Company: APTV
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0001521332-25-000040
Chunk: 246

Company: Aptiv PLC
Filing Date: 2025-07-31
Form: 10-Q
Item: Item 8
Chunk 246
---
 the statutory rate.

The Company’s effective tax rate for the three and six months ended June 30, 2025 includes net discrete tax benefits of approximately $40 million and net discrete tax expense of approximately $241 million, respectively, primarily related to a change in valuation allowance on the Swiss tax incentive, as described below, partially offset by changes in other valuation allowances and changes in reserves. The Company’s effective tax rate for the three and six months ended June 30, 2024 includes net discrete tax benefits of approximately $27 million and $20 million, respectively, primarily related to a business reorganization that occurred in the second quarter of 2024. Also included as a discrete item in the effective tax rate for the three months ended June 30, 2024 is the beneficial impact of approximately 8 points resulting from the Motional funding and ownership restructuring transactions, as described further in Note 21. Investment in Affiliates. There was no tax expense associated with these gains as Aptiv’s interest in Motional is exempt from capital gains tax in the jurisdiction in which it is owned. 

64

On December 15, 2022, the E.U. Member States formally adopted the Framework, which generally provides for a minimum effective tax rate of 15%, as established by the OECD. Many countries have enacted legislation consistent with the Framework effective at the beginning of 2024. The OECD continues to release additional guidance on these rules. The Company has proactively responded to these tax policy changes and will continue to closely monitor developments. Our effective tax rate for the six months ended June 30, 2025 includes an unfavorable impact from the enacted Framework.

On January 15, 2025, the OECD released Administrative Guidance (the “Guidance) on Article 9.1 of the Global Anti-Base Erosion Model Rules (the “Model Rules”) which amends the Pillar Two Framework. Jurisdictions that have adopted the Framework may implement and administer their domestic laws consistent with the Model Rules and Guidance. The Guidance eliminates the tax basis in certain deferred tax assets including tax credit carryforwards for purposes of the global minimum tax established under the Framework. As a result, the Company no longer expects to obtain significant benefits from the tax incentive granted to its Swiss subsidiary in 2023. Accordingly, the Company recognized an increase to valuation allowances of $294 million to reduce the related deferred tax asset during the six months ended June 30, 2025. No other deferred tax assets are impacted by the Guidance