Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Components of Income (Loss) Before Income Taxes

he components of income (loss) before income taxes are as follows: 

	2023	2022	2021
Netherlands	1,398	1,520	942
Foreign	1,954	1,843	1,238
	3,352	3,363	2,180

Components of Benefit (Expense) for Income Taxes

The components of income tax benefit (expense) are as follows:

	2023	2022	2021
Current taxes:
Netherlands	(281)	(285)	(106)
Foreign	(509)	(480)	(186)
	(790)	(765)	(292)
Deferred taxes:
Netherlands	4	(10)	10
Foreign	263	246	10
	267	236	20
Total income tax benefit (expense)	(523)	(529)	(272)

Reconciliation of Statutory Income Tax Rate

A reconciliation of the statutory income tax rate in the Netherlands as a percentage of income (loss) before income taxes and the effective income tax rate is as follows:

	2023		2022		2021
	amount	%	amount	%	amount	%
Statutory income tax rate in the Netherlands	865	25.8	868	25.8	545	25.0
Rate differential between the local statutory rates and the statutory rate of the Netherlands	(77)	(2.3)	(80)	(2.4)	(42)	(1.9)
Net change in valuation allowance	(3)	(0.1)	—	—	(20)	(0.9)
Non-deductible expenses/losses	60	1.8	56	1.7	53	2.5
Netherlands tax incentives	(111)	(3.3)	(113)	(3.4)	(69)	(3.2)
Foreign tax incentives	(251)	(7.5)	(266)	(7.9)	(163)	(7.5)
Changes in estimates of prior years' income taxes	(17)	(0.5)	(2)	(0.1)	(21)	(1.0)
Withholding taxes	13	0.4	8	0.3	(8)	(0.4)
Other differences	44	1.3	58	1.7	(3)	(0.1)
Effective tax rate	523	15.6	529	15.7	272	12.5

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Principal Components of Deferred Tax Assets and Liabilities

The principal components of deferred tax assets and liabilities are presented below:

	2023	2022
Operating loss and tax credit carryforwards	273	287
Disallowed interest and tax incentive carryforwards	31	41
Identified intangible assets, net	600	331
Property, plant and equipment, net	8	—
Other accrued liabilities	111	111
Pensions	63	51
Other non-current liabilities	47	55
Share-based compensation	10	11
Restructuring liabilities	23	3
Receivables	118	126
Inventories	16	14
Total Deferred Tax Assets	1,300	1,030
Valuation allowance	(144)	(154)
Total Deferred Tax Assets, net of valuation allowance	1,156	876
Undistributed earnings of foreign subsidiaries	(36)	(33)
Property, plant and equipment, net	—	(11)
Goodwill	(115)	(97)
Other current and non-current assets	(57)	(64)
Total Deferred Tax Liabilities	(208)	(205)
Net Deferred Tax Position	948	671

Classification of Deferred Tax Assets and Liabilities in Consolidated Balance Sheets

The classification of the deferred tax assets and liabilities in the Company’s Consolidated Balance Sheets is as follows:

	2023	2022
Deferred tax assets within other non-current assets	992	716
Deferred tax liabilities within non-current liabilities	(44)	(45)
	948	671

Expiration of Tax Loss Carryforwards

At December 31, 2023 tax loss carryforwards of $398 million (inclusive of $79 million of U.S. state tax losses) will expire as follows:

	Balance	Scheduled expiration
	December 31,
	2023	2024	2025	2026	2027	2028	2029-2033	later	unlimited
Tax loss carryforwards	398	3	7	7	4	—	74	3	300

This overview is excluding carried forward tax incentives of $130 million which have an unlimited expiration date.

Expiration of Tax Credit Carryforwards

The Company also has tax credit carryforwards of $227 million (excluding the effect of unrecognized tax benefits), which are available to offset future tax, if any, and which will expire as follows:

	Balance	Scheduled expiration
	December 31,
	2023	2024	2025	2026	2027	2028	2029-2033	later	unlimited
Tax credit carryforwards	227	10	18	22	7	7	58	56	49

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits excluding interest and penalties is as follows:

	2023	2022	2021
Balance as of January 1	173	176	161
Translation differences	—	(4)	(1)
Lapse of statute of limitations	(3)	(3)	(1)
Increases from tax positions taken during prior periods	13	1	7
Decreases from tax positions taken during prior periods	(3)	(4)	(1)
Increases from tax positions taken during current period	11	11	11
Decreases relating to settlements with the tax authorities	(5)	(4)	—
Balance as of December 31	186	173	176