Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 9. Income Taxes

LivaNova’s effective income tax rate for the three months ended March 31, 2023 was 24.3% compared with 45.6% for the three months ended March 31, 2022. LivaNova’s effective income tax rate fluctuates based on, among other factors, changes in pretax income in countries with varying statutory tax rates, valuation allowances, tax credits and incentives, and unrecognized tax benefits associated with uncertain tax positions.

LivaNova continually assesses the realizability of its worldwide deferred tax asset and valuation allowance positions, and when the need arises, the Company establishes or releases valuation allowances accordingly.

The decrease in the effective tax rate for the three months ended March 31, 2023 as compared to the same prior year period was primarily attributable to changes in valuation allowances and year-over-year changes in income before tax in countries with varying statutory tax rates.

LivaNova operates in multiple jurisdictions throughout the world, and its tax returns are periodically audited or subjected to review by tax authorities. As a result, there is an uncertainty in income taxes recognized in LivaNova’s financial statements. Tax benefits totaling $1.7 million and $1.6 million were unrecognized as of March 31, 2023 and December 31, 2022, respectively. It is reasonably possible that, within the next twelve months, due to the settlement of uncertain tax positions with various tax authorities and the expiration of statutes of limitations, unrecognized tax benefits could decrease by up to approximately $1.0 million.