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Income taxes
 12 Months Ended
Dec. 31, 2025
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 2025, Nokia has
EUR 21 918 million (EUR 21 853 million in 2024) 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.
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Components of the income tax expense/benefit
EURm
2025
2024
2023
Current tax expense
(478)
(439)
(429)
Deferred tax benefit/(expense)
201
59
(391)
Total
(277)
(380)
(820)
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
2025
2024
2023
Income tax expense at statutory rate
(183)
(418)
(294)
Permanent differences
51
149
146
Non-creditable withholding taxes
(39)
(44)
(38)
Income taxes for prior years
1
10
23
Effect of different tax rates of subsidiaries operating in other jurisdictions
(28)
(46)
(143)
Effect of deferred tax assets not recognized(1)
(58)
(44)
(533)
Benefit arising from previously unrecognized deferred tax assets
14
81
25
Net increase in uncertain tax positions
(23)
(29)
(15)
Change in income tax rates
(52)
(27)
32
Income taxes on undistributed earnings
40
(12)
(23)
Total
(277)
(380)
(820)
(1)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.
Income tax liabilities and assets include a net liability of EUR 318 million (EUR 207 million in 2024)
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,
China, France, India, Kenya, Mexico 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:
2025
2024
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
1 034
—
1 019
—
Undistributed earnings
—
(167)
—
(213)
Intangible assets and property,
plant and equipment
2 968
(294)
2 957
(152)
Right-of-use assets
—
(194)
—
(131)
Defined benefit pension assets
—
(1 913)
—
(2 106)
Other non-current assets
20
(12)
24
(17)
Inventories
198
(5)
148
(12)
Other current assets
128
(37)
160
(69)
Lease liabilities
188
—
137
—
Defined benefit pension and
other post-employment
liabilities
781
—
917
—
Other non-current liabilities
7
(1)
8
—
Provisions
330
(47)
254
(75)
Other current liabilities
335
(84)
287
(106)
Other temporary differences
39
(23)
34
(27)
Total before netting
6 028
(2 777)
3 251
5 945
(2 908)
3 037
Netting of deferred tax assets
and liabilities
(2 385)
2 385
—
(2 346)
2 346
—
Total after netting
3 643
(392)
3 251
3 599
(562)
3 037
Nokia has undistributed earnings of EUR 433 million (EUR 377 million in 2024) for which a deferred
tax liability has not been recognized as these earnings will not be distributed in the foreseeable
future.
The Finnish Government announced changes to the corporate income tax regime that could see the
corporate income tax rate reduce from 20% to 18% starting from 1 January 2027. On the date of
issuing the financial statements, the legislation has not yet been enacted or substantively enacted.
If the legislative change is enacted as proposed, the change in the corporate income tax rate would
decrease Nokia's net deferred tax assets approximately by EUR 300 million resulting in
corresponding impact on income tax expense. The estimated impact of the proposed change is
based on temporary differences recognized at 31 December 2025.
Nokia continues to monitor the legislative process and will reflect the impact of the tax rate change
in the period in which it becomes substantively enacted.
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Movements in the net deferred tax balance during the year:
EURm
2025
2024
2023
1 January
3 037
3 148
3 502
Recognized in income statement, continuing operations
201
59
(391)
Recognized in income statement, discontinued operations
—
—
(3)
Recognized in other comprehensive income
(21)
(77)
51
Acquisitions through business combinations(1)
45
2
—
Disposals
—
(75)
—
Other
—
—
(3)
Translation differences
(11)
(20)
(8)
31 December
3 251
3 037
3 148
(1)In 2025, acquisitions through business combinations relates to the acquisition of Infinera. For more information, refer to Note 6.2.
Acquisitions.
In addition, at 31 December 2025, 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
2025
2024
Temporary differences
2 071
1 810
Tax losses carried forward
19 530
19 770
Tax credits
317
273
Total
21 918
21 853
Expiry of tax losses carried forward and unused tax credits:
2025
2024
EURm
Recognized
Unrecognized
Total
Recognized
Unrecognized
Total
Tax losses carried forward
Within 10 years
1 372
924
2 296
1 356
1 022
2 378
Thereafter
50
83
133
74
—
74
No expiry
1 870
18 523
20 393
1 972
18 748
20 720
Total
3 292
19 530
22 822
3 402
19 770
23 172
Tax credits
Within 10 years
130
295
425
126
254
380
Thereafter
167
9
176
45
4
49
No expiry
122
13
135
153
15
168
Total
419
317
736
324
273
597
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 relates 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.
Nokia has established the pattern of material taxable and accounting profits 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
2025
2024
2023
EURm
Gross
Tax
Net
Gross
Tax
Net
Gross
Tax
Net
Remeasurements of defined
benefit plans
(24)
7
(17)
408
(85)
323
(343)
61
(282)
Translation differences
(1 627)
(3)
(1 630)
537
8
545
(535)
7
(528)
Net investment hedges
111
(22)
89
(40)
8
(32)
135
(27)
108
Cash flow and other hedges
1
—
1
21
(3)
18
(61)
10
(51)
Financial assets at fair value
through other comprehensive
income
9
(2)
7
19
(5)
14
10
—
10
Other increase/(decrease), net
7
(1)
6
3
—
3
(4)
—
(4)
Total
(1 523)
(21)
(1 544)
948
(77)
871
(798)
51
(747)
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 2025, 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.