Income Taxes

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The income expense for the three and six month periods ended June 30, 2021 was $4 million and $9 million, respectively. The income expense for three and six month periods ended June 30, 2020 was $2 million and $26 million, respectively. There were no discrete items in the three and six month periods ended June 30, 2021. Discrete items, net were a benefit of $1 million and expense of $20 million for the three and six month periods ended June 30, 2020, respectively. The discrete item in the six month period ended June 30, 2020 was primarily related to the tax impact of the divestiture of VNBS. Veoneer's effective tax rate differs from an expected statutory rate primarily due to the discrete item and losses in certain jurisdictions that are not benefited.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company assesses all available evidence, both positive and negative, to determine the amount of any required valuation allowance. Valuation allowances have been established for the Company’s operations in United States, Sweden, France, Japan and China.