
(in thousands)	2020		2019		2018

Domestic - Luxembourg	$	(50,821)	$	8,919	$	(22,513)
Foreign - U.S.	(13,243)		(12,602)		8,398
Foreign - non-U.S.	6,359		16,122		15,514

Total	$	(57,705)	$	12,439	$	1,399


(in thousands)	2020		2019		2018

Current:
Domestic - Luxembourg	$	(2,158)	$	—	$	(275)
Foreign - U.S. federal	4,992		187		(1,838)
Foreign - U.S. state	(322)		(174)		(336)
Foreign - non-U.S.	(6,088)		(10,970)		(7,440)

	$	(3,576)	$	(10,957)	$	(9,889)
Deferred:
Domestic - Luxembourg	$	224	$	(308,657)	$	4,927
Foreign - U.S. federal	(2,808)		329		291
Foreign - U.S. state	(465)		341		(134)
Foreign - non-U.S.	(1,984)		648		707

	$	(5,033)	$	(307,339)	$	5,791

Income tax (provision) benefit	$	(8,609)	$	(318,296)	$	(4,098)

We operate under a tax holiday in Uruguay. The Philippines and India tax holidays expired on June 30, 2019 and March 31, 2019 with the election of the reduced income tax rate, respectively. We operate in a Uruguay free trade zone that provides an indefinite future tax benefit. The tax holiday is conditioned upon our meeting certain employment and investment thresholds. The impact of these tax holidays decreased foreign taxes by $0.1 million ($0.01 per diluted share), $0.3 million ($0.02 per diluted share) and $0.7 million ($0.04 per diluted share) for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company accounts for certain income and expense items differently for financial reporting purposes and income tax purposes. We recognize deferred income tax assets and liabilities for these differences between the financial reporting basis and the tax basis of our assets and liabilities as well as expected benefits of utilizing net operating loss and credit carryforwards. We measure deferred income tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect to recover or settle those temporary differences.


(in thousands)	2020		2019

Non-current deferred tax assets:
Net operating loss carryforwards	$	353,358	$	338,403
U.S. federal and state tax credits	242		189
Other non-U.S. deferred tax assets	11,327		13,980
Share-based compensation	1,658		2,010
Accrued expenses	1,205		2,691
Unrealized losses	10,351		9,011
Other	—		526
Non-current deferred tax liabilities:
Intangible assets	(8,133)		(8,325)
Depreciation	(441)		(302)
Other non-U.S. deferred tax liability	(7)		(998)
Other	(736)		—
	368,824		357,185

Valuation allowance	(372,227)		(355,559)

Non-current deferred tax (liabilities) assets, net	$	(3,403)	$	1,626

A valuation allowance is provided when it is deemed more likely than not that some portion or all of a deferred tax asset will not be realized. In determining whether a valuation allowance is needed requires an extensive analysis of positive and negative evidence regarding realization of the deferred tax assets and, inherent in that, an assessment of the likelihood of sufficient future taxable income. When there is a cumulative pretax loss for financial reporting for the current and two preceding years (i.e., a three year cumulative loss), this is a significant element of negative evidence that would be difficult to overcome on a more likely than not or any other basis. Therefore, the Company recorded a valuation allowance of $372.2 million and $355.6 million for the year ending December 31, 2020 and 2019, respectively.

Previously, the Company has not recognized deferred taxes on cumulative earnings of non-Luxembourg affiliates. In 2019 with the sale of the NCI business and the impending closure of the Philippines, taxes of $0.9 million were provided on the Philippines earnings. In 2020, the Company recognized income tax expense on $68 million of accumulated earnings in India that had previously been considered indefinitely reinvested. The Company also recognized income tax expense on 2020 earnings in India. The Company continues to remain indefinitely reinvested in all other non-Luxembourg earning not previously discussed. The other non-Luxembourg earnings reinvested as of December 31, 2020 were approximately $13.8 million, which if distributed would result in additional tax due totaling approximately $0.5 million.

