
	For the Years Ended December 31,
(In millions)	2021		2020		2019
Income before income taxes (benefit):
Domestic	$	448.3	$	3,290.0	$	4,725.3
Foreign	1,296.9		1,757.5		2,400.6
Total	$	1,745.2	$	5,047.5	$	7,125.9
Income tax expense (benefit):
Current:
Federal	$	319.1	$	647.0	$	947.4
State	23.1		41.2		59.1
Foreign	137.1		155.1		84.4
Total	479.3		843.3		1,090.9
Deferred:
Federal	$	(242.5)	$	(1,749.9)	$	1,143.9
State	(11.9)		(6.8)		(2.3)
Foreign	(172.4)		1,905.7		(1,074.5)
Total	(426.8)		149.0		67.1
Total income tax expense	$	52.5	$	992.3	$	1,158.0

The Tax Cuts and Jobs Act of 2017 eliminated the deferral of U.S. income tax on the historical unrepatriated earnings by imposing the one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings (the Transition Toll Tax). The Transition Toll Tax was assessed on our share of our foreign corporations' accumulated foreign earnings that were not previously taxed. Earnings in the form of cash and cash equivalents were taxed at a rate of 15.5% and all other earnings were taxed at a rate of 8.0%.

As of December 31, 2021 and 2020, we have accrued income tax liabilities of $633.0 million and $697.0 million, respectively, under the Transition Toll Tax. Of the amounts accrued as of December 31, 2021, approximately $72.7 million is expected to be paid within one year. The Transition Toll Tax will be paid in installments over an eight--year period, which started in 2018, and will not accrue interest.

At December 31, 2021, we considered our earnings not to be permanently reinvested outside the U.S. and therefore recorded deferred tax liabilities associated with an estimate of the total withholding taxes expected as a result of our repatriation of earnings. Other than for earnings, we are permanently reinvested for book/tax basis differences of approximately $1.5 billion as of December 31, 2021, primarily arising through the impacts of purchase accounting. These permanently reinvested basis differences could reverse through sales of the foreign subsidiaries, as well as various other events, none of which were considered probable as of December 31, 2021. The residual U.S. tax liability, if these differences reverse, would be between $300.0 million and $400.0 million as of December 31, 2021.

In 2020 U.S. federal courts in West Virginia and Delaware entered judgments in favor of the defendants in patent infringement proceedings relating to TECFIDERA Orange-Book listed patents. We appealed both decisions. In late 2021 the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) affirmed the judgment of the West Virginia federal court. The appeals in the Delaware cases were stayed and we expect will remain so until the decision in the West Virginia case becomes final. For additional information, please read Note 20, Litigation, to these consolidated financial statements.

Multiple TECFIDERA generic entrants are now in the U.S. market and have deeply discounted prices compared to TECFIDERA. The generic competition for TECFIDERA has significantly reduced our TECFIDERA revenue and is expected to continue to have a substantial and increasing negative impact on our U.S. TECFIDERA revenue in the future.

As of December 31, 2020, we assessed the realizability of our deferred tax assets that are dependent on future expected sales of TECFIDERA in the U.S. and reduced the net value of certain deferred tax assets by approximately $1.7 billion and reduced the net value of deferred tax liabilities associated with GILTI and tax credits by approximately $1.6 billion. For the year ended December 31, 2020, the income tax expense associated with these reductions was approximately $90.3 million. We continue to assess the realizability of these deferred tax assets and have recorded an increase in these deferred tax assets of approximately $108.5 million and an increase in these deferred tax liabilities of approximately $103.9 million for the year ended December 31, 2021.


