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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The income tax provision (benefit) consisted of the following components:
| Year Ended December 31,
(In millions) | 2021 |  | 2020 |  | 2019
U.S. Federal: |  |  |  |  |
Current | $ | 12.6 |  |  | $ | (6.4) |  |  | $ | 118.1 |
Deferred | (182.7) |  |  | (277.0) |  |  | (165.5) |
| (170.1) |  |  | (283.4) |  |  | (47.4) |
U.S. State: |  |  |  |  |
Current | 7.7 |  |  | (0.1) |  |  | 21.1 |
Deferred | (10.8) |  |  | 7.7 |  |  | (13.6) |
| (3.1) |  |  | 7.6 |  |  | 7.5 |
Non-U.S.: |  |  |  |  |
Current | (91.3) |  |  | 168.7 |  |  | 191.0 |
Deferred | 869.2 |  |  | 55.8 |  |  | (13.5) |
| 777.9 |  |  | 224.5 |  |  | 177.5 |
Income tax provision (benefit) | $ | 604.7 |  |  | $ | (51.3) |  |  | $ | 137.6 |
Earnings before income taxes: |  |  |  |  |
United States | (1,982.5) |  |  | (945.5) |  |  | (1,031.4) |
Foreign - Other | 1,318.1 |  |  | 224.3 |  |  | 1,185.8 |
Total (loss) earnings before income taxes | $ | (664.4) |  |  | $ | (721.2) |  |  | $ | 154.4 |
For all periods presented, the allocation of earnings before income taxes between U.S. and non-U.S. operations includes intercompany interest allocations between certain domestic and foreign subsidiaries. These amounts are eliminated on a consolidated basis. Temporary differences and carry-forwards that result in deferred tax assets and liabilities were as follows:
(In millions) | December 31, 2021 |  | December 31, 2020
Deferred tax assets: |  |  |
Employee benefits | $ | 271.3 |  |  | $ | 273.0 |
Litigation reserves | 94.4 |  |  | 43.5 |
Accounts receivable allowances | 425.9 |  |  | 393.7 |
Inventory | 187.8 |  |  | 1,187.9 |
Tax credit and loss carry-forwards | 1,256.0 |  |  | 1,080.4 |
Operating lease assets | 63.6 |  |  | 66.5 |
Interest expense | 111.6 |  |  | 67.9 |
Intangible assets | 151.1 |  |  | 156.3 |
Other | 327.8 |  |  | 396.0 |
| 2,889.5 |  |  | 3,665.2 |
Less: Valuation allowance | (780.4) |  |  | (443.6) |
Total deferred tax assets | 2,109.1 |  |  | 3,221.6 |
Deferred tax liabilities: |  |  |
Plant and equipment | 19.6 |  |  | 50.2 |
Operating lease liabilities | 63.6 |  |  | 66.5 |
Intangible assets and goodwill | 3,468.3 |  |  | 4,058.6 |
Other | 39.9 |  |  | 22.1 |
Total deferred tax liabilities | 3,591.4 |  |  | 4,197.4 |
Deferred tax liabilities, net | $ | (1,482.3) |  |  | $ | (975.8) |
For those foreign subsidiaries whose investments are permanent in duration, income and foreign withholding taxes have not been provided on the unremitted earnings of those subsidiaries. This amount may become taxable upon a repatriation of assets from the subsidiary or a sale or liquidation of the subsidiary. The amount of such unremitted earnings is approximately $3.4 billion at December 31, 2021. Determination of the amount of any unrecognized deferred income tax liability on these unremitted earnings is not practicable as such determination involves material uncertainties about the potential extent and timing of any distributions, the availability and complexity of calculating foreign tax credits, and the potential indirect tax consequences of such distributions, including withholding taxes. Prior to the Combination, the applicable income tax rate to Mylan was the U.K. rate of 19%, and following the Combination, the statutory income tax rate applicable to Viatris Inc. is the U.S. rate of 21% for the years ended December 31, 2021 and 2020. A reconciliation of the statutory tax rate to the effective tax rate is as follows:
| Year Ended December 31,
| 2021 |  | 2020 |  | 2019
Statutory tax rate | 21.0 | % |  | 21.0 | % |  | 19.0 | %
United States Operations |  |  |  |  |
Clean energy and research credits | 9.8 | % |  | 12.8 | % |  | (43.4) | %
U.S. rate differentials | — | % |  | — | % |  | (3.1) | %
Impact of changes in legislation | — | % |  | (9.2) | % |  | — | %
State income taxes and credits | (0.6) | % |  | (1.6) | % |  | (4.1) | %
Valuation allowance | (0.1) | % |  | 8.6 | % |  | (118.5) | %
Tax settlements and resolution of certain tax positions | 0.1 | % |  | 0.1 | % |  | 199.6 | %
Incremental US Tax on Foreign Earnings | (36.9) | % |  | (3.6) | % |  | (8.6) | %
Waived deductions under IRC § 59A | — | % |  | (3.3) | % |  | 64.5 | %
Impact of the Combination and Divestitures | (2.8) | % |  | 5.8 | % |  | 7.7 | %
Other U.S. items | (6.1) | % |  | 1.5 | % |  | 6.9 | %
Other Foreign Operations |  |  |  |  |
Luxembourg | (6.7) | % |  | (5.0) | % |  | (14.8) | %
Gibraltar | 9.4 | % |  | 8.0 | % |  | (38.8) | %
Ireland | 5.8 | % |  | 8.2 | % |  | (13.7) | %
