Orion S.A.OEC
Orion S.A. Income Taxes Disclosure
Income Taxes
The Company operates in multiple jurisdictions with complex tax and regulatory environments and our income tax returns are periodically audited or subjected to review by tax authorities. We monitor tax law changes and the potential impact to our results of operations.
Tax provision (benefit) for income taxes consisted of the following:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Current | |||||||||||||||||
Domestic (1) | $ | 15.5 | $ | 8.4 | $ | 34.3 | |||||||||||
| Foreign | 27.1 | 21.0 | 19.7 | ||||||||||||||
| Total | 42.6 | 29.4 | 54.0 | ||||||||||||||
| Deferred | |||||||||||||||||
Domestic (1) | (5.3) | (5.2) | 3.1 | ||||||||||||||
| Foreign | (1.5) | (14.5) | 3.2 | ||||||||||||||
| Total | (6.8) | (19.7) | 6.3 | ||||||||||||||
| Provision for income taxes | $ | 35.8 | $ | 9.7 | $ | 60.3 | |||||||||||
(1) Domestic refers to Germany.
The following table presents the components of income before income taxes for continuing operations for fiscal years 2025, 2024 and 2023:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
Domestic (1) | $ | (17.4) | $ | 5.5 | $ | 119.1 | |||||||||||
| Foreign | (17.4) | 48.4 | 44.7 | ||||||||||||||
| Income (loss) before income taxes | $ | (34.8) | $ | 53.9 | $ | 163.8 | |||||||||||
(1) Domestic refers to Germany.
The overall statutory income tax rate for the German entities was 32.00%, for the years ended December 31, 2025, 2024 and 2023, which includes a corporate income tax rate of 15.0%, a solidarity surcharge of 0.8% and a trade tax rate of 16.2%.
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, the amount of tax-free income, and impact of non-deductible expenses.
The following tables reconcile the expected tax expense (benefit) at the German statutory tax rate of 32.0% calculated for the year ended December 31,:
| 2025 | |||||||||||
| (In millions) | % | ||||||||||
| Loss before income taxes | (34.3) | ||||||||||
| Expected income tax thereon | 11.1 | 32 | % | ||||||||
| Goodwill impairment | (3.3) | (9) | % | ||||||||
| Other permanent differences | 2.6 | 7 | % | ||||||||
| Uncertain tax positions | (2.7) | (8) | % | ||||||||
| Other | 2.7 | 8 | % | ||||||||
| Foreign tax effects | |||||||||||
| Brazil | |||||||||||
| Effects from tax rate differences | (1.1) | (3) | % | ||||||||
| Goodwill impairment | 4.5 | 13 | % | ||||||||
| Other | (0.3) | (1) | % | ||||||||
| U.S. | |||||||||||
| Effects from tax rate differences | (7.5) | (21) | % | ||||||||
| Goodwill impairment | 16.9 | 48 | % | ||||||||
| Cross border impacts | 3.7 | 11 | % | ||||||||
| Foreign tax credit | 14.1 | 40 | % | ||||||||
| Valuation allowance | (6.4) | (18) | % | ||||||||
| Other | (2.0) | (6) | % | ||||||||
| France | |||||||||||
| Effects from tax rate differences | (1.0) | (3) | % | ||||||||
| Goodwill impairment | (2.1) | (6) | % | ||||||||
| Valuation allowance | (1.0) | (3) | % | ||||||||
| Other | (0.6) | (2) | % | ||||||||
| Italy | |||||||||||
| Effects from tax rate differences | (2.7) | (8) | % | ||||||||
| Goodwill impairment | (13.8) | (40) | % | ||||||||
| Other | (1.3) | (4) | % | ||||||||
| Luxembourg | |||||||||||
| Effects from tax rate differences | (1.7) | (5) | % | ||||||||
| Changes in tax loss | (9.4) | (27) | % | ||||||||
| Valuation allowance | 7.3 | 21 | % | ||||||||
