Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

(7) Income Taxes

We recorded income tax expense at an effective rate of 44.7% for the three months ended September 30, 2023, as compared to an effective rate of 29.0% for the three months ended September 30, 2022. The 2023 rate was unfavorably impacted by a lower level of pre-tax earnings with a less beneficial mix due in part to restructuring costs recorded in the third quarter of 2023 and favorably impacted by the scheduled reduction in the French business tax rate from 0.75% to 0.375% effective January 1, 2023 and the effective settlement of an income tax audit. In certain countries in which we recorded restructuring costs, we did not recognize a corresponding tax benefit due to the recognition of valuation allowances against anticipated tax losses. The 44.7% effective tax rate for the third quarter of 2023 was higher than the United States Federal statutory rate of 21% primarily due to tax losses in certain countries for which we did not recognize a corresponding tax benefit due to valuation allowances, the French business tax, and the overall mix of earnings.

We recorded income tax expense at an effective rate of 33.6% for the nine months ended September 30, 2023, as compared to an effective rate of 30.3% for the nine months ended September 30, 2022. The 2023 rate was unfavorably impacted by a lower level of pre-tax earnings with a less beneficial mix due in part to restructuring costs recorded in the second and third quarters of 2023 and favorably impacted by the scheduled reduction in the French business tax rate from 0.75% to 0.375% effective January 1, 2023 and the effective settlement of an income tax audit. The 33.6% effective tax rate for the nine months ended September 30, 2023 was higher than the United States Federal statutory rate of 21% primarily due to tax losses in certain countries for which we did not recognize a corresponding tax benefit due to valuation allowances, the French business tax, and the overall mix of earnings.

As of September 30, 2023, we had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $33.8. If recognized, the entire amount would favorably affect the effective tax rate except for $6.0. As of December 31, 2022, we had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $81.6. In the third quarter of 2023, we effectively settled an income tax audit and reduced our unrecognized tax benefits by $45.3, most of which did not impact tax expense. 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 2016 through 2023 for our major operations in France, Italy, the United Kingdom and the United States. As of September 30, 2023, we were subject to tax audits in Austria, Belgium, Germany, India, Ireland, Israel, Spain and the United States. We believe that the resolution of these audits will not have a material impact on earnings.