NovoCure LtdNVCR
NovoCure Ltd Income Taxes Disclosure
Income taxes
a. Tax provision:
The Company maintains its effective place of daily management and control in Switzerland and is a Swiss tax resident. As a result, the income tax disclosures have been presented in accordance with the Company’s country of tax residency.
Income (loss) before income taxes is as follows:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Swiss | $ | (205,450) | $ | (205,310) | $ | (281,685) | |||||||||||
| Non-Swiss | 69,200 | 74,148 | 89,945 | ||||||||||||||
Total income (loss) before income taxes | $ | (136,250) | $ | (131,162) | $ | (191,740) | |||||||||||
The provision (benefit) for income taxes from continuing operations is comprised of:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Swiss | |||||||||||||||||
| Federal | $ | (3,072) | $ | 2,762 | $ | 1,385 | |||||||||||
| Cantonal (Zug) | 516 | 1,100 | 778 | ||||||||||||||
| Non-Swiss | 2,533 | 33,603 | 13,140 | ||||||||||||||
| Total current | $ | (23) | $ | 37,465 | $ | 15,303 | |||||||||||
| Deferred: | |||||||||||||||||
| Swiss | $ | — | — | $ | — | ||||||||||||
| Non-Swiss | — | — | — | ||||||||||||||
| Total deferred | — | — | — | ||||||||||||||
| Total income tax provision | $ | (23) | $ | 37,465 | $ | 15,303 | |||||||||||
b. Theoretical tax
The Company's effective tax rate is affected by the tax rates in the various jurisdictions in which the Company operates. Under Swiss law, the Company is subject to income tax at the federal level at a statutory rate of 8.5% as well as at the cantonal and communal levels, resulting in an aggregate corporate tax rate of 13.4%.
For purposes of comparability, the Company used the Swiss federal statutory rate for the 2025, 2024 and 2023 tax years when presenting the Company's reconciliation of the income tax provision.
A reconciliation of the provision for income taxes compared with the amounts at the Swiss rate was:
| Year ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| Swiss federal statutory rate | $ | (11,581) | 8.5 | % | $ | (11,149) | 8.5 | % | $ | (16,298) | 8.5 | % | |||||||||||||||||||||||
| Swiss cantonal (Zug) and local income taxes, net of federal income tax effect | 516 | (0.38) | 1,100 | (0.84) | 778 | (0.41) | |||||||||||||||||||||||||||||
| Foreign Tax Effects: | |||||||||||||||||||||||||||||||||||
| United States | |||||||||||||||||||||||||||||||||||
| Change in valuation allowance | (32,228) | 23.65 | (5,046) | 3.85 | (31,218) | 16.28 | |||||||||||||||||||||||||||||
| Statutory tax rate difference | 11,439 | (8.4) | 11,468 | (8.74) | 16,906 | (8.82) | |||||||||||||||||||||||||||||
| State Income Taxes (1) | 2,075 | (1.52) | 7,338 | (5.59) | 4,043 | (2.11) | |||||||||||||||||||||||||||||
| Share based compensation | 1,763 | (1.29) | 3,439 | (2.62) | 2,178 | (1.14) | |||||||||||||||||||||||||||||
| Foreign-Derived Intangible Income ("FDII") | 886 | (0.65) | — | — | — | — | |||||||||||||||||||||||||||||
| Research and development credits | — | — | 1,856 | (1.42) | 6,474 | (3.38) | |||||||||||||||||||||||||||||
| Other | 542 | (0.4) | (345) | 0.26 | (392) | 0.2 | |||||||||||||||||||||||||||||
| Israel | |||||||||||||||||||||||||||||||||||
| Change in valuation allowance | 4,314 | (3.17) | 1,443 | (1.1) | 2,466 | (1.29) | |||||||||||||||||||||||||||||
| Statutory tax rate difference | 606 | (0.44) | 508 | (0.39) | 662 | (0.35) | |||||||||||||||||||||||||||||
| Tax Effects of the Encouragement of Capital Investments Law | — | — | 729 | (0.56) | — | — | |||||||||||||||||||||||||||||
| Other | 989 | (0.73) | (67) | 0.05 | 1,076 | (0.56) | |||||||||||||||||||||||||||||
| Share based compensation | — | — | 671 | (0.51) | — | — | |||||||||||||||||||||||||||||
| Luxembourg | |||||||||||||||||||||||||||||||||||
| Statutory tax rate difference | 798 | (0.59) | 1,621 | (1.24) | 1,421 | (0.74) | |||||||||||||||||||||||||||||
| Change in valuation allowance | 621 | (0.46) | 829 | (0.63) | (857) | 0.45 | |||||||||||||||||||||||||||||
| Other | (5) | — | 15 | (0.01) | 95 | (0.05) | |||||||||||||||||||||||||||||
| France | 663 | (0.49) | 650 | 0.5 | 210 | (0.11) | |||||||||||||||||||||||||||||
| Other foreign jurisdictions | 4,188 | (3.07) | 2,541 | (1.94) | 2,867 | (1.5) | |||||||||||||||||||||||||||||
| Effect of Changes in Tax Laws or Rates Enacted in the Current Period | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Effect of Cross-Border Tax Laws | (32) | 0.02 | (30) | 0.02 | (37) | 0.02 | |||||||||||||||||||||||||||||
| Tax Credits | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Changes in Valuation Allowances | 14,654 | (10.77) | 20,483 | (15.62) | 24,812 | (12.91) | |||||||||||||||||||||||||||||
| Nontaxable or Nondeductible Items | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Changes in Unrecognized Tax Benefits | 1 | — | 1 | — | — | — | |||||||||||||||||||||||||||||
| Other Adjustments | (232) | 0.17 | (590) | 0.45 | 117 | (0.06) | |||||||||||||||||||||||||||||
| Effective Tax Rate | $ | (23) | (0.02) | % | $ | 37,465 | (27.58) | % | $ | 15,303 | (7.98) | % | |||||||||||||||||||||||
(1) Primarily California, Florida, Indiana, New Hampshire, Pennsylvania and Wisconsin.