| Other | (2.5) | (7) | % | ||||||||
| Poland | |||||||||||
| Effects from tax rate differences | (5.4) | (16) | % | ||||||||
| Goodwill impairment | (8.1) | (23) | % | ||||||||
| Other | 0.6 | 2 | % | ||||||||
| South Africa | |||||||||||
| Effects from tax rate differences | (1.1) | (3) | % | ||||||||
| Goodwill impairment | (4.3) | (12) | % | ||||||||
| Tax loss carry forward | 2.0 | 6 | % | ||||||||
| Valuation allowance | (3.3) | (9) | % | ||||||||
| Other | (1.4) | (4) | % | ||||||||
| Sweden | |||||||||||
| Effects from tax rate differences | (7.3) | (21) | % | ||||||||
| Goodwill impairment | (15.3) | (44) | % | ||||||||
| Other | (0.1) | — | % | ||||||||
| China | |||||||||||
| Effects from tax rate differences | (1.3) | (4) | % | ||||||||
| Valuation allowance | (7.3) | (21) | % | ||||||||
| Other | (0.1) | — | % | ||||||||
| South Korea | |||||||||||
| Effects from tax rate differences | 4.1 | 12 | % | ||||||||
| Goodwill impairment | 7.0 | 20 | % | ||||||||
| Other | 2.0 | 6 | % | ||||||||
| Effective tax expense | (35.8) | (104) | % | ||||||||
| 2024 | 2023 | ||||||||||
| (In millions) | |||||||||||
| Income before income taxes | $ | 53.9 | $ | 163.8 | |||||||
| Expected income tax thereon | 17.0 | 52.3 | |||||||||
| Tax rate differences | 1.0 | (4.2) | |||||||||
| Effect of cross-border tax laws | (9.4) | — | |||||||||
| Change in valuation allowance | 13.0 | 5.0 | |||||||||
| Income taxes for prior years | (1.0) | 3.3 | |||||||||
| Uncertain tax position | (13.3) | 1.6 | |||||||||
| Non-deductible interest expenses | — | 0.1 | |||||||||
| Non-deductible expenses, and non-deductible taxes | 1.5 | 2.1 | |||||||||
| Effects of changes in permanent differences | 1.2 | — | |||||||||
| Tax effect on tax-free income | (1.4) | (1.5) | |||||||||
| Other tax effects | 1.1 | 1.6 | |||||||||
| Income tax expense | $ | 9.7 | $ | 60.3 | |||||||
| Effective tax rate | 18.0 | % | 36.9 | % | |||||||
The 2025 effective income tax rate was (104.4)% compared with 18.0% in 2024. The change in the effective tax rate was mainly driven by the negative tax effects from the goodwill impairment, non-deductible expenses and valuation allowances. Those were partially offset by US tax refunds and tax-free income.
For the tax year ended December 31, 2025, additional valuation allowances were established primarily related to certain foreign net operating losses and other deferred tax assets. As part of the process of preparing the consolidated financial statements, we are required to determine the provision for income taxes. This process involves measuring temporary and permanent differences resulting from differing treatment of items for tax and accounting purposes. Non-deductible expenses and non-deductible taxes were analyzed and resulted in additional income tax.
Differences resulting from differing treatment of items for tax and accounting purpose, the net operating loss, and tax credit carryforwards result in deferred tax assets and liabilities. The deferred tax effects of tax losses, credit and interest carryforwards (“tax attributes”) and the tax effects of temporary differences between the tax basis of assets and liabilities and their amounts reported in the Consolidated Financial Statements, reduced by a valuation allowance where appropriate, are presented below.
