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INCOME TAXES | 6 Months Ended
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Jun. 30, 2025
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items. Provision (benefit) for income taxes and Income (loss) from continuing operations before provision (benefit) for income taxes for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Provision (benefit) for income taxes | $ | 10,927 |  |  | $ | 9,287 |  |  | $ | 12,355 |  |  | $ | 15,481 |
Income (loss) from continuing operations before provision (benefit) for income taxes | $ | 31,520 |  |  | $ | (125) |  |  | $ | 40,975 |  |  | $ | (5,437) |
Our U.S. Federal income tax rate is 21%. The primary factor impacting the effective tax rate for the three and six months ended June 30, 2025 and 2024 was the pretax losses incurred in jurisdictions that have valuation allowances against their net deferred tax assets. For the three and six months ended June 30, 2025 and 2024, we continue to maintain a full valuation allowance against all U.S. federal and state deferred tax assets. We expect that our consolidated effective tax rate in future periods will continue to differ significantly from the U.S. federal income tax rate as a result of our tax obligations in jurisdictions with profits and valuation allowances in jurisdictions with losses. In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in those operations or remit such earnings in a tax-efficient manner. Additionally, an actual repatriation from our non-U.S. subsidiaries could be subject to foreign and U.S. state income taxes. Aside from limited exceptions for which the related deferred tax liabilities recognized as of June 30, 2025 and December 31, 2024 are immaterial, we do not intend to distribute earnings of foreign subsidiaries for which we have an excess of the financial reporting basis over the tax basis of our investments and therefore have not recorded any deferred taxes related to such amounts. The actual tax cost resulting from a distribution would depend on income tax laws and circumstances at the time of distribution. Determination of the amount of unrecognized deferred tax liability related to the excess of the financial reporting basis over the tax basis of our foreign subsidiaries is not practical due to the complexities associated with the calculation. We are currently under audit by several foreign jurisdictions. It is likely that the examination phase of some of those audits will conclude in the next 12 months. There are many factors, including factors outside of our control, which influence the progress and completion of those audits. We are subject to claims for tax assessments by foreign jurisdictions, including a proposed assessment for $134.4 million (€114.7 million), inclusive of estimated incremental interest ("Italy 2012 Assessment"). The subsidiary subject to the Italy 2012 Assessment is Groupon S.r.l., one of the Company's Italian subsidiaries with operations formerly relating specifically to the local voucher business in Italy. In December 2024, Groupon S.r.l. received an unfavorable ruling at the second-level tax court. As Groupon S.r.l. believes that the Italy 2012 Assessment is without merit, it appealed that unfavorable ruling to the Italian Supreme Court on March 12, 2025. Under Italian tax court procedures, taxpayers are required to deposit “provisional payments” while tax appeals are pending, which are held in trust by tax authorities and returned to the taxpayer if the taxpayer prevails on the appeal. Groupon S.r.l. obtained approval of installment plans whereby two-thirds of the provisional payments may be deposited pro rata in monthly installments over seventy-two months. A third provisional amount (equal to the remaining third of the Italy 2012 Assessment) is set to be enforceable on December 11, 2025. Although Groupon S.r.l. sought a stay of this provisional payment obligation, the Court denied the request on July 7, 2025. To date, inclusive of July 2025 payments, Groupon S.r.l. has paid approximately $10.4 million (€8.9 million) in installments towards the provisional payment obligations. Additionally, unrelated to the tax matter above, in July 2024, Groupon S.r.l. ƒreceived final assessments of approximately $35.1 million (€29.9 million) related to a 2017 distribution made to its parent entity ("Italy 2017 Assessment"). As Groupon S.r.l. believes the Italy 2017 Assessment is without merit, it lodged an appeal to the first-tier court and a hearing is set for October 17, 2025. In July 2025, Groupon S.r.l, and the branch of the Italian Tax Authority responsible for pursuing the assessments commenced in-person meetings relating to a potential mutually-agreeable resolution of both the Italy 2012 Assessment and the Italy 2017 Assessment. On August 5, 2025, Groupon S.r.l. and the Italian Tax Authority reached an agreement in principle to resolve both the Italy 2012 Assessment and the Italy 2017 Assessment. With respect to the Italy 2012 Assessment, the agreement provides that the Italian Tax Authority would reduce the Italy 2012 Assessment from $134.4 million (€114.7 million) to $20.1 million (€17.2 million) against which approximately $10.1 million (€8.6 million) would be credited from previous installment payments made by Groupon S.r.l. With respect to the Italy 2017 Assessment, the agreement provides that the Italian Tax Authority would reduce the Italy 2017 Assessment from $35.1 million (€29.9 million) to approximately $4.8 million (€4.1 million). Accordingly, under the terms of the agreement, the combined total amount that would be owed by Groupon S.r.l. is $24.9 million (€21.3 million) of which $10.1 million (€8.6 million) has already been paid. Therefore, Groupon S.r.l. would pay an additional $14.9 million (€12.7 million). The agreement is non-binding on both parties and subject to the following additional contingencies: (1) the overall agreement on the reduction of the Italy 2012 Assessment must be reviewed and approved by the Administrative Review Committee, an Italian non-governmental oversight group; and (2) the portions of the reduction of the Italy 2012 Assessment that are attributable to penalties must be approved by the Central Directorate on Tax Audit for the Italian Internal Revenue Service. If both these approvals are obtained, Groupon S.r.l and the Italian Tax Authority would enter into a mutually binding agreement. The process for obtaining these approvals is expected to last several months and a binding agreement may not be in place until the fourth quarter of 2025 or later. If such approvals are not obtained, Groupon S.r.l. will continue to litigate both the Italy 2012 Assessment and the Italy 2017 Assessment. Groupon S.r.l. continues to believe that both matters are without merit, and it entered into the agreement without any admission of liability in either matter and for the purpose of avoiding the uncertainties of future and prolonged litigation and additional litigation expenses. We have no liabilities recorded for the Italy 2012 Assessment and Italy 2017 Assessment as of June 30, 2025 based on an evaluation of all information available as of June 30, 2025. Although no assurance can be provided that the above-referenced approvals will be obtained, or that a binding agreement will be executed, based on the agreement in principle with the branch of the Italian Tax Authority responsible for pursuing the assessments, the Company believes the measurement of the tax position relating to both the Italy 2012 Assessment and Italy 2017 Assessment may result in liabilities recorded in the third quarter 2025. The Company currently estimates such liabilities to be approximately $24.9 million (€21.3 million) based on the total reduced assessments under the agreement in principle. In other jurisdictions we believe it is reasonably possible that reductions of up to $2.7 million in unrecognized tax benefits may occur within the 12 months following June 30, 2025 upon closing of income tax audits or the expiration of applicable statutes of limitations. Enactment of the One Big Beautiful Bill Act On July 4, 2025, subsequent to the quarter ending June 30, 2025, the “One Big Beautiful Bill Act” was enacted into law in the United States. The legislation introduces significant changes to the federal income tax code, including changes to the deductibility of research and development (“R&D”) expenses, international taxation and minimum tax rules. The Company is currently evaluating the impact of The Act on its results of operations and will recognize the related tax impacts in the period of enactment.

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