Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Tax Rate

A reconciliation between the U.S. federal statutory tax rate and our effective tax rate is summarized as follows:

	For the Three Months Ended March 31,
	2023		2022
Statutory rate	21.0	%	21.0	%
State taxes	1.3		(0.4)
Taxes on foreign earnings	(5.6)		(10.8)
Tax credits	(6.6)		(2.5)
Purchased intangible assets	0.4		0.6
GILTI	0.5		0.3
Neurimmune tax impacts	—		24.2
Other	0.6		3.8
Effective tax rate	11.6	%	36.2	%

Changes in Tax Rate

For the three months ended March 31, 2023, compared to the same period in 2022, the decrease in our effective tax rate, excluding the impact of the net Neurimmune deferred tax asset, as discussed below, includes the resolution of an uncertain tax matter in the current quarter related to tax credits and the non-cash tax effects of changes in the value of our equity investments. The tax effects of this change in value of our equity investments are recorded discretely since changes in value of equity investments cannot be forecasted.

Neurimmune Deferred Tax Asset

During the first quarter of 2022, upon issuance of the final NCD related to ADUHELM, we recorded an increase in a valuation allowance of approximately $85.0 million to reduce the net value of a previously recorded deferred tax asset to zero.

This adjustment to our net deferred tax asset is recorded with an equal and offsetting amount assigned to net income (loss) attributable to noncontrolling interests, net of tax in our condensed 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 17, Investments in Variable Interest Entities, to these condensed consolidated financial statements.

Accounting for Uncertainty in Income Taxes

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 2013.

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.

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 $500.0 million, including approximately $450.0 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. Any changes to our gross unrecognized tax benefits related to Neurimmune's tax basis in ADUHELM would result in a zero net impact to net income attributable to Biogen, Inc., as w