PRA GROUP INCPRAA
PRA GROUP INC Income Taxes Disclosure
Income Taxes
Income/(loss) before income taxes for the years ended December 31, 2025, 2024 and 2023 was as follows (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
Loss before income taxes - U.S. (1) | $ | (79,404) | $ | (55,140) | $ | (199,660) | |||||||||||
Income/(loss) before income taxes - international (1) | (163,835) | 164,745 | 116,773 | ||||||||||||||
| Income/(loss) before income taxes | $ | (243,239) | $ | 109,605 | $ | (82,887) | |||||||||||
(1)Includes certain unallocated corporate expenses.
Income tax expense/(benefit) for the years ended December 31, 2025, 2024 and 2023 was as follows (in thousands):
| Federal | State | International | Total | ||||||||||||||||||||
| 2025 | |||||||||||||||||||||||
| Current | $ | 3,040 | $ | 263 | $ | 37,043 | $ | 40,346 | |||||||||||||||
| Deferred | (1,832) | (1,712) | 9,933 | 6,389 | |||||||||||||||||||
| Income tax expense/(benefit) | $ | 1,208 | $ | (1,449) | $ | 46,976 | $ | 46,735 | |||||||||||||||
| 2024 | |||||||||||||||||||||||
| Current | $ | (2,169) | $ | 210 | $ | 25,129 | $ | 23,170 | |||||||||||||||
| Deferred | 6,250 | 177 | (8,565) | (2,138) | |||||||||||||||||||
| Income tax expense | $ | 4,081 | $ | 387 | $ | 16,564 | $ | 21,032 | |||||||||||||||
| 2023 | |||||||||||||||||||||||
| Current | $ | 160 | $ | 1,697 | $ | 17,953 | $ | 19,810 | |||||||||||||||
| Deferred | (25,921) | (7,956) | (2,066) | (35,943) | |||||||||||||||||||
Income tax expense/(benefit) | $ | (25,761) | $ | (6,259) | $ | 15,887 | $ | (16,133) | |||||||||||||||
The following table, applying ASU 2023-09 prospectively, provides a reconciliation of the Company's expected tax benefit at the U.S. statutory federal tax rate to actual tax expense for the year ended December 31, 2025 (in thousands, except percentages):
| 2025 | ||||||||||||||
| Amount | Percent | |||||||||||||
| Income tax benefit at the U.S. federal statutory tax rate | $ | (51,080) | 21.0 | % | ||||||||||
| Foreign tax effects: | ||||||||||||||
Goodwill impairment (1) | 83,514 | (34.4) | ||||||||||||
| UK - other | 2,328 | (1.0) | ||||||||||||
| Poland - other | 339 | (0.1) | ||||||||||||
| Canada - other | (13) | — | ||||||||||||
| Norway - other | (1,092) | 0.5 | ||||||||||||
| Brazil | ||||||||||||||
| Nontaxable income | (15,535) | 6.4 | ||||||||||||
| Foreign withholding taxes | 10,024 | (4.1) | ||||||||||||
| Other | 577 | (0.2) | ||||||||||||
| Other foreign jurisdictions | (966) | 0.5 | ||||||||||||
| Effect of cross-border tax laws | ||||||||||||||
| Global intangible low-taxed income | 14,759 | (6.1) | ||||||||||||
| Subpart F income | 14,302 | (5.9) | ||||||||||||
| Tax credits | (10,059) | 4.1 | ||||||||||||
| Other adjustments | (363) | 0.1 | ||||||||||||
| Income tax expense and effective tax rate | $ | 46,735 | (19.2) | % | ||||||||||
(1)Includes the effect of goodwill impairment in Norway of $63.1 million (-26.0%), the UK of $7.8 million (-3.2%), Canada of $7.5 million (-3.1%) and Poland of $5.1 million (-2.1%).
