Vir Biotechnology, Inc.VIR
Vir Biotechnology, Inc. Income Taxes Disclosure
Income Taxes
Loss before (provision for) benefit from income taxes consists of the following (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | (448,370) | $ | (499,680) | $ | (608,134) | |||||||||||
| Foreign | 10,600 | (23,425) | (20,060) | ||||||||||||||
| Total loss before (provision for) benefit from income taxes | $ | (437,770) | $ | (523,105) | $ | (628,194) | |||||||||||
The components of (provision for) benefit from income taxes consist of the following (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | (162) | $ | (965) | $ | 12,774 | |||||||||||
| State | (12) | 1,254 | (685) | ||||||||||||||
| Foreign | 261 | (2,093) | (75) | ||||||||||||||
| 87 | (1,804) | 12,014 | |||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (302) | 2,105 | 406 | ||||||||||||||
| State | — | 900 | 598 | ||||||||||||||
| Foreign | (2) | (56) | 59 | ||||||||||||||
| (304) | 2,949 | 1,063 | |||||||||||||||
| (Provision for) benefit from income taxes | $ | (217) | $ | 1,145 | $ | 13,077 | |||||||||||
Income taxes paid consists of following (in thousands):
| Year Ended December 31 2025 | |||||
| Federal | $ | — | |||
| State | 73 | ||||
| Foreign (Switzerland) | 2,347 | ||||
| Total | $ | 2,420 | |||
A reconciliation between the U.S. federal statutory income tax provision and rate and the reported effective income tax provision and rate for the year ended December 31, 2025 is as follows (in thousands, except for percentages). The Company's effective tax rate of (0.03)% for the year ended December 31, 2025 is primarily due to the movement of valuation allowance and nondeductible stock compensation expense.
| Year Ended December 31 2025 | |||||||||||
| Provision at US federal statutory rate | $ | (91,933) | 21.00 | % | |||||||
| State and local income taxes, net of federal income tax effect | 9 | — | |||||||||
| Foreign tax effects | (2,224) | 0.51 | |||||||||
| Effect of cross-border tax laws: GILTI | 3,559 | (0.81) | |||||||||
| Tax credits: research and development credit | (3,904) | 0.89 | |||||||||
| Change in valuation allowance | 76,305 | (17.43) | |||||||||
| Nontaxable or nondeductible items | |||||||||||
| Stock-based compensation | 15,335 | (3.50) | |||||||||
| Other permanent items | 3,169 | (0.72) | |||||||||
| Changes in unrecognized tax benefits | 1,025 | (0.23) | |||||||||
| Other adjustments | (1,124) | 0.26 | |||||||||
| Income tax provision and effective tax rate | $ | 217 | (0.03 | %) | |||||||
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows.
| Years Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| U.S. federal statutory income tax rate | 21.0 | % | 21.0 | % | |||||||
| Foreign tax at less than federal statutory rate | (0.1) | — | |||||||||
| State taxes, net of federal benefit | (0.7) | 5.3 | |||||||||
| Research and development tax credit | 2.4 | 2.4 | |||||||||
| Permanent items | (2.4) | (1.6) | |||||||||
| Changes in valuation allowance | (18.5) | (24.2) | |||||||||
| Other adjustments | (1.5) | (0.8) | |||||||||
| Effective income tax rate | 0.2 | % | 2.1 | % | |||||||
The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities as of December 31, 2025, and 2024, are related to the following (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 294,591 | $ | 180,130 | |||||||
| Capitalized research and development | 118,473 | 175,835 | |||||||||
| Intangible assets | 61,266 | 40,593 | |||||||||
| Research and development tax credit carryforward | 35,578 | 30,549 | |||||||||
| Equity compensations | 14,779 | 23,776 | |||||||||
| Lease liabilities | 18,274 | 20,502 | |||||||||
| Reserves and accruals | 6,712 | 7,543 | |||||||||
| Valuation allowance | (527,114) | (453,394) | |||||||||
| Deferred tax assets | 22,559 | 25,534 | |||||||||
| Deferred tax liabilities: | |||||||||||
| ROU assets | (10,916) | (12,219) | |||||||||
| Property and equipment | (9,004) | (10,628) | |||||||||
| IPR&D | (1,928) | (1,928) | |||||||||
| Other | (257) | — | |||||||||
| Deferred tax liabilities | (22,105) | (24,775) | |||||||||
| Net deferred tax assets | $ | 454 | $ | 759 | |||||||
