The preparation of financial statements requires use of

management judgment in selecting and applying accounting

policies as well as making estimates and assumptions about

the future. These judgments, estimates and assumptions may

have a significant effect on the amounts recognized in the

The estimates and assumptions used in determining the

carrying amounts of assets and liabilities are based on

historical experience, expected outcomes and various other

factors that were available when these financial statements

were prepared, and they are believed to be reasonable under

the circumstances. The estimates and assumptions are

reviewed continually and revised if changes in circumstances

occur, or as a result of new information. As estimates

and assumptions inherently contain a varying degree of

uncertainty, actual outcomes may differ resulting in

adjustments to the carrying amounts of assets and liabilities

The accounting matters listed below are determined to involve

the most difficult, subjective or complex judgments, or are

considered as major sources of estimation uncertainty that

may have a significant risk of resulting in a material adjustment

to the carrying amounts of assets and liabilities within the next

financial year. Please refer to the specific notes for further

information on the key accounting estimates and judgments.


Key accounting estimates and judgments	Note
Judgment related to recognition of deferred tax assets	2.5. Income taxes
Estimate of pension and other post-employment benefit obligations	3.4. Pensions and other post-employment benefits

Nokia is subject to income taxes in the jurisdictions in

which it operates. Judgment is required in determining

current tax expense, uncertain tax positions, deferred

tax assets and deferred tax liabilities; and the extent to

Estimates related to the recoverability of deferred tax

assets are based on forecast future taxable income

and tax planning strategies. Based on these estimates

and assumptions, at 31 December 2023 Nokia has

EUR 21 569 million (EUR 20 214 million in 2022) of

unused tax losses, unused tax credits and deductible

temporary differences for which no deferred tax assets

are recognized due to uncertainty of utilization. The

majority of the unrecognized deferred tax assets relate

The utilization of deferred tax assets is dependent on

future taxable profit in excess of the profit arising from

the reversal of existing taxable temporary differences.

The recognition of deferred tax assets is based on the

assessment of whether it is probable that sufficient

taxable profit will be available in the future to utilize the

unused tax losses, unused tax credits and deductible

temporary differences before the unused tax losses

and unused tax credits expire. Recognition of deferred

tax assets involves judgment regarding the future

financial performance of the particular legal entity

or tax group that has recognized the deferred tax asset.

At 31 December 2022, Nokia re-recognized deferred

tax assets of EUR 2.5 billion related to Finland in the

Nokia has various post-employment plans in accordance with the local conditions and

practices in the countries in which it operates. Nokia’s defined benefit plans comprise

pension schemes as well as other benefit plans providing post-employment healthcare and

life insurance coverage to certain employee groups. Defined benefit plans expose Nokia to

various risks such as investment risk, interest rate risk, life expectancy risk, and regulatory/

compliance risk. The characteristics and extent of these risks vary depending on the legal,

fiscal and economic requirements in each country, as well as the impact of global events.

The plans are generally funded through payments to insurance companies or contributions

to trustee-administered funds as determined by periodic actuarial calculations.

The costs of defined benefit plans are assessed using the projected unit credit method.

The defined benefit obligation is measured as the present value of the estimated future

cash outflows using interest rates on high-quality corporate bonds or government bonds

with maturities most closely matching expected payouts of benefits. The plan assets

are measured at fair value at the reporting date. The liability or asset recognized in the

statement of financial position is the present value of the defined benefit obligation at the

reporting date less the fair value of plan assets adjusted for effects of any asset ceiling.

Actuarial valuations for defined benefit plans are performed annually or when a material

plan amendment, curtailment or settlement occurs. Service cost related to employees’

service in the current period and past service cost resulting from plan amendments and

curtailments, as well as gains and losses on settlements, are presented in cost of sales,

research and development expenses or selling, general and administrative expenses. Net

interest as well as pension plan administration costs not considered in determining the

return on plan assets, are presented in financial income and expenses. Remeasurements,

comprising actuarial gains and losses, the effect of the asset ceiling and the return

on plan assets, excluding amounts recognized in net interest, are recognized in other

comprehensive income. Remeasurements are not reclassified to profit or loss in

In a defined contribution plan, Nokia’s legal or constructive obligation is limited to the

amount that it agrees to contribute to the fund. Nokia’s contributions to defined

contribution plans, multi-employer and insured plans are recognized in the income

statement in the period to which the contributions relate. If a pension plan is funded

through an insurance contract where Nokia does not retain any legal or constructive

obligations, the plan is treated as a defined contribution plan. All arrangements that

do not fulfill these conditions are considered defined benefit plans.