Restaurant Brands International Inc.QSR

Restaurant Brands International Inc. Income Taxes Disclosure

10-KFiled Feb 20, 20267 min read
Income Taxes
Income before income taxes, classified by source of income, is as follows (in millions):
202520242023
Canadian$284 $317 $493 
Foreign1,400 1,492 960 
Income before income taxes$1,684 $1,809 $1,453 
Income tax expense (benefit) attributable to income from continuing operations consists of the following (in millions):
2025
Current:
Canadian$109 
Canadian provincial, net of federal abatement8 
U.S. federal116 
U.S. state, net of federal income tax benefit5 
Other foreign148 
$386 
Deferred:
Canadian$(53)
Canadian provincial, net of federal abatement(5)
U.S. federal(85)
U.S. state, net of federal income tax benefit(22)
Other foreign262 
$97 
Income tax expense$483 

20242023
Current:
Canadian$96 $(47)
U.S. federal113 77 
U.S. state, net of federal income tax benefit24 27 
Other foreign136 108 
$369 $165 
Deferred:
Canadian$(54)$(37)
U.S. federal(23)(18)
U.S. state, net of federal income tax benefit(24)(5)
Other foreign96 (370)
$(5)$(430)
Income tax expense (benefit)$364 $(265)
On July 4, 2025, the “One Big Beautiful Bill Act” (“OBBBA”) was enacted into law. The OBBBA provides for modifications to U.S. tax law including changes to interest deductibility, R&D expensing, bonus depreciation, and various international provisions. The OBBBA did not have a material impact on our financial statements for 2025 and we do not expect a material impact going forward.
We adopted guidance that expands income tax disclosures, including requiring enhanced disclosures related to the rate reconciliation and income taxes paid information, effective January 1, 2025, on a prospective basis. The Canadian federal statutory rate used is 25%. This rate results in the 10% federal tax abatement being included in the ‘Provincial income taxes, net of federal abatement’ line. Our disclosures reflect the application of this new guidance beginning in 2025, while our disclosures for prior periods were prepared under the guidance of the previous standards. The statutory rate reconciles to the effective income tax rate as follows:
2025
Canada federal statutory rate$421 25.0 %
Provincial income taxes, net of federal abatement2 — %
Foreign tax effects
United States
Effect of cross-border tax laws30 1.8 %
Tax credits(37)(2.2)%
Other adjustments(46)(2.7)%
Switzerland
Statutory tax rate difference between Canada and Switzerland(137)(8.1)%
Effect of cross-border tax laws(27)(1.6)%
Tax credits (23)(1.4)%
Changes in valuation allowances(195)(11.6)%
Intra-entity transfers of assets 362 21.5 %
Other adjustments16 0.9 %
Luxembourg
Changes in valuation allowances54 3.2 %
Intra-entity transfers of assets(57)(3.4)%
Other adjustments12 0.7 %
Other foreign jurisdictions
Withholding taxes 77 4.7 %
Other adjustments5 0.4 %
Effect of changes in tax laws or rates enacted in the current period— — %
Effect of cross-border tax laws
Withholding taxes24 1.4 %
Tax credits— — %
Changes in valuation allowances— — %
Nontaxable or nondeductible items
Non-taxable interest (34)(2.0)%
Changes in unrecognized tax benefits36 2.1 %
Effective tax rate$483 28.7 %


20242023
Statutory rate26.5 %26.5 %
Costs and taxes related to foreign operations5.2 5.3 
Foreign tax rate differential(12.7)(15.1)
Change in valuation allowance2.7 (0.8)
Change in accrual for tax uncertainties(0.6)(6.2)
Intercompany financing(1.8)(2.7)
Intra-Group reorganizations— (25.3)
Other0.8 0.1 
Effective income tax rate20.1 %(18.2)%
Companies subject to the Global Intangible Low-Taxed Income provision (GILTI) have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for outside basis temporary differences expected to reverse as GILTI. We have elected to account for GILTI as a period cost.
Income tax expense (benefit) allocated to continuing operations and amounts separately allocated to other items was (in millions):

202520242023
Income tax expense (benefit) from continuing operations$483 $364 $(265)
Cash flow hedge in accumulated other comprehensive (loss) income(43)2 (14)
Net investment hedge in accumulated other comprehensive income (loss)2 (16)22 
Foreign Currency Translation in accumulated other comprehensive income (loss)— — 1 
Pension liability in accumulated other comprehensive income (loss)1 1 2 
Total$443 $351 $(254)
The significant components of deferred income tax expense (benefit) attributable to income from continuing operations are as follows (in millions):

202520242023
Deferred income tax expense (benefit) $213 $(39)$(1,788)
Change in valuation allowance(101)50 1,357 
Change in effective U.S. state income tax rate(15)(15)2 
Change in effective foreign income tax rate— (1)(1)
Total$97 $(5)$(430)
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below (in millions):