As previously disclosed, prior to the adoption of ASU-2023-09, reconciliations of the Company's expected tax expense/(benefit) at the U.S. statutory federal tax rate to actual tax expense/(benefit) for the years ended December 31, 2024 and 2023 were as follows (in thousands, except percentages):
| 2024 | 2023 | ||||||||||
| Income tax expense/(benefit) at the statutory federal rate | $ | 23,017 | $ | (17,406) | |||||||
| State tax expense/(benefit), net of federal tax benefit | 387 | (4,886) | |||||||||
| Tax impact on foreign earnings, excluding uncertain tax positions | (2,630) | 2,058 | |||||||||
| Nondeductible legal settlement expenses | — | 3,017 | |||||||||
| Nondeductible compensation | 1,181 | 117 | |||||||||
| Other | (923) | 967 | |||||||||
| Total income tax expense/(benefit) | $ | 21,032 | $ | (16,133) | |||||||
| Effective tax rate | 19.2 | % | 19.5 | % | |||||||
As of December 31, 2025 and 2024, the components of deferred tax assets and liabilities were as follows (in thousands):
| December 31, 2025 | December 31, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforward | $ | 163,483 | $ | 164,070 | |||||||
| Foreign tax credits | 12,594 | — | |||||||||
| Employee compensation | 6,023 | 6,758 | |||||||||
| Interest | 6,088 | 6,626 | |||||||||
| Lease liability | 4,716 | 6,087 | |||||||||
| Other | 347 | 746 | |||||||||
| Valuation allowance | (54,123) | (52,418) | |||||||||
| Total deferred tax asset | 139,128 | 131,869 | |||||||||
| Deferred tax liabilities: | |||||||||||
Finance receivable revenue recognition - U.S. | (28,887) | (22,970) | |||||||||
Finance receivable revenue recognition - international | (23,529) | (22,116) | |||||||||
| Deferred income | (20,944) | (11,625) | |||||||||
| Intangible assets and goodwill | (1,648) | (6,983) | |||||||||
| ROU asset | (4,229) | (5,314) | |||||||||
| Foreign exchange - statutory | — | (4,540) | |||||||||
| Total deferred tax liability | (79,237) | (73,548) | |||||||||
| Net deferred tax asset | $ | 59,891 | $ | 58,321 | |||||||
As of December 31, 2025, the valuation allowance primarily related to foreign net operating loss carryforwards. The foreign and state net operating loss carryforwards generally have a to 20 year carryforward period and will expire if not utilized, while the federal net operating loss carryforward has an indefinite carryforward period. The foreign tax credits have expiration dates of $2.4 million in 2034 and $10.2 million in 2035.
Cash paid for income taxes (net of refunds received) for the year ended December 31, 2025 was as follows (in thousands):
| 2025 | |||||
| Federal | $ | 1,800 | |||
| State and local | 273 | ||||
| Foreign | |||||
| Austria | 11,752 | ||||
| Brazil | 10,024 | ||||
| Poland | 8,157 | ||||
| Canada | 4,069 | ||||
| Sweden | 2,485 | ||||
| Spain | 2,063 | ||||
| Norway | (3,018) | ||||
| Other foreign | 923 | ||||
| Total foreign | 36,455 | ||||
| Cash paid for income taxes | $ | 38,528 | |||
Aggregate changes in the balance of unrecognized tax benefits for the years ended December 31, 2025, 2024 and 2023 were as follows (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance as of the beginning of year | $ | 106,682 | $ | 105,704 | $ | 101,703 | |||||||||||
Increase related to tax positions taken during a prior year (1) | 3,052 | 978 | 4,001 | ||||||||||||||
| Balance as of the end of year | $ | 109,734 | $ | 106,682 | $ | 105,704 | |||||||||||
(1)Relates to foreign transactions and is primarily due to foreign exchange rate fluctuations.
As of December 31, 2025 and 2024, the total amount of after-tax unrecognized tax benefits that, if recognized, would affect the effective tax rate, was $21.2 million and $20.7 million, respectively. As of December 31, 2025 and 2024, the Company had accrued for potential interest and penalties related to unrecognized tax benefits in the amounts of $5.9 million and $4.8 million, respectively.
The Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. The Internal Revenue Service and other tax authorities routinely audit the Company's tax returns, and these audits can involve complex issues that may require an extended period of time to resolve. The Company records income tax liabilities based on estimates of the additional income taxes that may be due upon the conclusion of these audits. Due to the uncertain and complex application of income tax regulations, the ultimate resolution of such audits may result in liabilities that are materially different from those estimates, and the Company records additional income tax expense or income tax benefit in the period in which the matter is resolved.
As of December 31, 2025, tax years under examination in certain international jurisdictions include 2014 and subsequent years. The Company has received tax assessments from the Norwegian Tax Administration related to certain intercompany transactions that took place during the 2014 and 2015 tax years. The Company filed appeals for these assessments and believes that it is more-likely-than-not that its position will be sustained, and therefore, has not recorded tax liabilities in relation to these assessments.
As of December 31, 2025, the cumulative unremitted earnings of the Company's international subsidiaries were approximately $161.2 million. The Company intends for predominantly all foreign earnings to be indefinitely reinvested in its foreign operations; therefore, no deferred tax liabilities were recorded for such unremitted earnings. If foreign earnings were repatriated or deemed repatriated due to intercompany loans, the Company may need to accrue and pay taxes, although foreign tax credits and exemptions may be available to reduce or eliminate income and withholding taxes. Any deemed repatriations from intercompany loans would be expected to have little or no tax impact. It is impracticable to determine the total amount of unrecognized deferred taxes with respect to these indefinitely reinvested earnings.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 12, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 26, 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.