Roivant Sciences Ltd.ROIV
Roivant Sciences Ltd. Income Taxes Disclosure
Income Taxes
The (loss) income before income taxes and the related expense are as follows (in thousands):
| Years Ended March 31, | ||||||||||||||||||||
| 2026 | 2025 | 2024 | ||||||||||||||||||
| (Loss) income before income taxes: | ||||||||||||||||||||
Bermuda(1) | $ | 62,366 | $ | (80,590) | $ | 5,189,812 | ||||||||||||||
| United States | (354,509) | (174,763) | (232,592) | |||||||||||||||||
| Switzerland | 21,711 | (426,478) | (389,948) | |||||||||||||||||
| Other | 5,854 | 241 | 584 | |||||||||||||||||
| Total (loss) income from continuing operations before income taxes | $ | (264,578) | $ | (681,590) | $ | 4,567,856 | ||||||||||||||
(1)Primarily entities which are centrally managed and controlled in the U.K. and are subject to U.K. taxes.
| Years Ended March 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| Current taxes: | |||||||||||||||||
| Bermuda | $ | — | $ | — | $ | — | |||||||||||
United States(1) | 53,467 | 48,174 | 21,813 | ||||||||||||||
| Switzerland | 79,889 | — | — | ||||||||||||||
| Other | (27) | — | (310) | ||||||||||||||
| Total current tax expense | $ | 133,329 | $ | 48,174 | $ | 21,503 | |||||||||||
| Deferred taxes: | |||||||||||||||||
| Bermuda | $ | — | $ | — | $ | — | |||||||||||
| United States | — | — | — | ||||||||||||||
| Switzerland | — | — | — | ||||||||||||||
| Other | — | — | — | ||||||||||||||
| Total deferred tax benefit | $ | — | $ | — | $ | — | |||||||||||
| Total income tax expense | $ | 133,329 | $ | 48,174 | $ | 21,503 | |||||||||||
(1)Inclusive of the state and local income taxes.
Cash payments by jurisdiction, net of refunds, were as follows (in thousands):
| Years Ended March 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| United States Federal | 48,638 | 59,389 | 10,409 | ||||||||||||||
| Other | (269) | 2,521 | 1,945 | ||||||||||||||
| Total | $ | 48,369 | $ | 61,910 | $ | 12,354 | |||||||||||
A reconciliation of income tax expense computed at the Bermuda statutory rate to income tax expense reflected in the consolidated financial statements for the year ended March 31, 2026, pursuant to the new disclosure requirements of ASU 2023-09, is as follows (in thousands, except percentages):
| Year Ended March 31, 2026 | ||||||||||||||
Income tax benefit at Bermuda statutory tax rate (1) | $ | — | — | % | ||||||||||
| Foreign Tax Effects | ||||||||||||||
| United Kingdom | ||||||||||||||
| Statutory tax rate difference between Bermuda and U.K. | $ | 16,177 | (6.1) | % | ||||||||||
| Nondeductible/(nontaxable) changes in the fair value of investments and loss from equity method investments | (27,488) | 10.4 | % | |||||||||||
| Taxable intercompany income/(deductible intercompany expense) | (123,074) | 46.5 | % | |||||||||||
| Nontaxable income | (16,606) | 6.3 | % | |||||||||||
| Nondeductible changes in the fair value of the Earn-Out Shares | 11,926 | (4.5 | %) | |||||||||||
| Valuation allowance | 142,562 | (53.9) | % | |||||||||||
| Other | (3,524) | 1.3 | % | |||||||||||
| Switzerland | ||||||||||||||
| Statutory tax rate difference between Bermuda and Switzerland | 2,086 | (0.8) | % | |||||||||||
Cantonal and communal taxes (2) | 39,289 | (14.8) | % | |||||||||||
| Deductible federal taxes | (13,590) | 5.1 | % | |||||||||||
| Intercompany reorganization | 138,465 | (52.3) | % | |||||||||||
| Valuation allowance | (112,256) | 42.4 | % | |||||||||||
Reversal of certain deferred tax assets(3) | 25,351 | (9.6) | % | |||||||||||
| Other | 544 | (0.2) | % | |||||||||||
| United States | ||||||||||||||
| Statutory tax rate difference between Bermuda and the U.S. | (74,930) | 28.3 | % | |||||||||||
| Nondeductible executive compensation | 60,323 | (22.8) | % | |||||||||||
| Tax deficiencies (excess tax benefits) from stock-based compensation | (34,482) | 13.0 | % | |||||||||||
| Taxable intercompany income/ (deductible intercompany expense) | 160,909 | (60.8) | % | |||||||||||
| Foreign-derived intangible income | (26,310) | 9.9 | % | |||||||||||
| Income/(loss) from disregarded entities | (64,511) | 24.4 | % | |||||||||||
| Research tax credits | (20,336) | 7.7 | % | |||||||||||
| Valuation allowance | 44,916 | (17.0) | % | |||||||||||
| Other | 7,888 | (2.9) | % | |||||||||||
| Total income tax expense | $ | 133,329 | (50.4) | % | ||||||||||
(1)The Company’s country of domicile is Bermuda, as we are legally incorporated there, and therefore have applied its 0% statutory rate.