	As of December 31,
(In millions)	2021		2020
Deferred tax assets:
Tax credits	$	121.0	$	113.4
Inventory, other reserves and accruals	199.4		165.9
Intangibles, net	1,477.5		1,546.0
Neurimmune's tax basis in ADUHELM	475.8		—
Net operating loss	1,973.0		2,080.3
Share-based compensation	31.7		23.3
Other	208.8		103.1
Valuation allowance	(1,961.3)		(1,753.9)
Total deferred tax assets	$	2,525.9	$	2,278.1
Deferred tax liabilities:
Purchased intangible assets	$	(256.6)	$	(396.2)
GILTI	(1,037.6)		(1,143.7)
Tax credits	(260.2)		(174.6)
Depreciation, amortization and other	(250.9)		(227.0)
Total deferred tax liabilities	$	(1,805.3)	$	(1,941.5)

The change in the valuation allowance between December 31, 2021 and 2020, was primarily related to the establishment of a valuation allowance against the deferred tax asset related to Neurimmune SubOne AG's (Neurimmune) tax basis in ADUHELM, as discussed below, and the adjustment of a valuation against certain deferred tax assets, the realization of which is dependent on future sales of TECFIDERA in the U.S., as discussed above.

As of December 31, 2021 and 2020, the carrying value of our investment in Samsung Bioepis totaled 713.3 billion South Korean won ($599.9 million) and 673.8 billion South Korean won ($620.2 million), respectively, which is classified as a component of investments and other assets within our consolidated balance sheets. As of December 31, 2021, we have not recorded deferred taxes related to this investment as it is not apparent that the basis difference will reverse in the foreseeable future.


	For the Years Ended December 31,
	2021		2020		2019
Statutory rate	21.0	%	21.0	%	21.0	%
State taxes	0.8		0.7		0.8
Taxes on foreign earnings	(10.5)		(3.3)		(4.5)
Tax credits	(3.8)		(1.2)		(1.1)
Purchased intangible assets	(1.6)		0.7		0.4
Divestiture of Denmark manufacturing operations	—		(0.4)		1.0
Internal reorganization of certain intellectual property rights	—		—		(2.1)
TECFIDERA impairment	—		1.8		—
GILTI	1.3		1.3		1.5


Swiss tax reform	—		—		(0.8)
Neurimmune tax impacts	(5.3)		(0.1)		—
Other	1.1		(0.8)		0.1
Effective tax rate	3.0	%	19.7	%	16.3	%

For the year ended December 31, 2021, compared to 2020, the decrease in our effective tax rate, excluding the impact of the Neurimmune deferred tax asset, as discussed below, was primarily due to the change in the territorial mix of our profitability, which included the adverse effect of generic competition for TECFIDERA in the U.S. market, the tax impacts of the BIIB111 and BIIB112 impairment charges and the impact of the non-cash tax effects of changes in the value of our equity investments, where we recorded net unrealized losses in 2021 and net unrealized gains in 2020. Our 2020 effective tax rate also reflected an income tax expense related to the establishment of a valuation allowance against certain deferred tax assets, the realization of which is dependent on future sales of TECFIDERA in the U.S.

In addition, for the year ended December 31, 2021, compared to 2020, the decrease in our effective tax rate was significantly impacted by a current year deferred tax benefit in Switzerland resulting from the accelerated approval of ADUHELM by the FDA in the U.S., recognized during the second quarter of 2021. We recorded a net deferred tax asset of approximately $490.0 million during the second quarter of 2021. The net deferred tax asset is comprised of approximately $945.0 million of gross deferred tax asset, reduced by approximately $455.0 million of unrecognized tax benefit, as discussed below. During the fourth quarter of 2021 we recorded a valuation allowance of approximately $390.0 million related to this deferred tax asset. The deferred tax benefit relates to Neurimmune's tax basis in ADUHELM, the realization of which is dependent on future sales of ADUHELM and approval of the Swiss cantonal tax authorities, with an equal and offsetting amount assigned to net income (loss) attributable to noncontrolling interests, net of tax in our consolidated statements of income, resulting in a zero net impact to net income attributable to Biogen Inc. For additional information on our collaboration arrangement with Neurimmune, please read Note 19, Investments in Variable Interest Entities, to these consolidated financial statements.

