DENTSPLY SIRONA Inc.XRAY
DENTSPLY SIRONA Inc. Income Taxes Disclosure
INCOME TAXES
The components of loss before income taxes were as follows:
| Year Ended December 31, | ||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| United States | $ | (120) | $ | (307) | $ | (6) | ||||||||||||||
| Foreign | (366) | (629) | (169) | |||||||||||||||||
Total loss before income taxes | $ | (486) | $ | (936) | $ | (175) | ||||||||||||||
The components of the expense (benefit) for income taxes from operations were as follows:
| Year Ended December 31, | ||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current: | ||||||||||||||||||||
| U.S. federal | $ | (1) | $ | (6) | $ | 1 | ||||||||||||||
| U.S. state | 2 | 1 | — | |||||||||||||||||
| Foreign | 81 | 115 | 86 | |||||||||||||||||
| Total | $ | 82 | $ | 110 | $ | 87 | ||||||||||||||
| Deferred: | ||||||||||||||||||||
| U.S. federal | $ | 36 | $ | (61) | $ | 4 | ||||||||||||||
| U.S. state | 2 | (1) | (3) | |||||||||||||||||
| Foreign | (8) | (74) | (131) | |||||||||||||||||
| Total | $ | 30 | $ | (136) | $ | (130) | ||||||||||||||
Total expense (benefit) for income taxes | $ | 112 | $ | (26) | $ | (43) | ||||||||||||||
For the year ended December 31, 2025, the reconciliation of the U.S. federal statutory tax rate to the effective rate was as follows:
| Year Ended December 31, | |||||||||||
| (in millions, except percentages) | 2025 | ||||||||||
| Statutory U.S. federal income tax rate | $ | (102) | 21.0 | % | |||||||
| Effect of: | |||||||||||
State income taxes, net of federal benefit(a) | 3 | (0.6) | % | ||||||||
| Foreign tax effects | |||||||||||
| Germany | |||||||||||
| Statutory income tax rate differential | 16 | (3.3) | % | ||||||||
| Trade tax | (18) | 3.7 | % | ||||||||
| Changes in valuation allowances | 16 | (3.3) | % | ||||||||
| Goodwill impairment | 8 | (1.6) | % | ||||||||
| Other | 2 | (0.4) | % | ||||||||
| Israel | |||||||||||
| Statutory income tax rate differential | 16 | (3.3) | % | ||||||||
| Goodwill impairment | 18 | (3.7) | % | ||||||||
| Other | (4) | 0.8 | % | ||||||||
| Luxembourg | |||||||||||
| Changes in valuation allowance | 238 | (48.9) | % | ||||||||
| Local impairment losses | (250) | 51.3 | % | ||||||||
| Foreign exchange differences | 11 | (2.3) | % | ||||||||
| Other | 3 | (0.6) | % | ||||||||
| Sweden | |||||||||||
| Goodwill impairment | 26 | (5.3) | % | ||||||||
| Other | 2 | (0.4) | % | ||||||||
| Switzerland | |||||||||||
| Statutory income tax rate differential | (21) | 4.3 | % | ||||||||
| Cantonal tax | 28 | (5.7) | % | ||||||||
| Changes in valuation allowances | 55 | (11.3) | % | ||||||||
| Foreign exchange differences | (4) | 0.8 | % | ||||||||
| Local impairment losses | (38) | 7.8 | % | ||||||||
| Other foreign jurisdictions and consolidated eliminations | 39 | (8.0) | % | ||||||||
| Effect of cross-border tax laws | |||||||||||
| Global Intangible Low Taxed Income (GILTI) | 7 | (1.5) | % | ||||||||
| Subpart F | 8 | (1.7) | % | ||||||||
| Other cross-border | 2 | (0.4) | % | ||||||||
| Tax credits | 2 | (0.4) | % | ||||||||
| Non-taxable or non-deductible items | |||||||||||
| Goodwill impairment | 24 | (4.9) | % | ||||||||
Share-based payment awards | 6 | (1.2) | % | ||||||||
| Other non-taxable or non-deductible items | 7 | (1.5) | % | ||||||||
| Changes in unrecognized tax benefits | 2 | (0.4) | % | ||||||||
| Other | 10 | (2.1) | % | ||||||||
| Total tax provision and effective tax rate | $ | 112 | (23.1) | % | |||||||
(a) State taxes in California, New York, Minnesota, Texas, and Florida made up the majority (greater than 50%) of the tax effect in this category.
