Income Taxes

6 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note 17. Income Taxes

The effective tax rate was 16.3% for the three months ended June 30, 2024 and 63.9% for the six months ended June 30, 2024. The effective tax rate was 30.0% for the three months ended June 30, 2023 and a negative 86.2% for the six months ended June 30, 2023.

The income tax provision was computed based on our estimated annualized effective tax rate and the full-year forecasted income or loss plus the tax impact of unusual, infrequent, or nonrecurring significant items during the period. The amount and change of pre-tax income and loss recognized between jurisdictions impacted the reported effective tax rate for the six months ended June 30, 2024 as we do not recognize a tax benefit primarily on losses in the United States where we have a valuation allowance, while recognizing tax expense in Canada, Netherlands, the Middle East, the United Kingdom, and Iceland. We included in the annualized effective rate a $1.1 million benefit for the release of the valuation allowance recorded on the United Kingdom’s tax loss carryforwards as the United Kingdom’s forecasted income will fully utilize these carryforward losses for the year. We also recorded a $0.5 million expense during the first quarter of 2024 to record estimated withholding taxes associated with repatriating all of Sky Lagoon’s earnings back to the United States and a valuation allowance against the tax credit generated from this withholding tax.

The effective tax rate for the six months ended June 30, 2023 was further impacted by the release of a valuation allowance of $2.1 million during the first quarter of 2023 on deferred tax assets associated with certain separate state filings, which more than offset taxes due in jurisdictions without a valuation allowance.

We paid net cash for income taxes of $5.1 million during the three months ended June 30, 2024 and $12.9 million during the six months ended June 30, 2024 of which $9.0 million of the $12.9 was paid to Canadian taxing authorities and $1.7 million to the Netherlands. We paid net cash for income taxes of $4.6 million during the three months ended June 30, 2023 and $12.7 million during the six months ended June 30, 2023, of which $9.6 million of the $12.7 million was paid to Canadian tax authorities.