INCOME TAXES

9 Months Ended

Sep. 30, 2023

INCOME TAXES

INCOME TAXES

NOTE 16 - INCOME TAXES

The Company had an effective tax rate of 27.3% for the nine months ended September 30, 2023, compared to an effective tax rate of 144% for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, the difference between the Company’s effective tax rate and the U.S. federal statutory rate of 21% was the result of foreign income taxed at different rates, including the provision for uncertain tax positions, an increase in nondeductible expenses such as share-based compensation, and the release of the valuation allowance on deferred tax assets in the United States.

NOTE 16 - INCOME TAXES (continued):

The Company maintains a valuation allowance in jurisdictions where it is more likely than not that all or a portion of a deferred tax asset may not be realized. In determining whether a valuation allowance is warranted, the Company evaluates factors such as prior earnings history, expected future earnings and the reversal of existing taxable temporary differences. During the nine months ended September 30, 2023, the Company recorded a release of $10,553 in respect of the valuation allowance applied on deferred tax assets recorded in the United States.

The Company maintains a full valuation allowance on its deferred tax assets in Germany and maintains its previous conclusion that a valuation allowance on deferred tax assets in Israel is not necessary.