VISHAY INTERTECHNOLOGY INC Income Taxes Disclosure

Changes in Tax Laws and Regulations

On July 4, 2025, H.R. 1 (the "Act"), a tax reconciliation act, was enacted into law in the United States.  The Act did not change the U.S. federal tax rate and most of the provisions of the Act are effective for tax years beginning after December 31, 2025.  The Company has recorded no change to the deferred U.S. taxes directly related to the Act.  The Act allows the deduction in tax year 2025, or in tax years 2025 and 2026, of some previously capitalized research and development costs.  The Company anticipates that these additional tax deductions may preclude the utilization of a U.S. foreign tax credit ("FTC") that is due to expire in 2028.  As an indirect result of this change in tax law, the Company recorded a valuation allowance of $9,420 on the deferred tax asset related to this FTC.

On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted in the United States.  Under previous law, companies could indefinitely defer U.S. income taxation on unremitted foreign earnings. The TCJA imposed a one-time transition tax on deferred foreign earnings, payable in defined increments over eight years.  Installments of $47,027 were paid in 2025, $37,622 were paid in 2024, $27,670 were paid in 2023, and $14,757 in each of 2022, 2021, 2020, 2019, and 2018.  The 2025 installment was the last payment.

The Company has elected to account for Global Intangible Low-Taxed Income ("GILTI") tax in the period in which it is incurred and, therefore, does not provide any deferred taxes in the consolidated financial statements at December 31, 2025, 2024, or 2023.

Germany

In the third fiscal quarter of 2025, the Federal Republic of Germany enacted tax legislation decreasing the federal tax rate beginning in 2028 by 1% per year for five years.  The Company recorded deferred tax expense of $4,237 to reduce the carrying amount of deferred tax assets in Germany based on these new rates.

Changes in Indefinite Reversal Assertion

The Company made the determination in 2021 that substantially all unremitted foreign earnings in Israel were no longer indefinitely reinvested.  The Company made the determination in 2022 that substantially all unremitted earnings in Germany were no longer indefinitely reinvested.

These changes in this indefinite reinvestment assertions provide greater access to the Company's worldwide cash balances to fund its growth plan and its Stockholder Return Policy.  While the change in assertion provides access to these balances, these amounts will be repatriated only as needed.  The withholding taxes associated with any distribution to the United States is payable upon distribution.  The Company repatriated $75,000 of accumulated earnings to the United States in the second fiscal quarter of 2025 and paid withholding taxes, in Israel, of $9,375.  The Company repatriated $120,000 of accumulated earnings to the United States in the second fiscal quarter of 2024 and paid withholding taxes, in Israel, of $15,000.  During the fourth fiscal quarter of 2023, the Company repatriated $325,000 of accumulated earnings to the United States and paid withholding taxes, in Germany and Israel, of $63,600. 

At December 31, 2025, approximately $231,187 of German earnings and approximately $261,452 of Israeli earnings are deemed not indefinitely reinvested.  The aggregate tax liability recorded for unremitted earnings at December 31, 2025 is approximately $76,000, which includes amounts accrued subsequent to the changes in indefinite reinvestment determinations described above.

There are amounts of unremitted foreign earnings in countries other than Israel and Germany, which continue to be reinvested indefinitely, and the Company has made no provision for incremental foreign income taxes and withholding taxes payable to foreign jurisdictions related to these amounts.  Determination of the amount of the unrecognized deferred foreign tax liability for these amounts is not practicable because of the complexities associated with its hypothetical calculation.

Income before taxes consists of the following components:

Significant components of income taxes are as follows:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

The Company makes significant judgments regarding the realizability of its deferred tax assets (principally net operating losses and tax credits). The carrying value of deferred tax assets is based on the Company’s assessment that it is more likely than not that the Company will realize these assets after consideration of all available positive and negative evidence.  

Note 5 – Income Taxes (continued)

A reconciliation of income tax expense at the U.S. federal statutory income tax rate to actual income tax provision for the year ended December 31, 2025 is as follows:

* State taxes in Minnesota, Arizona, and Illinois made up the majority (greater than 50%) of the tax effect in this category.

Note 5 – Income Taxes (continued)

A reconciliation of income tax expense at the U.S. federal statutory income tax rate to actual income tax provision for the years ended December 31, 2024 and 2023 is as follows:

Vishay operates in a global environment with significant operations in various locations outside the United States.  Accordingly, the consolidated income tax rate is a composite rate reflecting our earnings and the applicable tax rates in the various locations where we operate.  Part of Vishay's historical strategy has been to achieve cost savings through the transfer and expansion of manufacturing operations to countries where it can take advantage of lower labor costs.  With the reduction in the U.S. statutory rate to 21% beginning January 1, 2018, Vishay expects that its effective tax rate will be higher than the U.S. statutory rate, excluding unusual transactions. 

Income tax expense for the year ended December 31, 2025 includes certain discrete tax items for changes in uncertain tax positions, valuation allowances, tax rates, and other related items.  These items totaled $13,657 in 2025.  There were no unusual tax items for the years ended December 31, 2024 and 2023.

At December 31, 2025, the Company had the following significant net operating loss carryforwards for tax purposes:

At December 31, 2025, the Company had the following significant tax credit carryforwards available:

The following table summarizes income taxes paid by jurisdiction for the year ended December 31, 2025:

		Year Ended
		December 31, 2025
U.S. Federal		$	47,895
U.S. State and Local			(99	)
China			12,424
Israel			14,950
The Republic of China (Taiwan)			9,427
Other Foreign			16,175
Total income taxes paid		$	100,772

Net income taxes paid were $136,784, and $224,232 for the years ended December 31, 2024, and 2023, respectively.  Net income taxes paid for the years ended December 31, 2025, 2024, and 2023, respectively, include withholding taxes for repatriation activity.  Net income taxes paid for the years ended December 31, 2025, 2024, and 2023 also includes $47,027, $37,622, and $27,670, respectively, of TCJA transition tax paid.

The following table summarizes changes in the liabilities associated with unrecognized tax benefits:

In 2024, the Company recorded a deferred tax asset and offsetting liability for unrecognized tax benefits related to an acquired net operating loss carryover.

All of the unrecognized tax benefits of $33,003 and $32,500, as of December 31, 2025 and 2024, respectively, would reduce the effective tax rate if recognized.

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. At December 31, 2025 and 2024, the Company had accrued interest and penalties related to the unrecognized tax benefits of $1,422 and $1,564, respectively. During the years ended December 31, 2025, 2024, and 2023, the Company recognized $360, $303, and $821, respectively, in interest and penalties. 

The Company and its subsidiaries file U.S. federal income tax returns, as well as tax returns in multiple states and foreign jurisdictions.  During the years ended December 31, 2025, 2024, and 2023, certain tax examinations were concluded and certain statutes of limitations lapsed.  The tax provision for those years includes adjustments related to the resolution of these matters, as reflected in the table above.  During 2023, the Company settled an examination of its U.S. federal income tax returns for the years ended December 31, 2017 through 2019.  The federal income tax returns for the years 2022 through 2024 remain subject to examination.  The tax returns of significant non-U.S. subsidiaries currently under examination are located in the following jurisdictions: Israel (2021), China (2022 through 2024), India (2004 through 2023), and Philippines (2020 through 2022).  The Company and its subsidiaries also file income tax returns in other taxing jurisdictions in the U.S. and around the world, many of which are still open to examination.

The timing of the resolution of income tax examinations is highly uncertain, as are the amounts and timing of tax payments that result from such examinations.  These events could cause large fluctuations in the balance sheet classification of current and non-current unrecognized tax benefits.