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Axalta Coating Systems Ltd.

For the period ended Dec 31, 2025. Filed Feb 13, 2026.

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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.

FY2025 · Filed Feb 13, 2026

AXTA$37.38-0.4%Stored close · as of Nov 10, 2026

Extracted filing text, with the paragraph anchors used by the comparison.

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(10) INCOME TAXES

On December 27, 2023, the Government of Bermuda enacted the Bermuda Corporate Income Tax Act (“Bermuda CITA”), which imposes a 15% corporate income tax effective for tax years beginning on or after January 1, 2025.

For the year ended December 31, 2025, the domestic components presented represent Bermuda, our country of incorporation. For the years ended December 31, 2024, and 2023, the domestic components presented represent the United States. Prior to 2025, we reflected the United States as the domestic component, which we believe was more meaningful to the reader due to the significance of our operations in the United States during the years when Bermuda did not impose a corporate income tax.

The Company’s operations in Switzerland are subject to reduced tax rates through December 31, 2026, as long as certain conditions are met. The tax benefit attributable to this tax holiday was $6 million, $4 million, and $4 million for the years ended December 31, 2025, 2024, and 2023, respectively. The tax effect of the holiday on diluted net income per common share was $0.03, $0.02, and $0.01 for the years ended December 31, 2025, 2024, and 2023.

Domestic and Foreign Components of Income Before Income Taxes

Year Ended December 31,
202520242023
Domestic (1)$29$203$150
Foreign517293205
Total$546$496$355

(1)For the year ended December 31, 2025, the domestic income before income taxes represents Bermuda operations. For the years ended December 31, 2024, and 2023, the domestic income before income taxes represent United States operations.

Provision (Benefit) for Income Taxes

Year Ended December 31, 2025Year Ended December 31, 2024Year Ended December 31, 2023
CurrentDeferredTotalCurrentDeferredTotalCurrentDeferredTotal
Domestic (1)$1$24$25$27$7$34$33$(9)$24
Domestic State (1)———8(1)79(2)7
Foreign1212114287(23)6452355
Total$122$45$167$122$(17)$105$94$(8)$86

(1)For the year ended December 31, 2025, the domestic federal and state provision (benefit) for income taxes represent Bermuda operations. Bermuda does not impose a state income tax. For the years ended December 31, 2024, and 2023, the domestic federal and state provision (benefit) for income taxes represent United States operations.

Income Tax Paid by Jurisdiction

Year Ended December 31,
Brazil8
China22
India6
Mexico14
United States29
Other foreign jurisdictions (1)28
Total Income Tax Paid$107

(1)All other foreign jurisdictions do not individually exceed $5 million.

Reconciliation to U.S. Statutory Rate

For the year ended December 31, 2025, the effective tax rate reconciliation is presented reflecting the differences between the Bermuda income tax rate and the effective tax rate for the Company. For the years ended December 31, 2024, and 2023, the effective tax rate reconciliation is presented reflecting the differences between the United States federal income tax rate and the effective tax rate for the Company.

Year Ended December 31,
Statutory Bermuda federal income tax rate$8215.0%
Foreign Tax Effects
Brazil
Statutory tax rate differences between Brazil and Bermuda40.8
Foreign taxes40.8
China
Statutory tax rate differences between China and Bermuda91.6
Other30.6
Germany
Trade tax50.9
Enactment of new tax laws(5)(0.9)
Other(1)(0.2)
Luxembourg
Nondeductible foreign exchange gains and losses101.8
Other(3)(0.5)
Netherlands
Statutory tax rate differences between Netherlands and Bermuda(4)(0.7)
Nondeductible foreign exchange gains and losses71.3
Other(5)(0.9)
Switzerland
Statutory tax rate differences between Switzerland and Bermuda(20)(3.7)
Cantonal tax71.3
Foreign taxes40.8
Deductible impairment loss(5)(0.9)
Other(2)(0.4)
United Kingdom
Statutory tax rate differences between the United Kingdom and Bermuda(6)(1.1)
Changes in valuation allowance30.5
United States
Statutory tax rate differences between United States and Bermuda71.3
State and local income taxes, net federal tax effect40.7
Tax credits(6)(1.1)
Nontaxable and nondeductible items91.6
Mexico71.3
Other162.8
Changes in valuation allowance193.5
Nontaxable and nondeductible items10.2
Changes in unrecognized tax benefits234.2
Total income tax provision / effective tax rate$16730.6%
Year Ended December 31,
2024 · 2023
Statutory U.S. federal income tax rate$10421.0%$7521.0%
Foreign income taxed at rates other than U.S. statutory rate(25)(5.1)(29)(8.2)
Changes in valuation allowances142.73810.7
Foreign exchange gains and losses(14)(2.7)10.2
Unrecognized tax benefits132.6(6)(1.7)
Foreign taxes81.692.5
Non-deductible expenses71.571.9
Tax credits(7)(1.4)(9)(2.5)
U.S. state and local taxes, net61.251.5
Bermuda CITA(27)(5.5)——
Other, net (1)265.2(5)(1.1)
Total income tax provision / effective tax rate$10521.1%$8624.3%

(1)In 2024, the Company recorded a tax expense of $26 million in the Netherlands related to the write off of an expired net operating loss carryforward, which is fully offset by a tax benefit of $26 million for the decrease to the valuation allowance.