(2)The taxes in Swiss canton of Basel-Stadt made up the majority of the state tax effect in this category (greater than 50%)
(3)Primarily relates to deferred tax assets associated with entities no longer included in the consolidated financial statements (i.e. sold, deconsolidated, or liquidated) and Switzerland expiring net operating losses.
The Company’s effective tax rate for the year ended March 31, 2026 was (50.4)% and is driven by our fluctuating earnings by legal entity in various jurisdictions over the period and a valuation allowance that eliminates the Company’s global net deferred tax assets. The jurisdictional earnings were significantly impacted by the income associated with the gain on litigation settlement, refer to Note 5, “Recent Transactions and Developments.” The effective tax rate was also driven by the impacts of taxable intercompany income and non-deductible executive compensation.
The effective tax rate reconciliation for the year ended March 31, 2026 is presented in accordance with ASU 2023-09, while the effective tax rate reconciliations for the years ended March 31, 2025 and 2024 have not been recast and continue to be presented under the prior guidance. As a result of the adoption of ASU 2023-09, certain items in the effective tax rate reconciliation may have been reclassified between categories compared to prior periods; however, such reclassifications did not have a material impact on any individual line items or the overall effective tax rate.
A reconciliation of income tax expense computed at the Bermuda statutory rate to income tax expense reflected in the consolidated financial statements, for the years ending March 31, 2025 and 2024, are as follows (in thousands, except percentages):
| Year Ended March 31, 2025 | Year Ended March 31, 2024 | ||||||||||||||||||||||
Income tax expense at Bermuda statutory tax rate | $ | — | — | % | $ | — | — | % | |||||||||||||||
Foreign rate differential(1) | (112,413) | 16.5 | % | 1,196,877 | 26.2 | % | |||||||||||||||||
| Permanent disallowed IPR&D | — | — | % | — | — | % | |||||||||||||||||
| Tax effect of changes in the fair value of investments and loss from equity method investments | (12,813) | 1.9 | % | 15,431 | 0.3 | % | |||||||||||||||||
| Substantial shareholding exemption | (27,597) | 4.0 | % | (1,337,102) | (29.3) | % | |||||||||||||||||
| Nondeductible executive compensation | 54,558 | (8.0) | % | 19,727 | 0.4 | % | |||||||||||||||||
| Tax deficiencies (excess tax benefits) from stock-based compensation | (16,676) | 2.4 | % | (21,668) | (0.5) | % | |||||||||||||||||
| Other permanent adjustments | 37,096 | (5.4) | % | 40,085 | 0.9 | % | |||||||||||||||||
| Research tax credits | (31,840) | 4.7 | % | (22,863) | (0.5) | % | |||||||||||||||||
| Valuation allowance | 134,855 | (19.8) | % | 43,754 | 1.0 | % | |||||||||||||||||
Reversal of certain deferred tax assets(2) | 25,062 | (3.7) | % | 87,262 | 2.0 | % | |||||||||||||||||
| Other | (2,058) | 0.3 | % | — | — | % | |||||||||||||||||
| Total income tax expense | $ | 48,174 | (7.1) | % | $ | 21,503 | 0.5 | % | |||||||||||||||
(1)Primarily related to operations in the U.S., Switzerland, the U.K., and other jurisdictions with statutory tax rates different than the Bermuda rate.
(2)Primarily relates to deferred tax assets associated with entities no longer included in the consolidated financial statements (i.e., sold, deconsolidated or liquidated) and Switzerland expiring net operating losses.
The Company’s effective tax rate for the years ended March 31, 2025 and 2024 was (7.1)% and 0.5%, respectively. The effective tax rate for the year ended March 31, 2025 is driven by earnings by jurisdiction and a valuation allowance that eliminates the Company’s global net deferred tax assets. The effective tax rate for the year ended March 31, 2024 is driven by the Company’s gain on sale of Telavant net assets, which qualifies for the substantial shareholding exemption in the U.K. and consequently is not subject to the corporation income tax, as well as earnings by jurisdiction and a valuation allowance that eliminates the Company’s global net deferred tax assets.
