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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The composition of pre-tax income (loss) for the years ended December 31, 2024, 2023, and 2022 is as follows:
|  | Year Ended December 31,
(in millions) |  | 2024 |  | 2023 |  | 2022
International |  | $ | 8,029 |  |  | $ | 6,119 |  |  | $ | 4,717 |
U.S. |  | (737) |  |  | (638) |  |  | (794) |
Total |  | $ | 7,292 |  |  | $ | 5,481 |  |  | $ | 3,923 |
Provision for Income Taxes The composition of income tax expense for the years ended December 31, 2024, 2023, and 2022 is as follows:
|  | Year Ended December 31,
(in millions) |  | 2024 |  | 2023 |  | 2022
Current income tax expense (benefit): |  |  |  |  |  |
International |  | $ | 1,545 |  |  | $ | 1,371 |  |  | $ | 1,145 |
U.S. Federal |  | (235) |  |  | 291 |  |  | (8) |
U.S. State |  | 2 |  |  | 8 |  |  | (15) |
Current income tax expense (benefit): |  | 1,312 |  |  | 1,670 |  |  | 1,122 |
Deferred income tax expense (benefit): |  |  |  |  |  |
International |  | 25 |  |  | (47) |  |  | (61) |
U.S. Federal |  | 51 |  |  | (411) |  |  | (172) |
U.S. State |  | 22 |  |  | (20) |  |  | (24) |
Deferred income tax expense (benefit) |  | 98 |  |  | (478) |  |  | (257) |
Income tax expense |  | $ | 1,410 |  |  | $ | 1,192 |  |  | $ | 865 |
Income tax liabilities of $905 million and $1.0 billion are included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets at December 31, 2024 and 2023, respectively. U.S. Tax Reform In December 2017, the Tax Act was enacted into law in the U.S. The Tax Act made significant changes to U.S. federal tax law, including a one-time deemed repatriation tax on accumulated unremitted international earnings, to be paid over eight years. In 2024, the Company reduced its income tax expense that was recorded during the year ended December 31, 2018 by $416 million relating to its federal one-time deemed repatriation liability. The reduction in expense resulted from a recent U.S. Tax Court decision in Varian Medical Systems, Inc. vs. Commissioner. Under the Tax Act, the Company's future cash generated by the Company's international operations can generally be repatriated without further U.S. federal income tax, but will be subject to U.S. state income taxes and international withholding taxes, which have been accrued by the Company. The Tax Act also introduced in 2018 a tax on 50% of GILTI, which is income determined to be in excess of a specified routine rate of return, and a base erosion and anti-abuse tax ("BEAT") aimed at preventing the erosion of the U.S. tax base. The Company has adopted an accounting policy to treat taxes on GILTI as period costs. Several countries outside the U.S. have adopted rules, effective January 1, 2024, that impose a 15% minimum global tax. This is in response to the framework set forth by the Organisation for Economic Co-operation and Development with respect to its base erosion and profit shifting project. The impact of these rules have been reflected in our 2024 income tax expense. Deferred Income Taxes The Company utilized $309 million of its U.S. NOLs to reduce its U.S. federal tax liability for the deemed repatriation tax. After utilization of available NOLs, at December 31, 2024, the Company had U.S. federal NOLs of $462 million, the majority of which do not have an expiration date, and U.S. state NOLs of $370 million, which mainly begin to expire in years ending December 31, 2032 and forward. In addition, at December 31, 2024, the Company had $796 million of non-U.S. NOLs, the majority of which do not have an expiration date, and $51 million of U.S. research tax credit and foreign tax credit carryforwards available to reduce future tax liabilities. The utilization of these NOLs and credits is dependent upon the Company's ability to generate sufficient future taxable income and the tax laws in the jurisdictions where the losses were generated. The Company periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of these deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. The Company considers many factors when assessing the likelihood of future realization of the deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future income, tax planning strategies, the carryforward periods available for tax reporting purposes and other relevant factors. The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 2024 and 2023 are as follows:
|  | December 31,
(in millions) |  | 2024 |  | 2023
Deferred tax assets: |  |  |  |
Net operating loss carryforward — U.S. |  | $ | 117 |  |  | $ | 89 |
Net operating loss carryforward — International |  | 156 |  |  | 200 |
Accrued expenses |  | 83 |  |  | 70 |
Stock-based compensation |  | 55 |  |  | 47 |
Unrealized losses on investments |  | 67 |  |  | 83 |
Foreign currency translation adjustments |  | 103 |  |  | 66 |
Tax credits |  | 45 |  |  | 39 |
Operating lease liabilities |  | 22 |  |  | 20 |
Property and equipment |  | 234 |  |  | 195 |
Embedded derivative liability |  | 123 |  |  | — |
Other |  | — |  |  | 16 |
Total deferred tax assets |  | 1,005 |  |  | 825 |
Valuation allowance on deferred tax assets |  | (111) |  |  | (114) |
Deferred tax assets, net |  | 894 |  |  | 711 |