For the year ended December 31, 2020, compared to 2019, the increase in our effective tax rate was primarily due to the income tax expense related to the establishment of a valuation allowance against certain deferred tax assets, the realization of which is dependent on future sales of TECFIDERA in the U.S., as discussed above, and partially offset by the benefit recognized on the effective settlement of certain tax matters. Additionally, our 2019 effective tax rate benefited from an internal reorganization of certain intellectual property rights and the enactment of a new taxing regime in the country and certain cantons of Switzerland, which we refer to as Swiss Tax Reform, partially offset by tax expense related to the divestiture of our Hillerød, Denmark manufacturing operations. Although we recognized a loss on the divestiture of our Hillerød, Denmark manufacturing operations, the divestiture required us to write-off certain deferred tax assets and resulted in a taxable gain in certain jurisdictions. For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read Note 3, Divestitures, to these consolidated financial statements.

As of December 31, 2021, we had net operating losses and general business credit carry forwards for U.S. federal income tax purposes of approximately $0.6 million and $4.8 million, respectively, which begin to expire in 2022 and 2027, respectively. For U.S. state income tax purposes, we had research and investment credit carry forwards of approximately $147.6 million that begin to expire in 2022. For foreign income tax purposes, we had $16.7 billion of Swiss federal net operating loss carryforwards that begin to expire in 2025 and $16.2 billion of Swiss cantonal net operating loss carryforwards that begin to expire in 2025.

In assessing the realizability of our deferred tax assets, we have considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. In making this determination, under the applicable financial reporting standards, we are allowed to consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies. Based upon the level of historical taxable income and income tax liability and projections for future taxable income over the periods in which the deferred tax assets are utilizable, we believe it is more likely than not that we will realize the net benefits of the deferred tax assets of our wholly owned subsidiaries, net of the recorded valuation allowance. In the event that actual results differ from our estimates or we adjust our estimates in future periods, we may need to adjust or establish a valuation allowance, which could materially impact our consolidated financial position and results of operations.



(In millions)	2021		2020		2019
Beginning balance	$	75.7	$	129.9	$	114.2
Additions based on tax positions related to the current period	4.2		1.5		5.3
Additions for tax positions of prior periods	509.9		51.7		17.2
Reductions for tax positions of prior periods	(18.8)		(63.6)		(10.3)
Statute expirations	(3.2)		(7.9)		(0.1)
Settlement refund (payment)	(4.4)		(35.9)		3.6
Ending balance	$	563.4	$	75.7	$	129.9

During the year ended December 31, 2021, we increased our gross unrecognized tax benefits by approximately $455.0 million, related to a deferred tax asset for Swiss tax purposes for Neurimmune's tax basis in ADUHELM, as discussed above. This unrecognized tax benefit was recorded as a reduction to the gross deferred tax asset, resulting in the net deferred tax asset, as discussed above, and not as a separate liability on our consolidated balance sheets.

Our 2020 activity reflects the impact of the effective settlement of certain tax matters. We and our subsidiaries are routinely examined by various taxing authorities. We file income tax returns in various U.S. states and in U.S. federal and other foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal tax examination for years before 2017 or state, local or non-U.S. income tax examinations for years before 2012.

The U.S. Internal Revenue Service and other national tax authorities routinely examine our intercompany transfer pricing with respect to intellectual property related transactions and it is possible that they may disagree with one or more positions we have taken with respect to such valuations.

Included in the balance of unrecognized tax benefits as of December 31, 2021, 2020 and 2019, are $87.5 million, $68.8 million and $122.7 million (net of the federal benefit on state issues), respectively, of unrecognized tax benefits that, if recognized, would affect the effective income tax rate in future periods.

We recognize potential interest and penalties related to unrecognized tax benefits in income tax expense. During the years ended December 31, 2021, 2020 and 2019 we recognized total interest and penalty expense of $2.7 million, $1.0 million and $4.7 million, respectively. We have accrued $24.8 million and $21.2 million for the payment of interest and penalties as of December 31, 2021 and 2020, respectively.

It is reasonably possible that we will adjust the value of our uncertain tax positions related to certain transfer pricing, collaboration matters and other issues as we receive additional information from various taxing authorities, including reaching settlements with such authorities.

We estimate that it is reasonably possible that our gross unrecognized tax benefits, exclusive of interest, could decrease by up to approximately $475.0 million, including approximately $455.0 million related to the unrecognized tax benefits related to Neurimmune's tax basis in ADUHELM, as discussed above, in the next 12 months as a result of various audit closures, settlements and expiration of the statute of limitations.