Income Taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

(7) Income Taxes

We recorded income tax expense at an effective rate of 61.5% for the three months ended September 30, 2024, as compared to an effective rate of 44.7% for the three months ended September 30, 2023. The 2024 rate was unfavorably impacted by the lower level and overall mix of earnings, a discrete valuation allowance recorded against deferred tax assets in Sweden, and a 2023 rate that included benefits from the effective settlement of an income tax audit. The higher 2024 rate was partially offset by the scheduled reduction in the French business tax rate from 0.38% to 0.28% effective January 1, 2024. The 61.5% effective tax rate for the third quarter of 2024 was higher than the United States Federal statutory rate of 21% primarily due to tax losses in certain countries for which we did not recognize a corresponding tax benefit due to valuation allowance, the French business tax, and the overall mix of earnings.

We recorded income tax expense at an effective rate of 41.4% for the nine months ended September 30, 2024, as compared to an effective rate of 33.6% for the nine months ended September 30, 2023. The 2024 rate was unfavorably impacted by the lower level and overall mix of earnings, a discrete valuation allowance recorded against deferred tax assets in Sweden, and a 2023 rate that included benefits from the effective settlement of an income tax audit. The higher 2024 rate was partially offset by the scheduled reduction in the French business tax rate from 0.38% to 0.28% effective January 1, 2024. The 41.4% effective tax rate for the nine months ended September 30, 2024 was higher than the United States Federal statutory rate of 21% primarily due to tax losses in certain countries for which we did not recognize a corresponding tax benefit due to valuation allowances, the French business tax, and the overall mix of earnings.

We had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $39.7 as of September 30, 2024. If recognized, the entire amount would favorably affect the effective tax rate except for $9.8. As of December 31, 2023, we had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $32.8.

We conduct business globally in various countries and territories. We are routinely audited by the tax authorities of the various tax jurisdictions in which we operate. Generally, the tax years that could be subject to examination are 2017 through 2024 for our major operations in France, Italy, the United Kingdom and the United States. As of September 30, 2024, we were subject to tax audits in

Australia, Austria, France, Germany, India, Israel, Spain and the United States. We believe that the resolution of these audits will not have a material impact on earnings.