France | (1.1) | % |  | (2.8) | % |  | 15.2 | %
Puerto Rico | 4.4 | % |  | (2.5) | % |  | — | %
Switzerland | 1.0 | % |  | 2.0 | % |  | — | %
Singapore | 28.8 | % |  | 1.0 | % |  | — | %
Other | (10.2) | % |  | (0.4) | % |  | 12.8 | %
Deferred tax impact of tax law changes | 7.0 | % |  | (0.1) | % |  | 36.7 | %
Valuation allowance | (8.3) | % |  | 16.1 | % |  | (9.9) | %
Impact of the Combination and divestitures | (106.9) | % |  | (42.2) | % |  | — | %
Withholding taxes | (1.3) | % |  | (1.6) | % |  | 7.1 | %
Tax settlements and resolution of certain tax positions | 0.8 | % |  | (3.9) | % |  | (27.6) | %
Other foreign items | 1.9 | % |  | (1.8) | % |  | 2.1 | %
Effective tax rate | (91.0) | % |  | 7.1 | % |  | 89.1 | %
In all years, our effective tax rate is impacted by the jurisdictional location of earnings and the corresponding tax rates in those jurisdictions. Subsequent to the Combination, the Company realizes benefits from lower tax rates in Singapore and Puerto Rico due to manufacturing and other incentives.. Tax Act On December 22, 2017, the U.S. government enacted the Tax Act. The Tax Act makes broad and complex changes to the Code including, but not limited to, reducing the U.S. federal corporate income tax rate and requiring a one-time transition tax on certain unrepatriated earnings of non-U.S. corporate subsidiaries of large U.S. shareholders that may electively be paid over eight years. The Tax Act also puts in place new tax laws that impact our taxable income beginning in 2018, which include, but are not limited to (1) creating a BEAT, which is a new minimum tax, (2) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries, (3) a new provision designed to tax currently GILTI earned by non-U.S. corporate subsidiaries of large U.S. shareholders and a deduction generally equal to 50 percent of GILTI (37.5 percent for tax years beginning after December 31, 2025) to offset the income tax liability, (4) a provision limiting the amount of deductible interest expense in the U.S., (5) limitations on the deductibility of certain executive compensation, and (6) limitations on the utilization of foreign tax credits to reduce the U.S. income tax liability. As of December 31, 2021, no U.S. deferred income taxes or foreign withholding taxes were recorded on earnings in the Company’s non-U.S. subsidiaries where there would be no U.S. or foreign tax upon repatriation or where the Company’s practice and intention was to reinvest the earnings outside of the U.S. The transition tax noted above resulted in the previously untaxed foreign earnings of U.S. subsidiaries being included in federal and state taxable income. We analyze on an ongoing basis our global working capital requirements and the potential tax liabilities that would be incurred if the non-U.S. subsidiaries repatriate cash, which include potential local country withholding taxes and U.S. state taxation. The Company has elected to not record deferred taxes associated with the GILTI provision of the Tax Act. Valuation Allowance A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. At December 31, 2021, a valuation allowance has been applied to certain deferred tax assets in the amount of $780.4 million. When assessing the realizability of deferred tax assets, management considers all available evidence, including historical information, long-term forecasts of future taxable income and possible tax planning strategies. Amounts recorded for valuation allowances can result from a complex series of estimates, assumptions and judgments about future events. Due to the inherent uncertainty involved in making these estimates, assumptions and judgments, actual results could differ materially. Any future increases to the Company’s valuation allowances could materially impact the Company’s consolidated financial condition and results of operations. Net Operating Losses As of December 31, 2021, the Company had the following carryforwards and attributes: •U.S. federal net operating loss carryforwards of $7.9 million. •U.S. state income tax loss carryforwards of approximately $3.10 billion, which are largely offset by a valuation allowance. •Non-U.S. net operating loss carryforwards of approximately $1.57 billion, of which $748.4 million can be carried forward indefinitely, with the remaining $817.8 million expiring in years 2022 through 2041. •Foreign deductible attributes of $39.6 million that can be carried forward indefinitely, which are offset by a full valuation allowance. •U.S. and foreign credit carryovers of $329.2 million, expiring in various amounts through 2041. •Anticipatory