Income taxes

12 Months Ended

Dec. 31, 2024

Major components of tax expense (income) [abstract]

Income taxes

2.5. Income taxes

Accounting policies

Income tax expense comprises current tax and deferred tax.

Tax is recognized in the income statement except to the

extent that it relates to items recognized in other

comprehensive income, or directly in equity, in which case

the related tax is recognized in other comprehensive income

or equity, respectively.

Current taxes are calculated based on the results of the

Group companies in accordance with local tax laws and using

tax rates that are enacted or substantively enacted at the

reporting date. Corporate taxes withheld at the source of

the income on behalf of Group companies are accounted

for as income taxes when determined to represent a tax on

net income.

Deferred tax assets and liabilities are determined using the

balance sheet liability method for all temporary differences

arising between the tax bases of assets and liabilities and

their carrying amounts in the statement of financial

position. Deferred tax assets are recognized to the extent

it is probable that future taxable profit will be available

against which the unused tax losses, unused tax credits

and deductible temporary differences can be utilized in

the relevant jurisdictions. Deferred tax assets are assessed

for realizability at each reporting date. When facts and

circumstances indicate it is no longer probable that

deferred tax assets will be utilized, adjustments are made

as necessary.

Deferred tax liabilities are recognized for taxable temporary

differences, and for temporary differences that arise

between the fair value and the tax base of identifiable net

assets acquired in business combinations. Deferred tax

liabilities are not recognized if they arise from the initial

recognition of goodwill. Deferred tax liabilities are

recognized on taxable temporary differences associated

with investments in subsidiaries, associates and joint

arrangements, unless the timing of the reversal of the

temporary difference is controlled by Nokia, and it is

probable that the temporary difference will not reverse

in the foreseeable future. Nokia applies the exception to

recognizing and disclosing information about deferred

tax assets and liabilities related to Pillar Two income taxes,

as provided in the amendments to IAS 12 issued in May

2023. Deferred tax assets and deferred tax liabilities are

measured using the enacted or substantively enacted tax

rates at the reporting date that are expected to apply in the

period when the asset is realized or the liability is settled.

Deferred tax assets and liabilities are not discounted.

Deferred tax assets and deferred tax liabilities are offset for

presentation purposes when there is a legally enforceable

right to set off current tax assets against current tax

liabilities, and the deferred tax assets and deferred tax

liabilities relate to income taxes levied by the same taxation

authority on either the same taxable entity or different

taxable entities which intend either to settle current tax

liabilities and assets on a net basis, or realize the assets and

settle the liabilities simultaneously in each future period

in which significant amounts of deferred tax liabilities or

deferred tax assets are expected to be settled or recovered.

Nokia periodically evaluates positions taken in tax returns

in situations where applicable tax regulation is subject to

interpretation. The amounts of current and deferred tax

assets and liabilities are adjusted when it is considered

probable, i.e. more likely than not, that certain tax positions

may not be fully sustained upon review by tax authorities.

The amounts recorded are based on the most likely amount

or the expected value, depending on which method Nokia

expects to better predict the resolution of the uncertainty,

at each reporting date.

Critical accounting judgment

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

which deferred tax assets can be recognized. 

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 2024, Nokia has

EUR 21 853 million (EUR 21 569 million in 2023) 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

to France.

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

statement of financial position.

Components of the income tax expense/benefit

EURm	2024	2023	2022
Current tax expense	(439)	(429)	(421)
Deferred tax benefit/(expense)	59	(391)	2 454
Total	(380)	(820)	2 033

Income tax reconciliation

Reconciliation of the difference between income tax computed at the statutory rate in Finland of

20% and income tax recognized in the income statement:

EURm	2024	2023	2022
Income tax expense at statutory rate	(418)	(294)	(434)
Permanent differences	149	146	76
Non-creditable withholding taxes	(44)	(38)	(66)
Income taxes for prior years	10	23	2
Effect of different tax rates of subsidiaries operating in other jurisdictions	(46)	(143)	(66)
Effect of deferred tax assets not recognized(1)	(44)	(533)	(99)
Benefit arising from previously unrecognized deferred tax assets(2)	81	25	2 646
Net (increase)/decrease in uncertain tax positions	(29)	(15)	9
Change in income tax rates	(27)	32	24
Income taxes on undistributed earnings	(12)	(23)	(59)
Total	(380)	(820)	2 033

(1)In 2023, includes a remeasurement of deferred tax assets related to internal operating model change.

(2)In 2022, includes a re-recognition of deferred tax assets related to Finland.

Income tax liabilities and assets include a net liability of EUR 207 million (EUR 184 million in 2023)

relating to uncertain tax positions with inherently uncertain timing of cash outflows.

Prior period income tax returns for certain Group companies are under examination by local tax

authorities. Nokia has ongoing tax investigations in various jurisdictions, including Australia,

Brazil, Canada, China, France, India and United States. Nokia’s business and investments,

especially in emerging market countries, may be subject to uncertainties, including unfavorable

or unpredictable tax treatment. Management judgment and a degree of estimation are required

in determining the tax expense or benefit. Even though management does not expect that any

significant additional taxes in excess of those already provided for will arise as a result of these

examinations, the outcome or actual cost of settlement may vary materially from estimates.