The Company had a deferred tax asset of $353.4 million as of December 31, 2020 relating to Luxembourg, U.S. federal, state and foreign net operating losses compared to $338.4 million as of December 31, 2019. As of December 31, 2020 and 2019, a valuation allowance of $349.8 million and $337.7 million, respectively, has been established related to Luxembourg net operating loss (“NOL”), a valuation allowance of $0.8 million and $0.5 million, respectively, has been established related to state NOLs and a valuation allowance of $2.4 million and $0.1 million, respectively, has been established related to U.S. federal NOLs. The gross amount of net operating losses available for carryover to future years is approximately $1,415.9 million as of December 31, 2020 and approximately $1,355.4 million as of December 31, 2019. These losses are scheduled to expire between the years 2023 and 2040.

The deferred tax asset created from the sale of the Financial Services Business was adjusted to reflect the final capital loss balance of $10.4 million in the U.S. Because it is not more likely than not the Company will have sufficient taxable income of the appropriate character (a capital gain) in the carryforward period, a full valuation allowance has been established related to the capital loss.

On September 20, 2019, the corporate income tax rate in India lowered from 34.94% to 25.17% retroactive to April 1, 2019. The Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future. As of December 31, 2020, the amount recorded related to remeasurement of our deferred tax balance was $1.4 million.

On April 25, 2019, the Luxembourg Parliament voted to approve the 2019 Budget Law. The new legislation reduced the overall effective corporate income tax rate from 26.01% to 24.94% for accounting periods beginning on or after January 1,

2019. The Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 24.94%. As of December 31, 2019, the amount recorded related to remeasurement of our deferred tax balance was $14.0 million.

In addition, the Company had a deferred tax asset of $0.9 million and $0.6 million as of December 31, 2020 and 2019, respectively, relating to state tax credits. Some of the state tax credit carryforwards have an indefinite carryforward period.

The Company is taking advantage of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act signed into law on March 27, 2020 by utilizing a five year carryback of the full net operating loss generated in the U.S. in 2020. The CARES Act allows a five year carryback of the $14.8 million net operating loss generated in the U.S. in 2020

The effective tax rate differs from the Luxembourg statutory tax rate due to tax rate differences on foreign earnings, increases in uncertain tax positions, state taxes, remeasurement of deferred tax assets related to tax rate changes, a decrease in unrecognized tax benefits and a valuation allowance against deferred tax assets the Company believes it is more likely than not will not be realized


	2020		2019		2018

Statutory tax rate	24.94	%	24.94	%	26.01	%
Change in valuation allowance	(29.79)		2,526.53		43.08
State tax expense	(1.25)		(1.63)		28.58
Tax credits	0.10		—		—
Uncertain tax positions	(2.94)		39.60		114.18
Unrecognized tax loss	—		(67.18)		—
Income tax rate change	(2.40)		—		—
Tax rate differences on foreign earnings	(6.62)		28.75		73.11
Other	3.04		7.85		7.96

Effective tax rate	(14.92)	%	2,558.86	%	292.92	%

The Company follows ASC Topic 740 which clarifies the accounting and disclosure for uncertainty in tax positions. We analyzed our tax filing positions in the domestic and foreign tax jurisdictions where we are required to file income tax returns as well as for all open tax years subject to audit in these jurisdictions. The Company has open tax years in the United States (2017 through 2019), India (2011 through 2019) and Luxembourg (2014 through 2018).


(in thousands)	2020		2019

Amount of unrecognized tax benefits as of the beginning of the year	$	9,767	$	9,687
Decreases as a result of tax positions taken in a prior period	(2,591)		(192)
Increases as a result of tax positions taken in a prior period	767		22
Increases as a result of tax positions taken in the current period	598		250

Amount of unrecognized tax benefits as of the end of the year	$	8,541	$	9,767

The total amount of unrecognized tax benefits including interest and penalties that, if recognized, would affect the effective tax rate is $13.2 million and $13.5 million as of December 31, 2020 and 2019, respectively. The Company recognizes interest, if any, related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2020 and 2019, the Company had recorded accrued interest and penalties related to unrecognized tax benefits of $4.6 million and $3.7 million, respectively.