foreign tax credits of $230.3 million which will generate from the reversal of future taxable income in certain non-U.S. jurisdictions which are taxed both in their local jurisdictions and in the U.S. On November 16, 2020, the Company had a change in ownership pursuant to Section 382 of the Code. Under this provision of the Code, the utilization of any NOL or tax credit carryforwards incurred prior to the date of ownership change may be limited. Analyses of the limits for each ownership change indicates the annual limitation would not impair the Company's ability to utilize our U.S. federal credit carryovers. While state loss carryforwards may be limited by Section 382 of the Code, the carryforwards are largely offset by a valuation allowance. CARES Act On March 27, 2020, the CARES Act was enacted and signed into law. The CARES Act includes several provisions, including increasing the amount of deductible interest, allowing companies to carryback certain NOLs, and increasing the amount of NOLs that corporations can use to offset income.During the year ended December 31, 2020, the CARES Act reduced the Company’s 2020 income tax expense by $22.1 million resulting from additional deductible interest. Tax Examinations The Company is subject to income taxes and tax audits in many jurisdictions. A certain degree of estimation is thus required in recording the assets and liabilities related to income taxes. Tax audits and examinations can involve complex issues, interpretations, and judgments and the resolution of matters that may span multiple years, particularly if subject to litigation or negotiation. Although the Company believes that adequate provisions have been made for these uncertain tax positions, the Company’s assessment of uncertain tax positions, including those arising from legal entity restructuring transactions in connection with the Combination, is based on estimates and assumptions that the Company believes are reasonable but the estimates for unrecognized tax benefits and potential tax benefits may not be representative of actual outcomes, and variations from such estimates could materially affect the Company’s financial condition, results of operations or cash flows in the period of resolution, settlement or when the statutes of limitations expire. The Company is subject to ongoing IRS examinations. The years 2015 through 2018 are open years under examination. The years 2012, 2013 and 2014 have one matter open, and a Tax Court petition was filed regarding the matter and a trial was held in December 2018 and is discussed further below. During the year ended December 31, 2019, Mylan reached an agreement in principle with the IRS to resolve all issues relating to our positions on the February 27, 2015 acquisition by Mylan N.V. of Mylan Inc. and Abbott Laboratories’ non-U.S. developed markets specialty and branded generics business. Under the agreement in principle, which was finalized as part of a closing agreement with the IRS on October 11, 2019, Mylan’s status as a non-U.S. corporation for U.S. Federal income tax purposes was confirmed, and we have adjusted the interest rates used for intercompany loans as necessary. During the year ended December 31, 2019, the Company recorded a reserve of approximately $155.0 million as part of its liability for uncertain tax positions, with a net impact to the income tax provision of approximately $144.9 million related to this matter. Several international audits are currently in progress. In some cases, the tax auditors have proposed adjustments or issued assessments to our tax positions, including with respect to intercompany transactions, and we are in ongoing discussions with some of the auditors regarding the validity of their positions. In instances where assessments have been issued, we disagree with these assessments and believe they are without merit and incorrect as a matter of law. As a result, we anticipate that certain of these matters may become the subject of litigation before tax courts where we intend to vigorously defend our position. In Australia, the tax authorities have issued notices of assessments to the Company for the years ended December 2009 to December 2019, subject to additional interest and penalties, concerning our tax position with respect to certain intercompany transactions. The tax authorities denied our objections to the assessments and we have commenced litigation in the Australian Federal Court challenging that decision. During 2021, the Company made a partial payment of $56.0 million in order to stay potential interest and penalties