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Income Taxes
 6 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Funko, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from FAH, LLC based upon Funko, Inc.’s economic interest held in FAH, LLC. FAH, LLC is treated as a pass-through partnership for income tax reporting purposes. FAH, LLC’s members, including the Company, are liable for federal, state and local income taxes based on their share of FAH, LLC’s pass-through taxable income.
Numerous foreign jurisdictions have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate described under The Organization for Economic Co-operation and Development’s accord commonly referred to as “Pillar Two”. Under such rules, a minimum effective tax rate of 15% would apply to multinational companies with consolidated revenue above €750 million.
Under the Pillar Two rules, a company would be required to determine a combined effective tax rate for all entities located in a jurisdiction. If the jurisdictional effective tax rate determined under the Pillar Two rules is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. The Company is continuing to monitor the pending implementation of Pillar Two by individual countries and the potential effects of Pillar Two on the business. The Company does not expect the provisions effective in 2024 to have a materially adverse impact on its results of operations, financial position or cash flows.
The Company recorded income tax expense of $0.8 million and $1.7 million for the three and six months ended June 30, 2024, respectively and $138.1 million and $127.8 million for the three and six months ended June 30, 2023, respectively. As reflected in Note 2, Significant Accounting Policies and Transactions, the Company established a full valuation allowance of $123.2 million against its deferred tax assets during the three and six months ended June 30, 2023. The Company’s effective tax rate for the six months ended June 30, 2024 was (10.2)%. The Company’s effective tax rate differs from the statutory rate of 21% primarily due to the valuation allowance as of June 30, 2024.

The Company is party to the Tax Receivable Agreement that provides for the payment by the Company to the TRA Parties under certain circumstances. See Note 5, Liabilities under Tax Receivable Agreement.