| December 31 | |||||||||||
| 2025 | 2024 | ||||||||||
| (In millions) | |||||||||||
| Deferred tax assets | |||||||||||
| Inventories | $ | 7.8 | $ | 5.8 | |||||||
| Deferred Compensation | 4.3 | 4.0 | |||||||||
| Provisions | 11.1 | 14.3 | |||||||||
| Liabilities including leases liabilities | 34.0 | 42.5 | |||||||||
| Loss carryforwards | 59.5 | 54.0 | |||||||||
| Interest carryforwards | 5.5 | 5.6 | |||||||||
| Tax credits | 26.2 | 21.0 | |||||||||
| Other | 11.2 | 2.6 | |||||||||
| Total deferred tax assets | 159.6 | 149.8 | |||||||||
| Valuation allowances | (67.3) | (50.5) | |||||||||
| Net deferred tax assets | $ | 92.3 | $ | 99.3 | |||||||
| Deferred Tax Liabilities | |||||||||||
| Intangible assets | $ | 1.4 | $ | 1.4 | |||||||
| Property, plant and equipment including right of use assets | 77.3 | 92.0 | |||||||||
| Financial assets | 8.0 | 13.7 | |||||||||
| Receivables, other assets | 13.1 | 7.1 | |||||||||
| Total deferred tax liabilities | $ | 99.8 | $ | 114.2 | |||||||
| Net deferred tax assets / (liabilities) | $ | (7.5) | $ | (14.9) | |||||||
Our net deferred tax assets and liabilities reflected in our balance sheet are as follows:
| Net deferred tax position | December 31 | ||||||||||
| 2025 | 2024 | ||||||||||
| (In millions) | |||||||||||
| Deferred tax assets | |||||||||||
| Net deferred tax assets | $ | 20.5 | $ | 21.6 | |||||||
| Deferred tax liabilities | |||||||||||
| Net deferred tax liabilities | 28.0 | 36.5 | |||||||||
| Net deferred tax asset / (liability) positions | $ | (7.5) | $ | (14.9) | |||||||
As of each reporting date, management considers the weight of all evidence, both positive and negative, to determine if a valuation allowance is necessary for each jurisdiction's deferred tax assets. We place greater weight on historical evidence over future projections of our ability to utilize 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 carryback year(s) if carryback 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 assets. The following table presents a summary of our valuation allowance positions:
| Valuation allowance | 2025 | 2024 | 2023 | ||||||||||||||
| (In millions) | |||||||||||||||||
| As of January 1, | $ | 50.5 | $ | 40.1 | $ | 38.1 | |||||||||||
| Additions for Tax Credits | 6.4 | — | — | ||||||||||||||
| Additions for Loss carryforwards | 12.8 | 10.6 | 6.0 | ||||||||||||||
| Additions for Interest carryforwards | 0.3 | — | — | ||||||||||||||
| Additions Other | 2.6 | 0.2 | 0.2 | ||||||||||||||
| Reduction for Loss and Interest carryforwards | (5.3) | (0.4) | (4.2) | ||||||||||||||
| As of December 31, | $ | 67.3 | $ | 50.5 | $ | 40.1 | |||||||||||
The following table provides detail surrounding the expiration dates of the gross amount of tax loss carryforwards and tax credits:
| December 31, 2025 | |||||||||||
| Net operating loss carryforwards | Tax Credits | ||||||||||
| (In millions) | |||||||||||
| 2026 to 2032 | $ | 58.8 | $ | 1.0 | |||||||
| 2033 and thereafter | — | — | |||||||||
| Indefinite carryforwards | 183.6 | 25.2 | |||||||||
| Total | $ | 242.4 | $ | 26.2 | |||||||
As of December 31, 2025, we did not provide for deferred taxes on earnings of most of our foreign subsidiaries because they are indefinitely reinvested. If we were to make a distribution from the unremitted earnings of these subsidiaries, we could be subject to taxes in various jurisdictions. However, it is not practical to estimate the amount of tax that could ultimately be due if such earnings were remitted. If our expectations were to change regarding future tax consequences, we may be required to record additional deferred taxes that could have a material effect on our consolidated financial statements.
Liabilities for uncertain tax positions
We had a $4.7 million liability relating to uncertain tax positions unrecognized as of December 31, 2025. The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits:
| 2025 | 2024 | 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Balance at beginning of the year | $ | — | $ | 13.3 | $ | 11.6 | |||||||||||
| Additions for tax positions of prior year | 8.7 | — | 1.7 | ||||||||||||||
| Reductions of tax positions of prior year | — | (11.9) | — | ||||||||||||||
| Reductions related to settlements and other | (4.0) | (1.4) | — | ||||||||||||||
| Balance at end of the year | $ | 4.7 | $ | — | $ | 13.3 | |||||||||||
The $4.7 million unrecognized tax liability would not impact our effective income tax rate if it were recognized. Tax related interest and penalties are included interest expenses and other expenses and we accrued $1.0 million, none, and $4.4 million for interest and penalties as of December 31, 2025, 2024 and 2023, respectively.
Orion and certain subsidiaries are under audit in several jurisdictions. In 2025, tax audits in Germany, Italy, South Korea and China had been initiated. It is reasonably possible that our existing liabilities for unrecognized tax benefits may increase in future, primarily due to the progression of open audits.
The following table provides detail surrounding the cash paid for income taxes:
| 2025 | ||||||||
| (In millions) | ||||||||
| Germany | $ | 10.8 | ||||||
| USA | 7.2 | |||||||
| Brazil | 15.4 | |||||||
| Korea | 4.2 | |||||||
| Other | 3.6 | |||||||
| Cash paid for income taxes | $ | 41.2 | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 20, 2020 | |
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.