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the reconciliations of the U.S. federal statutory tax rate to the effective rate were as follows:
| Year Ended December 31, | |||||||||||||||||
(in millions, except percentages) | 2024 | 2023 | |||||||||||||||
| Statutory U.S. federal income tax rate | $ | (197) | 21.0 | % | $ | (37) | 21.0 | % | |||||||||
| Effect of: | |||||||||||||||||
| State income taxes, net of federal benefit | — | — | (2) | 1.4 | |||||||||||||
| Federal benefit of R&D and foreign tax credits | (7) | 0.8 | (17) | 10.0 | |||||||||||||
| U.S. other permanent differences | 3 | (0.3) | 5 | (2.7) | |||||||||||||
| Tax effect of international operations | 42 | (4.5) | (65) | 37.2 | |||||||||||||
| Global Intangible Low Taxed Income (GILTI) | 9 | (1.0) | 12 | (7.0) | |||||||||||||
| Foreign Derived Intangible Income (FDII) | — | — | (9) | 5.2 | |||||||||||||
| Net effect of tax audit activity | 23 | (2.5) | (6) | 3.2 | |||||||||||||
| Tax effect of enacted statutory rate changes on Non-U.S. jurisdictions | 3 | (0.3) | 1 | (0.4) | |||||||||||||
| Federal tax on unremitted earnings of certain foreign subsidiaries | (1) | 0.1 | 2 | (0.9) | |||||||||||||
| Valuation allowance adjustments | (13) | 1.3 | 5 | (3.2) | |||||||||||||
| Tax effect of impairment of goodwill and intangibles | 106 | (11.3) | 60 | (34.6) | |||||||||||||
| Other | 6 | (0.5) | 8 | (4.4) | |||||||||||||
| Effective income tax rate on operations | $ | (26) | 2.8 | % | $ | (43) | 24.8 | % | |||||||||
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. The OBBBA includes significant provisions, including tax cut extensions and modifications to the international tax framework. The Company evaluated the impact of the OBBBA and concluded that its effect was not material to the financial results of the year ended December 31, 2025.
The tax effects of significant temporary differences giving rise to deferred tax assets and liabilities were as follows:
| Year Ended December 31, | ||||||||||||||
| (in millions) | 2025 | 2024 | ||||||||||||
| Deferred tax assets | ||||||||||||||
| Employee benefit accruals | $ | 38 | $ | 40 | ||||||||||
| Inventory | 12 | 19 | ||||||||||||
| Miscellaneous accruals | 36 | 50 | ||||||||||||
| Other | 35 | 44 | ||||||||||||
| Lease right-of-use liability | 33 | 39 | ||||||||||||
Net unrealized gains/losses included in AOCI | 57 | — | ||||||||||||
| Foreign tax credit and R&D carryforward | 11 | 41 | ||||||||||||
| Tax loss carryforwards and other tax attributes | 2,132 | 1,554 | ||||||||||||
| Total deferred tax assets | $ | 2,354 | $ | 1,787 | ||||||||||
| Less: Valuation allowances | (2,103) | (1,503) | ||||||||||||
| Total deferred tax assets, net | $ | 251 | $ | 284 | ||||||||||
| Deferred tax liabilities | ||||||||||||||
| Identifiable intangible assets | $ | (60) | $ | (110) | ||||||||||
| Property, plant and equipment | (35) | (28) | ||||||||||||
| Lease right-of-use asset | (32) | (38) | ||||||||||||
| Net unrealized gains/losses included in AOCI | — | (9) | ||||||||||||
| Taxes on unremitted earnings of foreign subsidiaries | (7) | (6) | ||||||||||||
| Total deferred tax liabilities | (134) | (191) | ||||||||||||
| Net deferred tax assets (liabilities) | $ | 117 | $ | 93 | ||||||||||
Deferred tax assets and liabilities included in the following Consolidated Balance Sheets line items at December 31 were as follows:
Year Ended December 31, | ||||||||||||||
| (in millions) | 2025 | 2024 | ||||||||||||
| Assets | ||||||||||||||
| Other noncurrent assets | $ | 211 | $ | 222 | ||||||||||
| Liabilities | ||||||||||||||
| Deferred income taxes | $ | 94 | $ | 129 | ||||||||||
The Company has $11 million of tax credit carryforwards at December 31, 2025 which will expire at various times from 2028 through 2045.
