UPM Annual Report 2025
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In addition, the Group has not recognized deferred tax assets on loss carry-forwards relating to closed Miramichi paper mill in Canada. These loss carry-forwards expire at different times and the majority of the loss carry-forwards expire by the end of 2029. In Uruguay, tax credits amounting to €143 million (151 million) have not been recognized due to uncertainty of their utilization. The Group has not recognized deferred tax liability in respect of undistributed earnings of non-Finnish subsidiaries to the extent that it is probable that the temporary differences will not reverse in the foreseeable future. In addition, the Group has not recognized deferred tax liability for the undistributed earnings of Finnish subsidiaries and associates as such earnings can be distributed without any tax consequences. Deferred tax is calculated based on temporary differences between the carrying amounts and the taxable values of assets and liabilities and for tax loss carry-forwards to the extent that it is probable that these can be utilized against future taxable profits. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities are recognized net where there is a legal right to set-off and an intention to settle on a net basis. Accounting policies
7.2 Deferred tax
Movements in deferred tax assets and liabilities
€ million
2025
2024
€ million
2025 2024 2023
Carrying value, at January 1 Charged to income statement
-146
-185
Deferred tax assets Intangible assets and property, plant and equipment
-92 -41
85
119
134
66
Charged to other comprehensive income
-36
Inventories
61
72 95
77 94
Companies acquired
-15
-4 -6
Retirement benefit liabilities and provisions
75
Exchange rate adjustments
15
Other temporary differences
154 224 -221
192 276
175 242
Net deferred tax assets (liabilities)
-279
-146
Tax losses and tax credits carried forward
Offset against liabilities
-243
-224
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.
Total
413
526
431
Deferred tax liabilities Intangible assets and property, plant and equipment
-291
-330
-265
Forest assets
-461
-440
-412
Retirement benefit assets Other temporary differences
-1
—
—
-160
-145 243 -673 -146
-163 224 -616 -185
Offset against assets
221
Total
-692 -279
Net deferred tax assets (liabilities)
Tax charge to other comprehensive income
Before tax
Tax
After tax
Before tax
Tax
After tax
€ million
2025
2024
Actuarial gains and losses on defined benefit plans
50
-18
31
7
-2
4
Financial assets at FVOCI Translation differences
-83
-4
-87
-31
-16
-47 346
-724
—
-724
346
—
Cash flow hedges
48 46
-9 -9
38 37
98 -16
-20
78
Net investment hedges
3
-13
Total
-664
-41
-705
403
-35
368
Key estimates and judgments
Recognized deferred tax assets The recognition of deferred tax assets requires management judgment as to whether it is probable that such balances will be utilized and/or reversed in the foreseeable future. At December 31, 2025, net operating loss carry-forwards for which the Group has recognized a deferred tax asset amounted to €895 million (904 million in 2024 and €841 million in 2023), of which €845 million (865 million in 2024 and €772 million in 2023) was attributable to German subsidiaries. These losses primarily relate to restructuring activities, mill closures, and profit improvement programs implemented in recent years, as well as non-current asset impairments resulting in as tax losses prior year. In Germany, net operating loss carry-forwards do not expire. The Group expects sufficient future taxable income to be available for the utilization of deferred tax assets. In other countries net operating loss carry-forwards expire at various dates and in varying amounts.
Based on profit forecasts, it is probable that there will be sufficient future taxable profits available against which the tax losses and tax credits can be utilized. The assumptions regarding future realization of tax benefits, and therefore the recognition of deferred tax assets, may change due to future operating performance of the Group, as well as other factors, some of which are outside of the control of the Group. Unrecognized deferred tax assets and liabilities The net operating loss carry-forwards for which no deferred tax is recognized due to uncertainty of their utilization amounted to €946 million (873 million) in 2025. These net operating loss carry-forwards are mainly attributable to certain German and French subsidiaries and do not expire, as well as to certain Uruguayan subsidiaries which expire at different times by the end of 2029.
UPM Financial Report 2025
320
UPM Financial Report 2025
321
320
321
UPM Annual Report 2025
UPM Annual Report 2025
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