 As of December 31,
 20252024
Deferred tax assets:
Accounts and notes receivable$5 $3 
Accrued employee benefits47 53 
Leases82 95 
Operating lease liabilities536 504 
Liabilities not currently deductible for tax837 665 
Tax loss and credit carryforwards1,078 1,050 
Derivatives23 — 
Intangible assets526 993 
Total gross deferred tax assets3,134 3,363 
Valuation allowance(1,521)(1,588)
Net deferred tax assets$1,613 $1,775 
Less deferred tax liabilities:
Property and equipment, principally due to differences in depreciation14 16 
Intangible assets1,771 1,738 
Leases102 113 
Operating lease assets499 475 
Statutory impairment— 26 
Derivatives— 63 
Outside basis difference29 36 
Other28 30 
Total gross deferred tax liabilities$2,443 $2,497 
Net deferred tax liability$830 $722 
The valuation allowance had a net decrease of $67 million during 2025 due primarily to changes in estimates and foreign tax credits.
Changes in the valuation allowance are as follows (in millions):

202520242023
Beginning balance$1,588 $1,563 $194 
Change in estimates recorded to deferred income tax expense(205)32 (12)
Additions related to deferred tax assets generated in current year— — 1,369 
Changes in losses and credits71 18 — 
Additions (reductions) related to other comprehensive income67 (25)12 
Ending balance$1,521 $1,588 $1,563 
The gross amount and expiration dates of operating loss and tax credit carry-forwards as of December 31, 2025 are as follows (in millions):

AmountExpiration Date
Canadian net operating loss carryforwards$203 2037-2045
Canadian capital loss carryforwards224 Indefinite
Canadian tax credits2 2027-2046
U.S. state net operating loss carryforwards613 2026-2045
U.S. federal net operating loss carryforward108 Indefinite
U.S. foreign and other tax credits108 2026-2045
Other foreign net operating loss carryforwards174 Indefinite
Other foreign net operating loss carryforwards349 2027-2042
Other foreign credits703 2033
We are generally permanently reinvested on any potential outside basis differences except for unremitted earnings and profits and thus do not record a deferred tax liability for such outside basis differences. To the extent of unremitted earnings and profits, we generally review various factors including, but not limited to, forecasts and budgets of financial needs of cash for working capital, liquidity and expected cash requirements to fund our various obligations and record deferred taxes to the extent we expect to distribute. The determination of the unrecorded deferred tax liability amount is not practicable.
We had $70 million and $44 million of unrecognized tax benefits at December 31, 2025 and December 31, 2024, respectively, which if recognized, would favorably affect the effective income tax rate. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in millions):

202520242023
Beginning balance$44 $58 $139 
Additions for tax positions related to the current year17 2 5 
Additions for tax positions of prior years15 — 7 
Reductions for tax positions of prior years(3)(9)(14)
Adjustments for settlement(3)— 6 
Reductions due to statute expiration— (7)(85)
Ending balance$70 $44 $58 
We recognize interest and penalties related to unrecognized tax benefits in income tax expense. The total amount of accrued interest and penalties was $18 million and $12 million at December 31, 2025 and 2024, respectively. Potential interest and penalties associated with uncertain tax positions in various jurisdictions recognized was $5 million during 2025, $3 million during 2024, and $4 million during 2023. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.
We file income tax returns with Canada and its provinces and territories. Generally, we are subject to routine examinations by the Canada Revenue Agency (“CRA”). The CRA is conducting examinations of the 2015 through 2020 taxation years. Additionally, income tax returns filed with various provincial jurisdictions are generally open to examination for periods up to six years subsequent to the filing and assessment of the respective return.
In connection with an ongoing tax audit, we have had discussions with the Canada Revenue Agency (“CRA”) regarding our deductions of certain intercompany dividends in taxation years 2015 through 2018. We believe our tax position with respect to this matter is appropriate, as such no reserve has been recorded in the consolidated financial statements with respect to this matter.
We also file income tax returns, including returns for our subsidiaries, with U.S. federal, U.S. state, and other foreign jurisdictions. We are subject to routine examination by taxing authorities in the U.S. jurisdictions, as well as other foreign tax jurisdictions. Taxable years of such U.S. companies are closed through 2021 for U.S. federal income tax purposes. We have various U.S. federal, state and other foreign income tax returns in the process of examination. From time to time, these audits result in proposed assessments where the ultimate resolution may result in owing additional taxes. We believe that our tax positions comply with applicable tax law and that we have adequately provided for these matters.
Income tax payments (refunds) by jurisdiction consists of the following (in millions):
2025
Canada - federal $76 
Canada - provincial
British Columbia33 
Ontario26 
Foreign
United States - federal120 
United States - state and local26 
Switzerland86 
Other83 
Foreign subtotal315 
Total cash paid for income taxes (net of refunds)$450 

Historical Timeline

Fiscal YearFiled
2025Feb 20, 2026Showing above
2024Feb 21, 2025
2023Feb 22, 2024
2022Feb 22, 2023
2021Feb 23, 2022
2020Feb 23, 2021
2019Feb 21, 2020
2018Feb 22, 2019
2017Feb 23, 2018
2016Feb 17, 2017
2015Feb 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.

Other Available Disclosures

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