Gentherm Inc Income Taxes Disclosure

Note 18 — Income Taxes

No income taxes have been provided on indefinitely reinvested earnings of certain foreign subsidiaries at December 31, 2025. In addition, deferred U.S. income taxes have not been provided on the undistributed earnings of the Company’s foreign subsidiaries since these earnings will not be taxable upon repatriation to the United States. These earnings will be primarily treated as previously taxed income from either the one-time transition tax or global intangible low-taxed income provision, or they will be offset with a 100% dividend received deduction.

To the extent dividends are paid within foreign tiered subsidiaries, withholding and income taxes may be incurred upon repatriation through the chain. Taxes of $6,963 have been accrued on undistributed earnings that are not indefinitely reinvested and are primarily related to China, Germany, Korea, Ukraine, North Macedonia, Czech Republic and Malta. As of December 31, 2025, taxes have not been provided on $115,705 of undistributed earnings in various subsidiaries as those earnings have been indefinitely invested. If, in the future, these earnings were to be repatriated to foreign affiliates, additional tax provisions would be required. It is not practicable to determine the unrecognized deferred tax liability on these undistributed earnings. There are no other material liabilities for income taxes on the undistributed earnings of foreign subsidiaries, as the Company has concluded that such earnings are either indefinitely reinvested or should not give rise to additional income tax liabilities as a result of the distribution of such earnings.

As of December 31, 2025, the Company has consolidated deferred tax assets of $118,491 with a valuation allowance of $11,366 principally related to tax net operating losses, credit carryforwards and other deferred tax assets on certain U.S. state income tax attributes. The Company has considered historical pre-tax income or loss and the four sources of income in determining the need for a valuation allowance when the realization of its deferred tax assets are not more likely than not. The four sources of income considered are 1) taxable income in prior carryback years where carryback is allowable, 2) future reversals of existing temporary differences, 3) consideration of reasonable and prudent tax planning strategies, and 4) forecasts of future taxable income, exclusive of reversing temporary differences and carryforwards. In the cases where a valuation allowance has been recorded, the evidence described above did not result in a conclusion that the deferred tax assets are more likely than not.

The Company has NOL carryforwards in various states associated with the benefits of the state dividends received reduction and foreign royalty exclusion. The state NOL carryforwards generally expire at various dates from 2026 to 2044. We have concluded that there is not sufficient evidence these NOL carryforwards will be utilized, and thus have not recognized the benefit of these NOL carryforwards as of December 31, 2025.

At December 31, 2025, certain non-U.S. subsidiaries had gross NOL carryforwards totaling $183,419 which have no expiration date. The Company has no valuation allowance recorded against deferred tax assets of $21,442 of the total non-U.S. subsidiaries’ net operating loss carryforwards as of December 31, 2025.

The Company is subject to taxation in the United States and various state and foreign jurisdictions. As of December 31, 2025, the Company was no longer subject to U.S. Federal examinations by tax authorities for tax years before 2021 and was no longer subject to foreign examinations by tax authorities for tax years before 2015.

The Company currently benefits from incentive tax rates in various non-U.S. jurisdictions with expiration dates from 2026 – 2028. Certain of the Company’s Chinese subsidiaries benefit from a reduced corporate income tax rate in 2025 as a result of their

High and New Technology Enterprises status. For the years ended December 31, 2025, 2024 and 2023, income in foreign jurisdictions with such holidays was $17,380, $50,372, and $8,185, respectively.

At December 31, 2025, 2024 and 2023, the Company had total unrecognized tax benefits of $7,720, $8,266 and $5,486, respectively, all of which, if recognized, would affect the effective income tax rates. The reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

The Company classifies income tax-related penalties and net interest as income tax expense. In the years ended December 31, 2025, 2024 and 2023, income tax related interest and penalties were not material. It is reasonably possible that audit settlements, the conclusions of current examinations or the expiration of the statute of limitations in several jurisdictions could impact the Company’s unrecognized tax benefits.

Cash paid for income taxes, net of refunds, for the periods ended December 31, 2024 and 2023 were $20,837 and $23,273, respectively.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. OBBBA has not materially impacted the Company's effective tax rate.

In addition, on July 19, 2025, the Act for an Immediate Tax Investment Programme to Strengthen Germany's Business Location (“German Tax Package”) was enacted in Germany. The German Tax Package includes significant provisions, including a gradual reduction in the corporate tax rate from 15% in 2027 to 10% by 2032, in 1% increments beginning in 2028, enhanced depreciation

provisions and expanded relief for research and development expenses. The German Tax Package has not materially impacted the Company’s effective tax rate.