Deferred Tax Balances

Year Ended December 31,
20252024
Deferred tax asset
Tax loss, credit and interest carryforwards$437$361
Compensation and employee benefits6268
Accruals and other reserves3834
Research and development capitalization3553
Equity investment and other securities5—
Leases4138
Other81
Total deferred tax assets626555
Less: valuation allowance(337)(250)
Total deferred tax assets, net of valuation allowance289305
Deferred tax liabilities
Goodwill and intangibles(164)(126)
Property, plant and equipment(146)(143)
Unremitted earnings(16)(14)
Accounts receivable and other assets(15)(7)
Equity investment and other securities—(2)
Total deferred tax liabilities(341)(292)
Net deferred tax (liability) asset$(52)$13
Non-current assets$119$164
Non-current liability(171)(151)
Net deferred tax (liability) asset$(52)$13

At December 31, 2025 and 2024, deferred income taxes of approximately $16 million and $14 million, respectively, have been provided on unremitted earnings of all subsidiaries and related companies to the extent that such earnings are not deemed to be permanently reinvested and cannot be repatriated in a tax-free manner. At December 31, 2025, and 2024, we have not recorded a deferred tax liability related to withholding taxes of approximately $147 million and $95 million, respectively, on unremitted earnings of subsidiaries that are deemed permanently reinvested.

Tax loss, tax credit and interest carryforwardsYear Ended December 31,
20252024
Tax loss carryforwards (tax effected) (1)
Expire within 10 years$49$20
Expire after 10 years or indefinite carryforward201175
Tax credit carryforwards
Expire within 10 years11
Expire after 10 years or indefinite carryforward71
Interest carryforwards
Expire within 10 years11
Expire after 10 years or indefinite carryforward178163
Total tax loss, tax credit and interest carryforwards$437$361

(1)Net of unrecognized tax benefits

Utilization of our tax loss, tax credit and interest carryforwards may be subject to annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state and foreign provisions. Such annual limitations could result in the expiration of the tax loss, tax credit and interest carryforwards before their utilization.

Valuation allowance

Year Ended December 31,
20252024
Domestic (1)$27$4
Foreign310246
Total valuation allowance$337$250

(1)For the year ended December 31, 2025, the domestic valuation allowance represents Bermuda operations. For the year ended December 31,2024, the domestic valuation allowance represents the U.S. operations.

Valuation allowances relate primarily to the tax loss, tax credit and interest carryforwards, as well as equity investment in foreign jurisdictions, where the Company does not believe the associated net deferred tax assets will be realized, due to expiration, limitation or insufficient future taxable income. The foreign valuation allowance primarily relates to tax loss carryforwards and interest carryforwards from operations in Luxembourg, Netherlands, and the United Kingdom, of $295 million and $240 million at December 31, 2025 and 2024, respectively.

Total Gross Unrecognized Tax BenefitsYear Ended December 31,
202520242023
Total gross unrecognized tax benefits at January 1$107$96$98
Increases related to acquisitions———
Increases related to positions taken on items from prior years2852
Decreases related to positions taken on items from prior years(2)(3)(5)
Increases related to positions taken in the current year91012
Settlement of uncertain tax positions with tax authorities(2)—(1)
Decrease due to expiration of statues of limitations(41)(1)(10)
Total gross unrecognized tax benefits at December 319910796
Total accrual for interest and penalties associated with unrecognized tax benefits (1)1365
Total gross unrecognized tax benefits at December 31, including interest and penalties$112$113$101
Total unrecognized tax benefits that, if recognized, would impact the effective tax rate$73$50$42
Interest and penalties included as components of the Provision for income taxes$6$1$(1)

(1)Accrued interest and penalties are included within Other accrued liabilities and Other liabilities in the consolidated balance sheets.

The Company is subject to income tax in approximately 49 jurisdictions outside of Bermuda. The Company’s significant operations outside of Bermuda are located in Brazil, China, Germany, Mexico, Switzerland, the United Kingdom, and the United States. The statute of limitations varies by jurisdiction with 2014 being the oldest tax year still open in significant jurisdictions. Certain German subsidiaries are under tax examination for calendar years 2014 to 2020. The review by the German Tax Authorities (“GTA”) encompasses various tax aspects, including but not limited to intercompany transactions and the establishment of our European headquarters in Basel, Switzerland in 2016. The GTA have issued proposed adjustments and have communicated a preliminary position related to the establishment of our European headquarters. We are fully engaged in ongoing discussions with the GTA and are evaluating potential resolution options for certain tax years open under audit.

The Company is also under audit in other jurisdictions outside of Germany, including an inquiry with His Majesty’s Revenue and Customs (“HMRC”) in the United Kingdom for tax years 2021-2023. The HMRC’s inquiries are principally related to, but not limited to, certain intercompany financing activities. We continue to respond to information requests.

The result of all open examinations may lead to adjustments to our taxes or certain tax attributes including net operating losses or interest limitation carryforwards with respect to years under examination as well as subsequent periods. We believe that our estimated provisions for any adjustments that may result from the examinations are appropriately recorded in our condensed consolidated financial statements at December 31, 2025.

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