c. Deferred income tax
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Unamortized intangible assets (1) | $ | 1,581,633 | $ | 1,394,195 | |||||||
| Net operating loss carryforwards | $ | 168,429 | $ | 127,881 | |||||||
| Impact of revenue recognition | $ | 51,540 | $ | 68,347 | |||||||
| Share based compensation | $ | 23,809 | $ | 35,470 | |||||||
| Lease liabilities | $ | 9,860 | $ | 6,518 | |||||||
| Capitalized research and development | $ | — | $ | 4,036 | |||||||
| Research and development | $ | 2,047 | $ | 1,613 | |||||||
| Other temporary differences | $ | 9,053 | $ | 7,823 | |||||||
| Total gross deferred tax assets | $ | 1,846,371 | $ | 1,645,883 | |||||||
| Less: valuation allowance | (1,833,239) | (1,636,833) | |||||||||
| Total deferred tax assets | 13,132 | 9,050 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Right of use assets | 8,874 | 6,287 | |||||||||
| Fixed assets | 4,052 | 2,692 | |||||||||
| Other liabilities | 206 | 71 | |||||||||
| Total gross deferred tax liabilities | $ | 13,132 | $ | 9,050 | |||||||
| Net deferred taxes assets (liability) | $ | — | $ | — | |||||||
(1)The Company recorded an increase in the deferred tax asset related to unamortized intangible assets in the amount of $187,438. As of December 31, 2025, the balance of this deferred tax asset was offset by a full valuation allowance.
A valuation allowance is provided when it is more likely than not that the deferred tax assets will not be realized. The Company has established a full valuation allowance to offset the deferred tax assets at December 31, 2025 and 2024 due to the uncertainty of realizing future tax benefits. The net change in the total valuation allowance for the years ended December 31, 2025 and 2024 were 196,694 and 1,261,855, respectively.
Swiss income taxes and non-Swiss withholding taxes associated with the repatriation of earnings or for other temporary differences related to investments in non-Swiss subsidiaries have not been provided for, as the Company intends to reinvest the earnings of such subsidiaries indefinitely. If these earnings were distributed to Switzerland in the form of dividends or otherwise, or if the shares of the relevant non-Swiss subsidiaries were sold or otherwise transferred, the Company may be subject to additional Swiss income taxes and non-Swiss withholding taxes. As of December 31, 2025, the amount of unrecognized deferred income tax liability related to these earnings is estimated to be approximately $1,300.
d. Carryforward loss:
In Switzerland, the Company had $1,236,560 of net operating carryforwards (NOLs) available at the Federal level, of which $1,208,800 are also available at the cantonal and communal level. These NOLs expire from 2026 through 2032. Additionally, the Company had $27,377 of non-Swiss NOLs as of December 31, 2025, of which $2,531 carry forward indefinitely,and the remainder expire from 2026 through 2041.
e. Uncertain tax benefits:
A reconciliation of the beginning and ending balances of uncertain tax benefits is as follows:
| December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at beginning of the year | $ | 18 | $ | 18 | $ | 76 | |||||||||||
| Additions (reductions) for taxes positions related to prior years | 1 | — | (58) | ||||||||||||||
| Balance at the end of the year | $ | 19 | $ | 18 | $ | 18 | |||||||||||
The Company recognizes interest and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2025, 2024 and 2023, the Company accrued $1, $0 and $2, respectively, for interest and penalties expenses related to uncertain tax positions.
The Company files income tax returns in Switzerland and various foreign jurisdictions. Currently, the Company is under examination by the tax authorities in Israel and Germany and is not under examination by any other tax authority. Additional tax years within the period from 2019 to 2024 remain subject to examination by the various tax authorities.
f. Supplemental Cash Flow Information:
The following table presents the income taxes paid (net of refunds received) for the years ended December 31, 2025, 2024 and 2023:
| December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Switzerland : | |||||||||||||||||
| Federal | $ | 1,087 | $ | — | $ | — | |||||||||||
| Cantonal (Zug) | $ | 637 | $ | — | $ | — | |||||||||||
| Foreign countries: | |||||||||||||||||
| United States | $ | 12,809 | $ | 16,453 | $ | 7,413 | |||||||||||
| Luxembourg | $ | 6,953 | $ | — | $ | — | |||||||||||
| Israel | $ | 5,470 | $ | 4,945 | $ | 4,289 | |||||||||||
| Other foreign countries | $ | 3,717 | $ | 2,065 | $ | 1,963 | |||||||||||
| Total income taxes paid (net of refunds received) | $ | 30,673 | $ | 23,463 | $ | 13,665 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 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.