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General accounting policies (Policies)

12 Months Ended

Dec. 31, 2024

General Accounting Policies [Abstract]

Basis of presentation and statement of compliance

The consolidated financial statements are prepared in

accordance with IFRS Accounting Standards as issued by

the International Accounting Standards Board (IASB) and as

adopted by the European Union (EU). The consolidated

financial statements also conform to Finnish accounting

and company legislation.

The consolidated financial statements are presented in

millions of euros (EURm), except when otherwise noted,

and are prepared under the historical cost convention,

except when otherwise disclosed in the accounting policies

in the specific notes.

Other information

This paragraph is included in connection with statutory

reporting requirements in Germany. The fully consolidated

German subsidiary, Nokia Solutions and Networks GmbH & Co.

KG, registered in the commercial register of Munich under HRA

88537, has made use of the exemption available under § 264b

and § 291 of the German Commercial Code (HGB).

Principles of consolidation

The consolidated financial statements comprise the financial

statements of the Parent Company, and each of those

companies over which it exercises control. Control over an

entity exists when Nokia is exposed, or has rights, to variable

returns from its involvement with the entity and has the ability

to affect those returns through its power over the entity.

Presumption is that a majority of voting rights results in

control. To support this presumption, Nokia considers all

relevant facts and circumstances in assessing whether it has

power over the entity including voting rights and potential

voting rights, rights to appoint key management personnel

and rights arising from other contractual arrangements.

Consolidation of a subsidiary begins when Nokia obtains

control over the subsidiary and ceases when it loses control

over the subsidiary.

All intercompany transactions are eliminated as part of the

consolidation process. Non-controlling interest represents the

proportion of net profit or loss, other comprehensive income

and net assets in subsidiaries that is not attributable to the

equity holders of the Parent.

Investments in associates and joint ventures

An associate is an entity over which Nokia exercises significant

influence. A joint venture is a type of joint arrangement

whereby the parties that have joint control of the arrangement

have rights to the net assets of the arrangement.

Nokia’s investments in associates and joint ventures are

accounted for using the equity method. Under the equity

method, the investment in an associate or joint venture is

initially recognized at cost. The carrying amount of the

investment is adjusted to recognize changes in Nokia’s share

of net assets of the associate or joint venture since the

acquisition date. Nokia’s share of profits and losses of

associates and joint ventures is reflected in the consolidated

income statement. Any change in other comprehensive income

of associates and joint ventures is presented as part of

Nokia’s other comprehensive income.

Functional and presentation currency

The consolidated financial statements are presented in euro,

the functional and presentation currency of the Parent

Company. The financial statements of all Group companies

are measured using the functional currency, which is the

currency of the primary economic environment in which the

entity operates.

Transactions in foreign currencies

Transactions in foreign currencies are recorded at exchange

rates prevailing at the date of the transaction. For practical

reasons, a rate that approximates the actual rate at the date

of the transaction is often used. Monetary assets and liabilities

denominated in foreign currency are translated at the

exchange rates prevailing at the end of the reporting period.

Foreign exchange gains and losses arising from monetary

assets and liabilities as well as fair value changes of related

hedging instruments are recognized in financial income and

expenses. Unrealized foreign exchange gains and losses related

to non-monetary non-current financial investments are

included in the fair value measurement of these investments

and recognized in other operating income and expenses.

Foreign Group companies

On consolidation, the assets and liabilities of foreign

operations whose functional currency is other than euro are

translated into euro at the exchange rates prevailing at the end

of the reporting period. The income and expenses of these

foreign operations are translated into euro at the average

exchange rates for the reporting period. The exchange

differences arising from translation for consolidation are

recognized as translation differences in other comprehensive

income. On disposal of a foreign operation, the cumulative

amount of translation differences relating to that foreign

operation is reclassified to profit or loss.

Use of estimates and critical accounting judgements

1.3. Use of estimates and critical

accounting judgments

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

financial statements.

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

in subsequent periods.

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
Judgment related to classification of Submarine Networks as a discontinued operation	2.6. Discontinued operations
Estimate of pension and other post-employment benefit obligations	3.4. Pensions and other post-employment benefits

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.

