nVent Electric plcNVT
nVent Electric plc Income Taxes Disclosure
Income Taxes
Income before income taxes consisted of the following:
| Years ended December 31 | |||||||||||
| In millions | 2025 | 2024 | 2023 | ||||||||
Federal (1) | $ | (48.9) | $ | (23.6) | $ | (15.4) | |||||
International (2) | 598.9 | 452.8 | 390.7 | ||||||||
| Income before income taxes | $ | 550.0 | $ | 429.2 | $ | 375.3 | |||||
(1)"Federal" reflects U.K. loss before income taxes.
(2)"International" reflects non-U.K. income before income taxes.
The provision (benefit) for income taxes consisted of the following:
| Years ended December 31 | |||||||||||
| In millions | 2025 | 2024 | 2023 | ||||||||
| Currently payable | |||||||||||
Federal (1) | $ | — | $ | 0.8 | $ | — | |||||
International (2) | 113.3 | 104.9 | 87.6 | ||||||||
| Total current taxes | 113.3 | 105.7 | 87.6 | ||||||||
| Deferred | |||||||||||
Federal (1) | 0.1 | 0.1 | 2.0 | ||||||||
International (2) | 8.1 | 82.6 | (174.0) | ||||||||
| Total deferred taxes | 8.2 | 82.7 | (172.0) | ||||||||
| Total provision (benefit) for income taxes | $ | 121.5 | $ | 188.4 | $ | (84.4) | |||||
(1)"Federal" represents U.K. taxes.
(2)"International" represents non-U.K. taxes.
The table below provides the updated requirements of the Accounting Standards Update 2023-09, "Improvements to Income Tax Disclosures" ("ASU 2023-09"), for 2025. The reconciliations of the federal statutory income tax rate to our effective tax rate was as follows for the year ended December 31, 2025:
| Dollars in millions | Amount | Percent | ||||||
| Federal statutory tax rate | $ | 137.5 | 25.0 | % | ||||
| Foreign tax effects: | ||||||||
| Jurisdictions: | ||||||||
| Switzerland | ||||||||
| Tax rate differential | (44.8) | (8.1) | ||||||
| Cantonal income taxes | 20.3 | 3.6 | ||||||
| Other | 3.7 | 0.7 | ||||||
| United States | ||||||||
| Tax rate differential | (10.6) | (1.9) | ||||||
| State and local income taxes | 13.6 | 2.5 | ||||||
| Other | (7.3) | (1.3) | ||||||
| Other jurisdictions | 5.7 | 1.0 | ||||||
| Valuation allowances | 3.5 | 0.7 | ||||||
| Unrecognized tax benefits | (0.3) | (0.1) | ||||||
| Other adjustments | 0.2 | — | ||||||
Effective tax rate | $ | 121.5 | 22.1 | % | ||||
As previously disclosed for the years December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the reconciliations of the federal statutory income tax rate to our effective tax rate were as follows:
| Years ended December 31 | ||||||||
| Percentages | 2024 | 2023 | ||||||
Federal statutory income tax rate (1) | 25.0 | % | 23.5 | % | ||||
Tax effect of international operations (2) | (2.7) | (4.9) | ||||||
| Change in other valuation allowances | 0.6 | 0.3 | ||||||
| Withholding taxes | 0.3 | 0.4 | ||||||
Change in tax basis of foreign assets (3) | (0.1) | (16.4) | ||||||
Foreign income tax loss carryforwards (4) | 21.6 | (24.8) | ||||||
| Excess tax benefits on stock-based compensation | (1.3) | (0.6) | ||||||
| Tax effect of equity investment impairment | 0.5 | — | ||||||
Effective tax rate | 43.9 | % | (22.5) | % | ||||
(1)The U.K. changed its tax rate to from 19% to 25%, effective April 1, 2023.
(2)The tax effect of international operations consists of non-U.K. jurisdictions.
(3)In 2023, we recorded a non-cash income tax benefit of $55.4 million related to a step up in tax basis of intangible assets in Switzerland, partially offset by valuation allowances of $5.1 million. The assets were amortizable starting in 2025, and the amortization period varies based on the nature of the underlying assets from which the values were derived.
(4)In 2023, we recorded a non-cash income tax benefit of $93.2 million related to foreign income tax loss carryforwards resulting from tax-deductible statutory losses in Luxembourg. We determined in 2024 that such loss carryforwards would not be utilized in the remaining carryforward period and put a valuation allowance against the adjusted remaining loss carryforward available.
Reconciliations of the beginning and ending gross unrecognized tax benefits were as follows:
| Years ended December 31 | |||||||||||
| In millions | 2025 | 2024 | 2023 | ||||||||
| Beginning balance | $ | 11.7 | $ | 13.9 | $ | 13.4 | |||||
| Gross increases for tax positions in prior periods | 0.7 | 0.7 | 0.5 | ||||||||
| Gross decreases for tax positions in prior periods | (1.6) | (3.5) | (1.3) | ||||||||
| Gross increases based on tax positions related to the current year | 1.5 | 1.4 | 1.7 | ||||||||
| Gross decreases related to settlements with taxing authorities | (0.8) | — | (0.2) | ||||||||
| Reductions due to statute expiration | (1.3) | (0.5) | (0.3) | ||||||||
| Gross increases (decreases) due to currency fluctuations | 0.1 | (0.3) | 0.1 | ||||||||
| Ending balance | $ | 10.3 | $ | 11.7 | $ | 13.9 | |||||
We record gross unrecognized tax benefits in Other current liabilities and Other non-current liabilities in the Consolidated Balance Sheets. Included in the $10.3 million of total gross unrecognized tax benefits as of December 31, 2025 was $8.9 million of tax benefits that, if recognized, would impact the effective tax rate.