Although the Company has taxable income for the years ended December 31, 2022, and 2021, it has otherwise incurred accumulated tax losses since inception. Based on the available objective evidence, the Company cannot conclude it is more likely than not that the deferred tax assets will be fully realizable. Accordingly, the Company has provided a valuation allowance against its deferred tax assets. For the year ended December 31, 2025, the Company recorded a valuation allowance increase of $73.7 million. As of December 31, 2025, the Company has net operating loss carryforwards of $1.2 billion for federal purposes and $446.4 million for state tax purposes. If not utilized, these carryforwards will begin to expire in 2036 for federal and in 2037 for state tax purposes. As of December 31, 2025, the Company also has net operating loss carryforwards of $34.2 million for Australian tax purposes, which have an indefinite carryforward period, and $16.0 million net operating loss carryforwards for Swiss tax purposes, which have a seven-year carryforward period.
Under the Tax Reform Act of 1986, the amounts of and benefits from net operating loss carryforwards may be impaired or limited in certain circumstances. Events which cause limitations in the amount of net operating losses that the Company may utilize in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. The Company completed its Section 382 analysis as of December 31, 2025, and based on this analysis, it does not expect that the annual limitations will significantly impact its ability to utilize its net operating loss or tax credit carryforwards prior to expiration.
As of December 31, 2025, the Company has research and development tax credit carryforwards of $16.4 million and $30.5 million for federal and state tax purposes, respectively. If not utilized, the federal carryforward will expire in various amounts beginning in 2036. The California credits can be carried forward indefinitely.
On July 4, 2025, legislation formally titled An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14, commonly referred to as the One Big Beautiful Bill Act (OBBBA), was signed into law by President Trump. The application of the OBBBA did not have a material impact on the Company's financial statements during the year ended December 31, 2025.
Uncertain Tax Positions
As of December 31, 2025, and 2024, the Company had an unrecognized tax benefit balance of $17.3 million and $17.9 million, respectively, primarily related to transfer pricing and research and development tax credits. A portion of the unrecognized tax benefits as of December 31, 2025, if recognized, would increase the Company’s effective tax rate by 2.3%. Other unrecognized tax benefits as of December 31, 2025, if recognized, would be in the form of net operating loss and tax credit carryforwards, which attract a full valuation allowance offset, and would not impact the Company’s effective tax rate. Because the statute of limitations does not expire until after the net operating loss and credit carryforwards are actually used, the statutes are still open on calendar years ending December 31, 2017 and forward for federal and state purposes.
The Company recognized $1.3 million expense for interest and penalties related to uncertain tax positions during 2025, all of which was recorded as accrued and other liabilities as of December 31, 2025. The Company files U.S. federal, state, Switzerland and Australia tax returns. The Company’s tax years remain open for all years. As of December 31, 2025, the Company was not under examination by the Internal Revenue Service or any state or foreign tax jurisdiction.
A reconciliation of the beginning and ending amounts of the liability for uncertain tax positions is as follows (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Gross unrecognized tax benefits at January 1 | $ | 17,946 | $ | 13,583 | $ | 10,638 | |||||||||||
| Addition for tax positions taken in the prior years | — | 2,014 | 29 | ||||||||||||||
| Reduction for tax positions taken in the prior years | (2,221) | (20) | — | ||||||||||||||
| Addition for tax positions taken in current year | 1,611 | 2,369 | 2,916 | ||||||||||||||
| Gross unrecognized tax benefits at December 31 | $ | 17,336 | $ | 17,946 | $ | 13,583 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 23, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Mar 26, 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.