Critical accounting judgment

Nokia classified its non-core standalone Submarine Networks business, a global provider

of submarine communication networks, as held-for-sale and a discontinued operation

following the announcement of its sale on 27 June 2024. For financial reporting purposes

the Submarine Networks business had been a separate cash-generating unit within the

Network Infrastructure reportable segment. Judgment was applied in determining that

the Submarine Networks business is a component of Nokia that represents a separate

major line of business which should be presented as a discontinued operationAccounting policies

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

subsequent periods.

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

amount that it agrees to contribute to the plan. 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.

New and amended standards and interpretations

1.4. New and amended standards and

interpretations

On 1 January 2024, Nokia adopted the following amendments

to the accounting standards issued by the IASB and endorsed

by the EU:

■Amendments to IFRS 16 Leases: Lease Liability in a Sale and

Leaseback;

■Amendments to IAS 1 Presentation of Financial Statements:

Classification of Liabilities as Current or Non-current;

■Amendments to IAS 1 Presentation of Financial Statements:

Non-current Liabilities with Covenants; and

■Amendments to IAS 7 Statement of Cash Flows and IFRS 7

Financial Instruments: Disclosures: Supplier Finance

Arrangements.

The amendments had no material impact on the measurement,

recognition or presentation of any items in Nokia’s

consolidated financial statements for 2024.

Nokia has not early adopted any new or amended standards or

interpretations that have been issued but are not yet effective.

The new and amended standards and interpretations issued by

the IASB that are effective in future periods are not expected

to have a material impact on the consolidated financial

statements of Nokia when adopted, except for IFRS 18

Presentation and Disclosure in Financial Statements which

was published in April 2024.

IFRS 18 sets out the requirements for presentation and

disclosures in financial statements and it will replace IAS 1

Presentation of Financial Statements. The new standard is

effective for annual reporting periods beginning on or after

1 January 2027, with earlier application permitted. IFRS 18 is

yet to be endorsed by the EU. Nokia is assessing the impact

of IFRS 18 on its consolidated financial statements but as

IFRS 18 is not changing the recognition and measurement

requirements it is not expected to have significant impact

other than on the presentation of financial information.

Nokia intends to adopt IFRS 18 and other new and amended

standards and interpretations, if applicable, when they become

effective and are endorsed by the EU.

Revenue recognition

Accounting policies

Nokia accounts for a contract with a customer when the

contract has been approved in writing, which is generally

when both parties are committed to perform their

respective obligations, the rights, including payment terms,

regarding the goods and services to be transferred can be

identified, the contract has commercial substance, and

collection of the consideration to which Nokia expects to

be entitled is probable. Management considers only legally

enforceable rights in evaluating the accounting for contracts

with customers. As such, frame agreements that do not

create legally enforceable rights and obligations are

accounted for based on the issuance of subsequent legally

binding purchase orders under the frame agreements.

A contract modification or a purchase order is accounted

for as a separate contract if the scope of the contract

increases by additional distinct goods or services, and the

price of the contract increases by an amount that reflects

the standalone selling price of those additional goods or

services. In cases where the additional goods or services

are distinct but not sold at a standalone selling price,

the contract modification is accounted for prospectively.

In cases where the additional goods or services are not

distinct, the modification is accounted for through a

cumulative catch-up adjustment.

Nokia recognizes revenue from contracts with customers

to reflect the transfer of promised goods and services to

customers for amounts that reflect the consideration to

which Nokia expects to be entitled in exchange for those

goods and services. The consideration may include a

variable amount, which Nokia estimates based on the most

likely amount. Items causing variability include volume

discounts and sales-based or usage-based royalties. Nokia

includes variable consideration into the transaction price

only to the extent that it is highly probable that a significant

revenue reversal will not occur. The transaction price also

excludes amounts collected on behalf of third parties.

In cases where the timing of payments provides either the

customer or Nokia with a significant benefit of financing,

the transaction price is adjusted for the effect of financing

and the related interest revenue or interest expense

is presented separately from revenue. As a practical expedient,

Nokia does not account for financing components if, at

contract inception, the consideration is expected to be

received within one year before or after the goods or services

have been transferred to the customer.

Nokia enters into contracts with customers consisting of any

combination of hardware, services and intellectual property.

Hardware and software sold by Nokia includes warranty,

which can either be assurance-type for repair of defects

and replacement of hardware recognized as a centralized

warranty provision, or service-type for scope beyond the

repair of defects or for a time period beyond the standard

assurance-type warranty period and considered as a

separate performance obligation within the context of

the contract.

