Company: ALGN
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001097149-25-000034
Chunk: 55

Company: ALIGN TECHNOLOGY INC
Filing Date: 2025-05-08
Form: 10-Q
Item: Item 1
Chunk 55
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 made during the period of October 2019 through May 2023. We were required to pay these assessments prior to contesting or litigating the matter in statutory appeal. The Company has historically asserted and continues to assert that doctor prescribed clear aligners sold by dentists for the orthodontic treatment of patient malocclusions are exempt from VAT, that the Company has reasonably relied upon statements and guidance by HMRC and that the Company’s interpretation of United Kingdom legislation is appropriate. In October 2024, the Company and HMRC reached a settlement agreement regarding the unpaid VAT related to certain aligner sales made during the period of October 2019 through mid-October 2023. As part of the settlement, HMRC agreed to vacate the judicial review (before the Administrative Court) originally scheduled for October 9th and October 10th, 2024, refund to the Company all assessments paid for the period of October 2019 through May 2023 and withdraw any potential assessments for the period from June 2023 through mid-October 2023. HMRC has refunded to the Company all assessed amounts, approximately $100 million.The Company has remaining exposure in the amount of approximately $6.0 million for periods up to December 2023. A statutory appeal (before the First-tier Tribunal - “Tax Tribunal”) was held on January 27th through January 30th, 2025. On April 24, 2025, the Tax Tribunal issued a ruling in Align’s favor indicating that clear aligners are “dental prostheses for the 

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purposes of VAT”, which is a key condition for the VAT exemption. HMRC has until June 19, 2025 to appeal the Tax Tribunal decision. HMRC may also attempt to challenge the applicability of VAT on a different basis.It is not possible at this stage to accurately evaluate the likelihood of an unfavorable outcome from the Tax Tribunal statutory appeal. The Company has determined that a potential loss related to VAT accounted for in the periods up to December 2023 is not probable. Indemnification ProvisionsIn the normal course of business to facilitate transactions in our services and products, we indemnify certain parties: customers, vendors, lessors and other parties with respect to certain matters, including, but not limited to, services to be provided by us and intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with our directors and our executive officers that will require us, among