Based on the outcome of tax examinations, or as a result of the expiration of statute of limitations for specific jurisdictions, it is reasonably possible that certain unrecognized tax benefits for tax positions taken on previously filed tax returns will materially change from those recorded as liabilities in our financial statements. A number of tax periods from 2017 to present are under audit by tax authorities in various jurisdictions, including in the United States, Germany, and India. We anticipate that several of these audits may be concluded in the foreseeable future.
We record penalties and interest related to unrecognized tax benefits in Provision (benefit) for income taxes and Net interest expense, respectively, in the Consolidated Statements of Operations and Comprehensive Income. As of December 31, 2025 and 2024, we have liabilities of $1.5 million and $2.0 million, respectively, for the possible payment of penalties and $1.5 million and $1.4 million, respectively, for the possible payment of interest expense, which are recorded in Other current liabilities in the Consolidated Balance Sheets.
For 2025, we consider substantially all foreign earnings to be indefinitely reinvested. These earnings relate to ongoing operations and have been reinvested in active business operations. It is not practicable to estimate the amount of tax that might be payable if such earnings were to be remitted. Deferred taxes, if necessary, have been provided on earnings of non-U.S. affiliates whose earnings are not indefinitely reinvested.
Deferred taxes arise because of different treatment between financial statement accounting and tax accounting, known as "temporary differences." We record the tax effect of these temporary differences as "deferred tax assets" (generally items that can be used as a tax deduction or credit in future periods) and "deferred tax liabilities" (generally items for which we received a tax deduction but the tax impact has not yet been recorded in the Consolidated Statements of Operations and Comprehensive Income).
Deferred taxes were recorded in the Consolidated Balance Sheets at December 31 as follows:
| In millions | 2025 | 2024 | ||||||
| Other non-current assets | $ | 46.7 | $ | 57.0 | ||||
| Deferred tax liabilities | 232.0 | 242.7 | ||||||
| Net deferred tax liabilities | $ | 185.3 | $ | 185.7 | ||||
The tax effects of the major items recorded as deferred tax assets and liabilities at December 31 were as follows:
| In millions | 2025 | 2024 | ||||||
| Deferred tax assets | ||||||||
| Accrued liabilities and reserves | $ | 28.1 | $ | 23.3 | ||||
| Pension and other post-retirement compensation and benefits | 11.6 | 13.8 | ||||||
| Employee compensation and benefits | 39.8 | 28.5 | ||||||
| Tax loss and credit carryforwards | 191.8 | 195.8 | ||||||
| Other intangibles | 33.0 | 43.5 | ||||||
| Interest limitation | 39.3 | 42.7 | ||||||
| Other assets | 34.0 | 34.8 | ||||||
| Total deferred tax assets | 377.6 | 382.4 | ||||||
| Valuation allowance | 194.4 | 196.0 | ||||||
| Deferred tax assets, net of valuation allowance | 183.2 | 186.4 | ||||||
| Deferred tax liabilities | ||||||||
| Property, plant and equipment | 30.5 | 28.9 | ||||||
| Goodwill and other intangibles | 303.8 | 322.2 | ||||||
| Other liabilities | 34.2 | 21.0 | ||||||
| Total deferred tax liabilities | 368.5 | 372.1 | ||||||
| Net deferred tax liabilities | $ | 185.3 | $ | 185.7 | ||||
Included in tax loss and credit carryforwards in the table above is a deferred tax asset of $3.1 million as of December 31, 2025 related to foreign tax credit carryover from the tax period ended December 31, 2017 and related to transition taxes. The entire amount is subject to a valuation allowance. The foreign tax credit is eligible for carryforward until the tax period ending December 31, 2027.
As of December 31, 2025, tax loss carryforwards of $762.3 million were available to offset future income. A valuation allowance of $181.5 million exists for deferred income tax benefits related to the tax loss carryforwards which may not be realized. We believe sufficient taxable income will be generated in the respective jurisdictions to allow us to fully recover the remainder of the tax losses. The tax losses relate to non-U.S. carryforwards which are subject to varying expiration periods. Non-U.S. carryforwards of $378.8 million are located in jurisdictions with unlimited tax loss carryforward periods, while the remainder will begin to expire in 2026.
The following provides supplemental information of cash paid for income taxes for 2025, including taxes paid related to the sale of the Thermal Management business, updated for the requirements of ASU 2023-09:
| Years ended December 31 | |||||
| In millions | 2025 | ||||
| Cash paid during the period for income taxes, net of refunds: | |||||
| Federal | $ | — | |||
| Foreign | 283.3 | ||||
| Total cash paid during the period for income taxes | $ | 283.3 | |||
Individual jurisdictions equaling 5% or more of the total income tax paid for the year ended December 31, 2025 included the United States federal at $194.6 million and Switzerland federal at $16.5 million. The $194.6 million paid in the United States in 2025 includes $62.5 million paid to third parties for transferable tax credits.
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the following is a supplemental schedule of cash paid for income taxes:
| Years ended December 31 | ||||||||
| In millions | 2024 | 2023 | ||||||
| Cash paid during the period for income taxes | $ | 120.2 | $ | 112.4 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 18, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 19, 2019 | |
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.