Deferred taxes reflect the tax effects of the differences between the amounts recorded as assets and liabilities for financial reporting purposes and the comparable amounts recorded for income tax purposes. Significant components of the deferred tax assets (liabilities) at March 31, 2026 and 2025 are as follows (in thousands):
| March 31, 2026 | March 31, 2025 | ||||||||||
| Deferred tax assets | |||||||||||
| Research tax credits | $ | 76,810 | $ | 54,101 | |||||||
| Intangible assets | 8,732 | 16,939 | |||||||||
| Capitalized research and development | 189,355 | 41,387 | |||||||||
| Net operating loss | 550,011 | 469,339 | |||||||||
| Share-based compensation | 35,167 | 103,515 | |||||||||
| Lease liabilities | 22,622 | 21,687 | |||||||||
| Other assets | 33,870 | 18,001 | |||||||||
| Subtotal | 916,567 | 724,969 | |||||||||
| Valuation allowance | (897,209) | (701,219) | |||||||||
| Deferred tax liabilities | |||||||||||
| Depreciation | (2,593) | (561) | |||||||||
| Right-of-use assets | (15,848) | (19,270) | |||||||||
| Other liabilities | (917) | (3,919) | |||||||||
| Total deferred tax assets/(liabilities) | $ | — | $ | — | |||||||
The Company has net operating losses in Switzerland, the U.S. and the U.K. in the amount of $1,512.9 million, $890.7 million and $613.4 million, respectively. The Switzerland net operating losses will expire in varying amounts between March 31, 2027 and March 31, 2032. The U.S. net operating losses can be carried forward indefinitely with utilization limited to 80% of future taxable income for tax years beginning on or after January 1, 2021, while the U.K. and other net operating losses can be carried forward indefinitely as well, with an annual limitation on utilization. The Company has $66.0 million of federal research tax credit carryforwards in the U.S., which will expire in varying amounts between March 31, 2039 and March 31, 2046. Additionally, credits of $10.8 million are related to various states and Canada.
In January 2026, Immunovant completed an internal reorganization and transfer of intellectual property rights related to their product candidates, between two of its wholly-owned subsidiaries. Ownership and rights to such intellectual property remain with Immunovant and its subsidiaries. Immunovant utilized a significant portion of their Switzerland net operating loss carryforwards to offset the impacts of the internal reorganization. Further, the internal reorganization generated deferred tax assets related to capitalized research and development expenses that will be deductible in the U.S. in future periods.
The Company assesses the realizability of the deferred tax assets at each balance sheet date based on available positive and negative evidence in order to determine the amount which is more likely than not to be realized and record a valuation allowance as necessary. Due to the Company’s cumulative loss position (exclusive of the gain on sale of Telavant net assets) which provides significant negative evidence difficult to overcome, the Company has recorded a valuation allowance of $897.2 million as of March 31, 2026, representing the portion of the deferred tax asset that is not more likely than not to be realized. For the period April 1, 2025 through March 31, 2026, the valuation allowance increased by $196.0 million, primarily as a result of corresponding increases in our global net operating losses. The amount of the deferred tax asset considered realizable could be adjusted for future factors that would impact the assessment of the objective and subjective evidence of the Company. The Company will continue to assess the realizability of deferred tax assets at each balance sheet date in order to determine the amount, if any, required for a valuation allowance.
There are outside basis differences related to the Company’s investment in subsidiaries for which no deferred taxes have been recorded, as these would not be subject to tax on repatriation, as Bermuda has no tax regime for Bermuda exempted limited companies, and the U.K. tax regime relating to company distributions and sales generally provides for exemption from tax for most overseas profits, subject to certain exceptions.
The Company is subject to tax and is required to file U.S., U.K. and Switzerland federal income tax returns, as well as income tax returns in various state, local and foreign jurisdictions. The Company is subject to tax examinations for tax years ended March 31, 2019 and forward in major taxing jurisdictions. Tax audits and examinations can involve complex issues, interpretations and judgments. The resolution of matters may span multiple years particularly if subject to litigation or negotiation. The Company believes it has appropriately recorded its tax position using reasonable estimates and assumptions, however, the potential tax benefits may impact the results of operations or cash flows in the period of resolution, settlement or when the statutes of limitations expire.
The Company’s unrecognized tax benefit activity during the years ended March 31, 2026, 2025 and 2024 were not material to the Company’s consolidated financial statements. No interest and penalties related to unrecognized tax benefits were recorded as of March 31, 2026, 2025 or 2024.
On July 4, 2025, H.R. 1, 119th Cong. (2025), also referred to as the “One Big Beautiful Bill Act” (the “2025 Tax Act” or “OBBBA”) was signed into law in the U.S., which includes a broad range of tax reform provisions. The impact of the OBBBA on the Company’s accompanying consolidated financial statements is not material to the Company’s effective tax rate.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 20, 2026 | Showing above |
| 2025 | May 29, 2025 | |
| 2024 | May 30, 2024 | |
| 2023 | Jun 28, 2023 | |
| 2022 | Jun 28, 2022 | |
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.