resulting from this litigation. In France, the tax authorities have issued notices of assessments to the Company for the years ended December 2013 to December 2016 concerning our tax position with respect to (i) certain intercompany transactions and (ii) whether income earned by a Company entity not domiciled in France should be subject to French tax. We have resolved our position concerning certain intercompany transactions with the tax authorities. Concerning the remaining issue, we have commenced litigation before the French tax courts where the tax authorities will seek unpaid taxes, penalties, and interest. In India, the tax authorities have issued notices of assessments to the Company seeking unpaid taxes and interest for the financial years covering 2013 to 2018 concerning our tax position with respect to certain corporate tax deductions and certain intercompany transactions. Some of these assessments remain in the audit phase where we are challenging them before the tax authorities while we are challenging some of the other assessments in the Indian tax courts. The Company has recorded a net reserve for uncertain tax positions of $315.6 million, including interest and penalties, in connection with its international audits at December 31, 2021. The reserve balance at December 31, 2021 reflects the impact of current year settlement payments. In connection with our international tax audits, it is possible that we will incur material losses above the amounts reserved. The Company’s major U.S. state taxing jurisdictions remain open from fiscal year 2013 through 2020, with several state audits currently in progress. The Company’s major international taxing jurisdictions remain open from 2012 through 2020. Tax Court Proceedings The Company's U.S. federal income tax returns for 2012 through 2014 had been subject to proceedings in U.S. Tax Court involving a dispute with the IRS regarding whether certain costs related to ANDAs were eligible to be expensed and deducted immediately or required to be amortized over longer periods. A trial was held in U.S. Tax Court in December 2018 and on April 27, 2021, the Court affirmed Mylan’s position and held that patent litigation expenses related to ANDAs are immediately deductible. The IRS has appealed this decision. Accounting for Uncertainty in Income Taxes The impact of an uncertain tax position that is more likely than not of being sustained upon audit by the relevant taxing authority must be recognized at the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. As of December 31, 2021 and 2020, the Company’s consolidated balance sheets reflect net liabilities for unrecognized tax benefits of $322.9 million and $391.1 million, respectively, of which $230.2 million as of December 31, 2021 would affect the Company’s effective tax rate if recognized, with the remainder being offset by potential correlative adjustments. Related accrued interest and penalties included in the consolidated balance sheets were $96.8 million and $86.7 million as of December 31, 2021 and 2020, respectively. For the years ended December 31, 2021, 2020 and 2019, the Company recognized $18.5 million of tax expense, $6.0 million, and $35.2 million of tax benefits, respectively, related to interest and penalties on uncertain tax positions. Interest and penalties related to income taxes are included in the tax provision. A reconciliation of the unrecognized tax benefits is as follows:
| Year Ended December 31,
(In millions) | 2021 |  | 2020 |  | 2019
Unrecognized tax benefit — beginning of year | $ | 391.1 |  |  | $ | 92.1 |  |  | $ | 96.3 |
Additions for current year tax positions | — |  |  | 13.4 |  |  | — |
Additions for prior year tax positions | — |  |  | 35.7 |  |  | 154.9 |
Reductions for prior year tax positions | (9.1) |  |  | (5.2) |  |  | (11.7) |
Settlements | (47.3) |  |  | (8.9) |  |  | (112.5) |
Reductions due to expirations of statute of limitations | (7.0) |  |  | — |  |  | (34.9) |
(Reduction) addition due to acquisition | (4.8) |  |  | 264.0 |  |  | — |
Unrecognized tax benefit — end of year | $ | 322.9 |  |  | $ | 391.1 |  |  | $ | 92.1 |
The Company believes that it is reasonably possible that the amount of unrecognized tax benefits will decrease in the next twelve months by approximately $55.0 million, involving international and state audits and settlements and expiring statutes of limitations. The Company does not anticipate significant increases to the reserve within the next twelve months.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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