Deferred tax liabilities: |  |  |  |
Debt discount on convertible notes |  | (123) |  |  | — |
Intangible assets and other |  | (110) |  |  | (140) |
Euro-denominated debt |  | (144) |  |  | (11) |
Operating lease assets |  | (22) |  |  | (19) |
Installment sale liability |  | (118) |  |  | (118) |
Other |  | (4) |  |  | (6) |
Deferred tax liabilities |  | (521) |  |  | (294) |
Net deferred tax assets (1) |  | $ | 373 |  |  | $ | 417 |
(1) Includes deferred tax assets of $662 million and $675 million at December 31, 2024 and 2023, respectively, included in "Other assets, net" in the Consolidated Balance Sheets. The valuation allowance on deferred tax assets at December 31, 2024 includes $31 million related to international operations and $80 million primarily related to certain unrealized losses on equity securities. The valuation allowance on deferred tax assets at December 31, 2023 includes $30 million related to international operations and $84 million primarily related to certain unrealized losses on equity securities. The decrease in the valuation allowance is primarily related to deferred tax assets generated from certain unrealized losses on equity securities. The Company does not intend to indefinitely reinvest its international earnings that were subject to U.S. taxation pursuant to the mandatory deemed repatriation or subject to U.S. taxation as GILTI. Reconciliation of U.S. Federal Statutory Income Tax Rate to Effective Income Tax Rate A significant portion of the Company's taxable earnings is generated in the Netherlands. According to Dutch corporate income tax law, income generated from qualifying innovative activities is taxed at a rate of 9% ("Innovation Box Tax") rather than the Dutch statutory rate of 25.8%. A portion of Booking.com's earnings during the years ended December 31, 2024, 2023, and 2022 qualified for Innovation Box Tax treatment, which had a significant beneficial impact on the Company's effective tax rate for those years. The effective income tax rate of the Company is different from the amount computed using the expected U.S. statutory federal rate of 21% for the years ended December 31, 2024, 2023, and 2022 as a result of the following items:
|  | Year Ended December 31,
(in millions) |  | 2024 |  | 2023 |  | 2022
Income tax expense at U.S. federal statutory rate |  | $ | 1,531 |  |  | $ | 1,151 |  |  | $ | 824 |
Adjustment due to: |  |  |  |  |  |
Foreign rate differential |  | 386 |  |  | 307 |  |  | 264 |
Innovation Box Tax benefit |  | (607) |  |  | (544) |  |  | (452) |
Stock-based compensation |  | 73 |  |  | 59 |  |  | 42 |
Federal GILTI |  | 82 |  |  | 24 |  |  | 10 |
State income tax benefit |  | 19 |  |  | (9) |  |  | (31) |
Valuation allowance |  | (5) |  |  | (4) |  |  | 87 |
Uncertain tax positions |  | 189 |  |  | 14 |  |  | 72 |
Fines and penalties |  | — |  |  | 144 |  |  | 2 |
Loss related to the conversion option on convertible senior notes |  | 167 |  |  | — |  |  | — |
Tax Act - U.S. transition tax |  | (416) |  |  | 1 |  |  | — |
Other |  | (9) |  |  | 49 |  |  | 47 |
Income tax expense |  | $ | 1,410 |  |  | $ | 1,192 |  |  | $ | 865 |
Uncertain Tax Positions The following is a reconciliation of the total beginning and ending amount of unrecognized tax benefits:
|  | Year Ended December 31,
(in millions) |  | 2024 |  | 2023 |  | 2022
Unrecognized tax benefit — January 1 |  | $ | 67 |  |  | $ | 184 |  |  | $ | 120 |
Gross increases — tax positions in current period |  | 5 |  |  | 16 |  |  | 3 |
Gross increases — tax positions in prior periods |  | 193 |  |  | 22 |  |  | 94 |
Gross decreases — tax positions in prior periods |  | (4) |  |  | (5) |  |  | (33) |
Reduction due to lapse in statute of limitations |  | — |  |  | (3) |  |  | — |
Reduction due to settlements during the current period |  | (1) |  |  | (147) |  |  | — |
Unrecognized tax benefit — December 31 |  | $ | 260 |  |  | $ | 67 |  |  | $ | 184 |
The increase in unrecognized tax benefits during the year ended December 31, 2024 primarily relates to certain 2018 U.S. federal taxes that are impacted by the recent U.S. Tax Court decision in Varian Medical Systems, Inc. vs. Commissioner. The majority of unrecognized tax benefits are included in "Other assets, net" in the Consolidated Balance Sheet as of December 31, 2024. The amount of unrecognized tax benefits, if recognized, that would affect the effective tax rate are $236 million as of December 31, 2024. It is reasonably possible that the balance of gross unrecognized tax benefits could change over the next 12 months. As of December 31, 2024 and 2023, total gross interest and penalties accrued was $6 million and $7 million, respectively. See Note 16 for more information regarding tax contingencies. The Company's major taxing jurisdictions include: the Netherlands, U.S., Singapore, and the United Kingdom (the "UK"). The statutes of limitations that remain open related to these major tax jurisdictions are: the Company's Netherlands returns for 2019 and forward, U.S. federal returns for 2018, as well as 2021 and forward, Singapore returns from 2019 and forward, and UK returns for 2021 and forward.

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