Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

(7) Income Taxes

We recorded income tax expense at an effective rate of 32.9% for the three months ended September 30, 2021, as compared to an effective rate of 81.5% for the three months ended September 30, 2020. The 2020 rate was unfavorably impacted by the relatively low level and mix of pre-tax earnings and a discrete valuation allowance in Germany. The 2021 rate was favorably impacted by the scheduled reduction in the French corporate tax rate to 27.5%, the enacted 50% reduction in the French business tax rate, and a higher level of pre-tax earnings. The 32.9% effective tax rate for the three months ended September 30, 2021 was higher than the United States Federal statutory rate of 21% primarily due to the French business tax, tax losses in certain countries for which we did not recognize a corresponding tax benefit due to valuation allowances, and the overall mix of earnings.

We recorded income tax expense at an effective rate of 33.1% for the nine months ended September 30, 2021, as compared to an effective rate of 407.4% for the nine months ended September 30, 2020. The 2020 rate was unfavorably impacted by the relatively low level and mix of pre-tax earnings, the non-deductible goodwill impairment charge in Germany, and a discrete valuation allowance in Germany. The 2021 rate was favorably impacted by the scheduled reduction in the French corporate tax rate to 27.5%, the enacted 50% reduction in the French business tax rate, and a higher level of pre-tax earnings. The 33.1% effective tax rate for the nine months ended September 30, 2021 was higher than the United States Federal statutory rate of 21% primarily due to the French business tax, tax losses in certain countries for which we did not recognize a corresponding tax benefit due to valuation allowances, and the overall mix of earnings.

As of September 30, 2021, we had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $68.0 that would favorably impact the effective tax rate if recognized. As of December 31, 2020, we had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $64.5. We do not expect our unrecognized tax benefits to change significantly over the next 12 months.

We conduct business globally in various countries and territories. We are routinely audited by the tax authorities of the various tax jurisdictions in which we operate. Generally, the tax years that could be subject to examination are 2014 through 2021 for our major operations in France, Italy, the United Kingdom, and the United States. As of September 30, 2021, we were subject to tax audits in Austria, Denmark, France, Germany, Netherlands, and the United States. We believe that the resolution of these audits will not have a material impact on earnings.