The associated revenue recognized for such contracts

depends on the nature of the underlying goods and services

provided. The promised goods or services in the contract

might include sale of goods, license of intellectual property

and grant of options to purchase additional goods or

services that may provide the customer with a material

right. Nokia conducts an assessment at contract inception

to determine which promised goods and services in a

customer contract are distinct and accordingly identified

as performance obligations.

The standalone selling price of each performance obligation

is determined by considering factors such as the price of

the performance obligation if sold on a standalone basis and

the expected cost of the performance obligation plus a

reasonable margin when price references are not available.

The portion of the transaction price allocated to each

performance obligation is then recognized when the

revenue recognition criteria for that performance obligation

have been met.

Nokia allocates the transaction price to each distinct

performance obligation on the basis of their standalone

selling prices, relative to the overall transaction price. If a

standalone selling price is not observable, it is estimated.

The transaction price may include a discount or a variable

amount of consideration that is generally allocated

proportionately to all performance obligations in the

contract unless Nokia has observable evidence that the

entire discount relates to only one or more, but not all,

performance obligations in a contract. The amount of

revenue recognized is the amount allocated to the satisfied

performance obligation based on the relative standalone

selling prices. A performance obligation may be satisfied

at a point in time or over time.

As described in Note 4.5. Trade receivables and other

customer-related balances, Nokia presents its customer

contracts in the statement of financial position as either

a contract asset or a contract liability, depending on

the relationship between Nokia’s performance and

the customer’s payment for each individual contract.

Sale of products

Nokia manufactures and sells a range of networking

equipment, covering the requirements of network

operators. Revenue for these products is recognized when

control of the products has transferred, the determination

of which may require judgment. Typically, for standard

equipment sales, control transfers upon delivery. For

more complex solutions, control generally transfers

upon acceptance.

In some arrangements, mainly within the Submarine Networks

business which is presented as a discontinued operation and

was sold in 2024, Nokia’s performance does not create an

asset with an alternative use and Nokia recognizes revenue

over time using the output method, which faithfully depicts the

manner in which the asset is transferred to the customer as

well as Nokia’s enforceable rights to payment for the work

completed to date, including margin. The output measure

selected by Nokia for each contract may vary depending on

the nature of the contract.

Sale of services

Nokia provides services related to the provision of networking

equipment, ranging from managing a customer’s network

and product maintenance services to network installation,

integration and optimization. Revenue for each separate

service performance obligation is recognized as or when the

customer obtains the benefits of Nokia’s performance. Service

revenue is recognized over time for managed and maintenance

services, as in these cases Nokia performs throughout a fixed

contract term and the customer simultaneously receives and

consumes the benefits as Nokia performs. In some cases,

Nokia performs services that are subject to customer

acceptance where revenue is recognized when the customer

acceptance is obtained.

Sale of intellectual property licenses

Nokia provides its customers with licenses to intellectual

property (IP) owned by Nokia by granting software licenses

and rights to benefit from Nokia’s IP in their products.

When a software license is sold, revenue is recognized

upon delivery or acceptance of the software, as Nokia has

determined that each software release is distinct, and the

license is granted for software as it exists when the control

transfers to the customer.

When Nokia grants customers a license to use IP owned by

Nokia, the associated license fee revenue is recognized in

accordance with the substance of the relevant agreements.

In the majority of cases, Nokia retains obligations to

continue to develop and make available to the customer

the latest IP in the licensed assets during the contract term,

and therefore revenue is recognized pro rata over the

period during which Nokia is expected to perform.

Recognition of the revenue as pro rata over the term of the

license is considered the most faithful depiction of Nokia’s

satisfaction of the performance obligation as the IP being

licensed towards the customer includes new inventions

patented by Nokia that are highly interdependent and

interrelated and created through the course of continuous

research and development (R&D) efforts that are relatively

stable throughout the year. In some contracts, Nokia has

no remaining obligations to perform after granting a license

to the initial IP, and licensing fees are non-refundable. In

these cases, revenue is recognized at the beginning of the

license term.

Segment information

Accounting policies

Nokia has four operating and reportable segments for

financial reporting purposes: (1) Network Infrastructure,

(2) Mobile Networks, (3) Cloud and Network Services

and (4) Nokia Technologies. In addition, Nokia provides

net sales disclosure for the following business units

within the Network Infrastructure segment: (i) IP Networks,

(ii) Optical Networks and (iii) Fixed Networks.

