each jurisdiction’s net deferred tax assets. We place greater weight on historical evidence over future predictions of our ability to utilize net deferred tax assets. We consider future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences, and taxable income in prior carry-back year(s) if carry-back is permitted under applicable law, as well as available prudent and feasible tax planning strategies that would, if necessary, be implemented to ensure realization of the net deferred tax asset.
A summary of the valuation allowances by primary jurisdiction is shown below, reflecting the valuation allowances for all the net deferred tax assets, including deferred tax assets for tax attributes and other temporary differences.
| December 31, | |||||||||||||||||
| Millions of dollars | 2025 | 2024 | 2023 | ||||||||||||||
| United Kingdom | $ | 115 | $ | 30 | $ | 30 | |||||||||||
| Germany | 101 | 43 | 1 | ||||||||||||||
| United States | 35 | 24 | 15 | ||||||||||||||
| The Netherlands | 21 | 5 | 3 | ||||||||||||||
| France | — | 21 | 23 | ||||||||||||||
| Other | 21 | 12 | 6 | ||||||||||||||
| Total | $ | 293 | $ | 135 | $ | 78 | |||||||||||
During 2025, valuation allowances primarily in the United Kingdom had a material impact on the effective tax rate. Our activities in the United Kingdom are limited to a small number of manufacturing sites that are included in our United Kingdom tax group headed by LyondellBasell N.V., a holding company tax resident in the United Kingdom. LyondellBasell N.V., as a holding company, does not generate taxable income independently and therefore is dependent on the receipt of intercompany dividends to generate taxable income to offset its costs incurred. Given recent macroeconomic trends, intercompany dividends to LyondellBasell N.V. are constrained. As a result, we no longer believe it is more likely than not that the United Kingdom deferred tax assets will be realized. In Germany, the majority of the increase was associated with adjustments to attributes acquired in 2024. As a full valuation allowance was established in 2024 in connection with the acquisition of a business, these adjustments did not impact the effective tax rate.
During 2024 and 2023, valuation allowances did not have a material impact to our effective tax rate. The increase in valuation allowances from 2023 to 2024 was primarily due to attributes acquired during 2024 that required a full valuation allowance.
The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits included in the Consolidated Balance Sheets:
| Year Ended December 31, | |||||||||||||||||
| Millions of dollars | 2025 | 2024 | 2023 | ||||||||||||||
| Unrecognized tax benefit, beginning of period | $ | 236 | $ | 288 | $ | 271 | |||||||||||
| Additions for tax positions of current year | — | 14 | 37 | ||||||||||||||
| Additions for tax positions of prior years | 128 | 15 | 2 | ||||||||||||||
| Reductions for tax positions of prior years | (3) | (15) | (22) | ||||||||||||||
| Reductions resulting from the lapse of statutes of limitations | (49) | — | — | ||||||||||||||
| Settlements (payments/refunds) | (73) | (66) | — | ||||||||||||||
| Unrecognized tax benefit, end of period | $ | 239 | $ | 236 | $ | 288 | |||||||||||
The majority of the uncertain tax positions, if recognized, will affect the effective tax rate. During 2025, 2024 and 2023, our effective tax rate included tax expense of $5 million, $18 million and $21 million, respectively, related to adjustments in uncertain tax position balances. During 2025, we entered into a settlement with the tax authorities related to a transfer pricing position and released related reserves of $73 million. This position will not result in a material net cash impact as there is an almost fully offsetting income tax receivable. During 2024, we entered into an audit settlement and released a related $66 million non-cash reserve. The settlement of this position did not affect the effective tax rate.
We recognize interest associated with unrecognized tax benefits in income tax expense. Income tax expense includes interest and penalties of $16 million, $15 million and $11 million in 2025, 2024 and 2023, respectively. Accrued interest and penalties as of December 31, 2025, 2024 and 2023 were $82 million, $67 million, and $52 million, respectively.
We operate in multiple jurisdictions throughout the world, and our tax returns are periodically audited or subjected to review by tax authorities. We are currently under examination in a number of tax jurisdictions. As a result, there is an uncertainty in income taxes recognized in our financial statements. Positions challenged by the tax authorities may be settled or appealed by us.
A summary of the years open to examination in our primary jurisdictions is as follows:
| Jurisdiction | Open Tax Years | |||||||
| France | 2020 and later | |||||||
| Germany | 2008 and later | |||||||
| Italy | 2014 and later | |||||||
| The Netherlands | 2018 and later | |||||||
| United Kingdom | 2024 and later | |||||||
| United States | 2014 and later | |||||||
The following is a supplemental schedule of income taxes paid (net of refunds) disaggregated by federal, state, and non-U.S.:
| Year Ended December 31, | |||||
| Millions of dollars | 2025 | ||||
| Net income taxes paid: | |||||
| U.S. federal | $ | 307 | |||
| U.S. state | 32 | ||||
| Non-U.S. | |||||
| France | (26) | ||||
| The Netherlands | 24 | ||||
| Germany | (20) | ||||
| Hong Kong | 23 | ||||
| Other | 53 | ||||
| Total net income taxes paid | $ | 393 | |||
Taxes paid in 2025 include $235 million in U.S. Federal corporate income tax payments deferred from 2024 into 2025 under Hurricane Beryl disaster relief provisions. Total income taxes paid for the years ended December 31, 2024 and 2023 were $343 million and $465 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 16, 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.