The Company has tax loss carryforwards related to certain foreign and domestic subsidiaries of approximately $10,187 million at December 31, 2025, of which $9,775 million expires at various times through 2045 and $412 million may be carried forward indefinitely. These are reflected as deferred income tax assets at December 31, 2025, and are comprised of future tax benefits of $2,015 million and $117 million, before valuation allowances, related to tax loss carryforwards and disallowed interest carryforwards, respectively. As of December 31, 2024 the Company’s deferred tax assets included $1,458 million of tax loss carryforwards and $96 million of disallowed interest carryforwards. The increase in tax loss carryforwards in 2025 is primarily the result of impairment losses.
At December 31, 2025, the Company has recorded $1,992 million of valuation allowance to offset the future tax benefit of net operating losses, $5 million to offset the future tax benefit of foreign tax credits, and $106 million of valuation allowance for other deferred tax assets. The Company has recorded these valuation allowances due to the uncertainty that these assets can be realized in the future. The increase in the valuation allowance is attributable to the increase in the tax loss carryforwards as there is uncertainty that these assets can be realized in the future.
The Company has recorded $7 million of withholding taxes on certain undistributed earnings of its foreign subsidiaries that the Company anticipates will be repatriated.
Tax Contingencies
The total amount of gross unrecognized tax benefits at December 31, 2025 is approximately $152 million, including interest, of which approximately $52 million represents the amount of unrecognized tax benefits that, if recognized, would affect the effective income tax rate. It is reasonably possible that certain amounts of unrecognized tax benefits will significantly increase or decrease within twelve months of the reporting date of the Company’s consolidated financial statements.
The total amount of accrued interest and penalties was $9 million at December 31, 2025 and 2024. The Company has consistently classified interest and penalties recognized in its consolidated financial statements as income taxes based on the accounting policy election of the Company. The Company recognized a tax expense of $2 million for the year ended December 31, 2025, and a tax expense of $5 million in 2024 related to interest and penalties.
The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The significant jurisdictions include the United States and Germany. The Company has concluded all U.S. federal income tax matters for years through 2014 with the Internal Revenue Service (“IRS”). The Company is currently under IRS audit for the tax years 2015 and 2016. The Company is under audit in Germany for the tax years 2014 through 2021. For additional information on the IRS and German audits, see Note 21, Commitments and Contingencies.
The activity recorded for unrecognized tax benefits were as follows:
Year Ended December 31, | ||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Unrecognized tax benefits at beginning of period | $ | 128 | $ | 132 | $ | 49 | ||||||||||||||
| Gross change for prior-period positions | 1 | 18 | 1 | |||||||||||||||||
| Gross change for current year positions | 1 | 1 | 95 | |||||||||||||||||
| Decrease due to settlements and payments | (1) | (13) | (9) | |||||||||||||||||
| Decrease due to statute expirations | (1) | — | (4) | |||||||||||||||||
| Increase due to effect of foreign currency translation | 15 | — | — | |||||||||||||||||
| Decrease due to effect from foreign currency translation and other | — | (10) | — | |||||||||||||||||
| Unrecognized tax benefits at end of period | $ | 143 | $ | 128 | $ | 132 | ||||||||||||||
Cash Taxes
Cash paid for income taxes, net of refunds, for the years ended December 31, 2024 and 2023 prior to adoption of ASU 2023-09 was $74 million and $177 million, respectively. Cash paid during the year ended December 31, 2025 for income taxes, net of refunds after adoption of ASU 2023-09 is as follows:
Year Ended December 31, | ||||||||
| (in millions) | 2025 | |||||||
| Federal | $ | (6) | ||||||
| State and local jurisdictions | — | |||||||
| Foreign: | ||||||||
| Brazil | 4 | |||||||
| France | 5 | |||||||
| Germany | (6) | |||||||
| Italy | 11 | |||||||
| Russia | 5 | |||||||
| Sweden | 30 | |||||||
| Switzerland | 10 | |||||||
| Other | 18 | |||||||
| Total | $ | 71 | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 8, 2019 | |
| 2017 | Mar 15, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 12, 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.