The President and CEO is the chief operating decision-

maker monitoring the operating results of segments

for the purpose of assessing performance and making

decisions about resource allocation. Key financial

performance measures of the segments comprise

primarily net sales and segment operating profit.

The evaluation of segment performance and allocation

of resources is primarily based on segment operating

profit which the management believes is the most

relevant measure for this purpose. Segment operating

profit excludes intangible asset amortization and

other purchase price fair value adjustments, goodwill

impairments, restructuring-related charges and certain

other items of income and expenses that may not be

indicative of the business operating results.

Accounting policies of the segments are the same as

those for the Group except for the aforementioned

items of income and expenses that are not allocated to

the segments. Inter-segment revenues and transfers are

accounted for as if the revenues were to third parties,

that is, at current market prices.

Operating expenses and other operating income

Accounting policies

Nokia presents its income statement based on the

function of expenses as it considers this to provide more

relevant information about its financial performance.

Information about the nature of expenses is provided

in the notes. Certain items of income and expenses,

such as gains and losses from venture funds, are

presented as other operating income and expenses

as Nokia considers these items to be related to its

operating activities but not to any specific functions.

Government grants received as compensation for

expenses incurred are recognized as a reduction of

the related expenses except for certain non-recurring

grants that are recognized as other operating income.

Government grants received in the form of R&D tax

credits are recognized as a reduction of R&D expenses if

the tax credit relates to the R&D expenditures incurred

by Nokia and the tax credit is reimbursed in cash by the

government in cases where Nokia is not able to offset it

against its income tax payable. R&D tax credits that do

not meet both conditions are recognized as income

tax benefit.

Government grants

Government grants received as compensation for

expenses incurred are recognized as a reduction of

the related expenses except for certain non-recurring

grants that are recognized as other operating income.

Government grants received in the form of R&D tax

credits are recognized as a reduction of R&D expenses if

the tax credit relates to the R&D expenditures incurred

by Nokia and the tax credit is reimbursed in cash by the

government in cases where Nokia is not able to offset it

against its income tax payable. R&D tax credits that do

not meet both conditions are recognized as income

tax benefit.

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.

Description of accounting policy for non-current assets or disposal groups classified as held for sale and discontinued operations [text block]

Accounting policies

Non-current assets or disposal groups are classified as held for sale if their carrying

amounts will be recovered principally through a sale transaction rather than through

continuing use. Non-current assets or disposal groups classified as held for sale are

measured at the lower of their carrying amount and fair value less costs to sell. Non-

current assets classified as held for sale, or included in a disposal group classified as held

for sale, are not depreciated or amortized.

Discontinued operation is reported when a component of Nokia, comprising operations

and cash flows that can be clearly distinguished both operationally and for financial reporting

purposes from the rest of Nokia, has been disposed of or is classified as held for sale, and

that component represents a major line of business or geographical area of operations or

is part of a single coordinated plan to dispose of a separate major line of business or

geographical area of operations. Profit or loss from discontinued operations is reported

separately from income and expenses from continuing operations in the consolidated

income statement, with prior periods presented on a comparative basis. Intra-group

revenues and expenses between continuing and discontinued operations are eliminated

Earnings per share

Accounting policies

Basic earnings per share is calculated by dividing the profit or loss attributable to

equity holders of the parent by the weighted average number of shares outstanding

during the year. Diluted earnings per share is calculated by adjusting the profit or loss

attributable to equity holders of the parent, and the weighted average number of

shares outstanding, for the effects of all dilutive potential ordinary shares. Potential

ordinary shares are excluded from the calculation of diluted earnings per share when

they are determined to be antidilutive.

Share-based payments

Accounting policies

Nokia offers three types of global share-based

compensation plans for employees: performance shares,

restricted shares and the employee share purchase plan.

All plans are equity-settled.

Employee services received and the corresponding

increase in equity are measured by reference to the

fair value of the equity instruments at the grant date,

excluding the impact of any non-market vesting

conditions. Plans that apply tranched vesting are

accounted for under the graded vesting model. Share-

based compensation plans are generally conditional on

continued employment as well as the fulfillment of any

performance conditions specified in the award terms.

Until the Nokia shares are delivered, the participants

do not have any shareholder rights, such as voting or

dividend rights, associated with the shares. The share

grants are generally forfeited if the employment

relationship with Nokia terminates prior to vesting.

Share-based compensation is recognized as an expense

over the relevant service periods.

Pensions and other post-employee benefits