MoonLake ImmunotherapeuticsMLTX
MoonLake Immunotherapeutics Income Taxes Disclosure
Income Taxes
The Company's effective tax rate (“ETR”) was (0.3)%, (0.2)%, and (0.3)% for the years ended December 31, 2025, 2024, and 2023, respectively. The Company is not aware of any items that would cause the quarterly or period-to-date ETR to be significantly different from the Company's annual ETR. The difference between the income tax provision that would be derived by applying the statutory rate to the Company's loss before income taxes and the income tax provision recorded was primarily attributable to the change in the valuation allowance. The Company continues to incur losses for the Cayman Island and Swiss entity and its ability to utilize the deferred tax asset related to the tax losses is not considered more likely than not.
The Company's main operating affiliate, MoonLake AG, is subject to taxation in the Canton of Zug, Switzerland. For the years ended December 31, 2025, 2024, and 2023, the Company did not incur any significant income tax expense or benefit, as the Company incurred tax losses and provided a full valuation allowance.
The components of loss before income tax were as follows:
(in thousands) | Year Ended December 31, 2025 | Year Ended December 31, 2024 | Year Ended December 31, 2023 | |||||||||||||||||
Switzerland | $ | (229,118) | $ | (120,417) | $ | (43,470) | ||||||||||||||
Foreign | (592) | (545) | (515) | |||||||||||||||||
Total | $ | (229,710) | $ | (120,962) | $ | (43,985) | ||||||||||||||
The reconciliation of taxes at the federal statutory rate to the Company’s provision for income taxes is as follows:
Year Ended December 31, 2025 | ||||||||||||||
(in thousands, except percentages) | Amount | Percent | ||||||||||||
Statutory federal income tax rate(1) | $ | (19,525) | 8.5 | % | ||||||||||
State and local income tax, net of federal income tax effect(2) | 455 | (0.2) | % | |||||||||||
Changes in valuation allowance | 19,238 | (8.4) | % | |||||||||||
Nontaxable or nondeductible expense | 217 | (0.1) | % | |||||||||||
Other adjustments | 226 | (0.1) | % | |||||||||||
Effective tax rate | $ | 611 | (0.3)% | |||||||||||
(1) The statutory income tax rate utilized is the federal (national) Switzerland tax rate which is the Company's country of domicile. (2) Cantonal & local taxes in the Canton of Zug comprise 100% of this category. | ||||||||||||||
Below is a tabular rate reconciliation previously disclosed for the years ended December 31, 2024 and 2023:
Year Ended December 31, 2024 | Year Ended December 31, 2023 | |||||||||||||
Statutory income tax rate | 11.8 | % | 11.8 | % | ||||||||||
Effect of income taxed at different rates | (0.3) | % | (0.4) | % | ||||||||||
Changes in prior year estimates | — | % | (0.5) | % | ||||||||||
Utilization of unrecognized losses | — | % | 0.6 | % | ||||||||||
Changes in valuation allowance | (11.3) | % | 0.5 | % | ||||||||||
Nondeductible expense | (0.5)% | (12.3)% | ||||||||||||
Total | (0.2)% | (0.3)% | ||||||||||||
Significant components of the Company’s deferred tax assets (liabilities) were:
(in thousands) | December 31, 2025 | December 31, 2024 | ||||||||||||
Intangible assets | $ | 4,437 | $ | 4,491 | ||||||||||
Defined benefit plan | — | 74 | ||||||||||||
Lease liabilities | 37 | 64 | ||||||||||||
Net operating loss carry forward | 47,241 | 20,373 | ||||||||||||
Total deferred tax assets | 51,715 | 25,002 | ||||||||||||
Operating lease right-of-use assets | (37) | (70) | ||||||||||||
Defined benefit plan | (1) | — | ||||||||||||
Total deferred tax liabilities | (38) | (70) | ||||||||||||
Total deferred tax assets (net) | 51,677 | 24,932 | ||||||||||||
Valuation allowance | (51,677) | (24,932) | ||||||||||||
Total deferred tax (net) | $ | — | $ | — | ||||||||||
As of December 31, 2025, the Company’s net deferred tax assets before valuation allowance were $51.7 million. In assessing the realizability of its deferred tax assets, the Company considers whether it is more likely than not that some portion or all of its deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the weight of all evidence, the Company has determined that it is not more likely than not that the net deferred tax assets will be realized. Therefore, a valuation allowance of $51.7 million has been recorded against the deferred tax assets.
As of December 31, 2025, MoonLake AG had net operating losses of approximately $403.5 million of which $12.6 million will expire in 2028, $44.0 million will expire in 2029, $115.3 million will expire in 2031, and $231.6 million will expire in 2032.
The Company’s net operating losses will not be subject to any limitation due to change in ownership according to Swiss Income Tax Law.
The Company has no unrecognized tax benefits and does not expect that uncertain tax benefits will change significantly in the next twelve months.
Cash paid for income taxes, net of refunds, during the year ended December 31, 2025 was $799 thousand, of which, $598 thousand was paid to the United Kingdom and $201 thousand was paid to Portugal.
Cash paid for income taxes, net of refunds, during the year ended December 31, 2024 and 2023 was $147 thousand and $42 thousand, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 20, 2023 | |
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.