Deferred tax assets and liabilities

Deferred tax assets and liabilities relate to the following:

	2024			2023
	Deferred	Deferred	Net	Deferred	Deferred	Net
EURm	tax assets	tax liabilities	balance	tax assets	tax liabilities	balance
Tax losses carried forward and unused tax credits	1 019	—		1 062	—
Undistributed earnings	—	(213)		—	(215)
Intangible assets and property, plant and equipment	2 957	(152)		2 962	(312)
Right-of-use assets	—	(131)		—	(177)
Defined benefit pension assets	—	(2 106)		—	(1 913)
Other non-current assets	24	(17)		83	(37)
Inventories	148	(12)		185	(18)
Other current assets	160	(69)		221	(93)
Lease liabilities	137	—		156	—
Defined benefit pension and other post-employment liabilities	917	—		991	—
Other non-current liabilities	8	—		14	(1)
Provisions	254	(75)		245	(138)
Other current liabilities	287	(106)		301	(184)
Other temporary differences	34	(27)		33	(17)
Total before netting	5 945	(2 908)	3 037	6 253	(3 105)	3 148
Netting of deferred tax assets and liabilities	(2 346)	2 346	—	(2 380)	2 380	—
Total after netting	3 599	(562)	3 037	3 873	(725)	3 148

In 2023, Nokia recognized a deferred tax expense and a decrease in deferred tax assets of

EUR 0.4 billion due to an internal transaction related to an operating model change that led

to a remeasurement of deferred tax assets in Finland and the United States.

Nokia has undistributed earnings of EUR 377 million (EUR 356 million in 2023) for which a

deferred tax liability has not been recognized as these earnings will not be distributed in the

foreseeable future.

Movements in the net deferred tax balance during the year:

EURm	2024	2023	2022
1 January	3 148	3 502	990
Recognized in income statement, continuing operations	59	(391)	2 454
Recognized in income statement, discontinued operations	—	(3)	(2)
Recognized in other comprehensive income	(77)	51	56
Acquisitions through business combinations	2	—	—
Disposals	(75)	—	—
Other	—	(3)	2
Translation differences	(20)	(8)	2
31 December	3 037	3 148	3 502

In addition, at 31 December 2024, Nokia has unrecognized deferred tax assets of which

the majority relate to France. These deferred tax assets have not been recognized due to

uncertainty regarding their utilization. A significant portion of the French unrecognized deferred

tax assets are indefinite in nature and available against future French tax liabilities, subject to a

limitation of 50% of annual taxable profits.

The amount of temporary differences, tax losses carried forward and tax credits for which no

deferred tax asset was recognized due to uncertainty of utilization:

EURm	2024	2023
Temporary differences	1 810	1 743
Tax losses carried forward	19 770	19 482
Tax credits	273	344
Total	21 853	21 569

Expiry of tax losses carried forward and unused tax credits:

                                                                                                                               

	2024			2023
EURm	Recognized	Unrecognized	Total	Recognized	Unrecognized	Total
Tax losses carried forward
Within 10 years	1 356	1 022	2 378	1 375	1 025	2 400
Thereafter	74	—	74	17	—	17
No expiry	1 972	18 748	20 720	2 229	18 457	20 686
Total	3 402	19 770	23 172	3 621	19 482	23 103
Tax credits
Within 10 years	126	254	380	143	329	472
Thereafter	45	4	49	48	1	49
No expiry	153	15	168	154	14	168
Total	324	273	597	345	344	689

Nokia continually evaluates the probability of utilizing its deferred tax assets and considers both

positive and negative evidence in its assessment. As the majority of the recognized deferred tax

assets relate to Finland, Nokia has considered the following factors in the assessment:

■The recent years’ cumulative accounting and taxable profit in Finland;

■Expectations regarding future financial performance in Finland; and

■The relevant attributes underlying the deferred tax assets are generally not subject to expiry.

At 31 December 2022, Nokia concluded based on its assessment that it is probable that it will be

able to utilize the unused tax losses and deductible temporary differences and re-recognized

deferred tax assets of EUR 2.5 billion in the statement of financial position.

In 2023 and 2024, Nokia generated accounting and taxable profit in Finland and continued to

recognize deferred tax assets related to Finland. In its assessment, Nokia has not applied any

cut-off period, other than expiry under the relevant tax legislation. A significant portion of the

tax attributes for which the deferred tax assets relate to are indefinite in nature and available

fully against future Finnish tax liabilities. Due to the non-expiry of these assets, the sensitivity

of future profit projections affects mainly the period over which the deferred tax assets are

expected to be utilized. Nokia will continue to monitor the above factors related to Finland,

including in particular its actual profit record, in upcoming periods.

Income tax related to items of other comprehensive income

	2024			2023			2022
EURm	Gross	Tax	Net	Gross	Tax	Net	Gross	Tax	Net
Remeasurements of defined benefit plans	408	(85)	323	(343)	61	(282)	(424)	77	(347)
Translation differences	537	8	545	(535)	7	(528)	710	1	711
Net investment hedges	(40)	8	(32)	135	(27)	108	(127)	(20)	(147)
Cash flow and other hedges	21	(3)	18	(61)	10	(51)	83	(15)	68
Financial assets at fair value through other comprehensive income	19	(5)	14	10	—	10	(46)	13	(33)
Other increase/(decrease), net	3	—	3	(4)	—	(4)	(3)	—	(3)
Total	948	(77)	871	(798)	51	(747)	193	56	249

OECD Pillar Two model rules

Nokia is within the scope of the OECD Pillar Two model rules, which introduced a global minimum

tax rate of 15% per jurisdiction. Pillar Two legislation has been enacted in Finland, the jurisdiction

in which Nokia is incorporated, and is effective from 1 January 2024.

Nokia has performed an analysis of the impact of the Pillar Two legislation and based on this

analysis, in 2024, the impact on income tax expense is immaterial. The main elements of this

analysis were the following:

■Current understanding of the interpretation of the rules.

■Applicability of the safe harbors provided for in the Pillar Two legislation.

■Analysis and calculations of potential income tax expense in respect of jurisdictions not

meeting safe harbor tests.