Company: STGW
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0000876883-25-000024
Chunk: 160

Company: Stagwell Inc
Filing Date: 2025-07-31
Form: 10-Q
Item: Item 8
Chunk 160
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 Treasury Department announced that an understanding of accepted principles had been reached with other members of the G-7 that would implement a “side-by-side” system that would fully exclude U.S. parented 

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groups from the Income Inclusion Rule (“IIR”) and Undertaxed Profits Rule (“UTPR”) in respect of both their domestic and foreign profits in recognition of the existing U.S. minimum tax rules to which such U.S. parented groups are subject.  If this understanding is implemented for some or all jurisdictions that have enacted Pillar 2 rules, we will update our estimate of the impact of Pillar 2 in our estimated annual effective tax rateAlthough it is reasonably possible that a change in the balance of unrecognized tax benefits may occur within the next 12 months, based on the information currently available, we do not expect any change to be material to our unaudited consolidated financial statements.Tax Receivables AgreementIn connection with the TRA, the Company is required to make cash payments to Stagwell Media equal to 85% of certain U.S. federal, state and local income tax or franchise tax savings, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (i) increases in the tax basis of OpCo’s assets resulting from exchanges of Paired Units (defined in Note 11) for shares of Class A Common Stock or cash, as applicable, and (ii) certain other tax benefits related to us making payments under the TRA. The TRA liability is an estimate and actual amounts payable under the TRA could differ from this estimate. Effective April 4, 2025, all Paired Units were exchanged for Class A Shares in the Class C Exchange (see Note 11). As a result of the Class C Exchange, the Company recorded an increase to deferred tax asset of $204.7 million and an increase to TRA liability of $200.1 million. As of June 30, 2025, the Company has recorded a TRA liability of $225.7 million, and an associated deferred tax asset, net of amortization, of $259.2 million, in connection with the exchange of Paired Units and the projected obligations under the TRA.

15. Related Party Transactions In the ordinary course of business, the Company enters into transactions with related parties, including its affiliates. The transactions may range in the nature and value of services underlying the arrangements. The following table presents significant related party transactions where