29. Deferred taxes (deferred tax assets and liabilities) and current taxes

Deferred tax assets and liabilities relate to the following items on the statement of financial position:

Of the total gross deferred tax assets, EUR 30,819 thousand (December 31, 2023: EUR 25,202 thousand) are due within one year. Of the total gross deferred tax liabilities, EUR 8,528 thousand (December 31, 2023: EUR 4,229 thousand) are due within one year. The remaining amounts are due in more than one year.

Deferred taxes developed as follows:

The Group held tax loss carryforwards of EUR 966,073 thousand as at December 31, 2024 (December 31, 2023: EUR 808,080 thousand). The existing tax loss carryforwards can be utilized as follows:

As of December 31 2024, deferred tax assets totaling EUR 4,331 thousand (December 31, 2023: EUR 48,559) were capitalized. Of this amount, EUR 1,844 (December 31, 2023: EUR 46,786 thousand) are attributable to deferred tax assets relating to Group units that generated losses in either the past or previous year. If there is no substantial evidence for recoverability, deferred tax assets are recognized to the extent that sufficient taxable temporary differences exist.

The valuation allowance on deferred tax assets relates mainly to companies based in Austria in the amount of EUR 96,723 thousand (December 31, 2023: EUR 16,519 thousand), in China in the amount of EUR 33,340 thousand (December 31, 2023: EUR 34,120 thousand), in Indonesia in the amount of EUR 113,622 thousand (December 31, 2023: EUR 104,881 thousand), in the USA in the amount of EUR 7,668 thousand (December 31, 2023: EUR 6,545 thousand) and in Thailand in the amount of EUR 45,946 thousand (December 31, 2023: EUR 35,428 thousand). Certain loss carryforwards were not capitalized because their usability is restricted. If all tax loss carryforwards could be utilized in full, the deferred tax assets on loss carryforwards would total EUR 219,736 thousand (December 31, 2023: EUR 180,427 thousand) instead of EUR 16,408 thousand (December 31, 2023: EUR 55,009 thousand).

The financial assets and other assets shown under deferred tax assets in the above table include amounts for outstanding partial write-downs to investments in accordance with Section 12 Para. 3 no. 2 of the Austrian Corporation Tax Act (“Siebentelabschreibung”, the partial write-downs of investments over a period of seven years for tax purposes) corresponding to a measurement base of EUR 179,362 thousand (December 31, 2023: EUR 7,335 thousand). Deferred tax assets on the total amount of outstanding partial write-downs to investments are recognized to the extent that taxable temporary differences exist. Partial write-downs of EUR 34,200 thousand were utilized for tax purposes in 2024 (2023: EUR 3,755 thousand).

The recoverability of deferred tax assets is generally based on the positive taxable results expected in the future – after the deduction of taxable temporary differences – in line with the forecasts approved by the Managing Board. These forecasts are also used for impairment testing (see note 10). The assessment of unused tax loss carryforwards and tax credits also involves the consideration of utilization requirements.

Deferred tax liabilities were not recognized for temporary differences with a measurement base of EUR 396,234 thousand (December 31, 2023: EUR 542,772 thousand) in connection with investments in subsidiaries, joint ventures and associates and the related proportional share of net assets held by group companies because the Lenzing Group is able to control the timing of the reversal of the temporary difference and these differences are not expected to reverse in the foreseeable future.

The receivables from current taxes include prepayments made to foreign taxation authorities. These amounts are recognized when the recoverability is probable, while valuation adjustments are made in all other cases. The gross carrying amount of non-current receivables from current taxes as at December 31, 2024 amounts to EUR 21,457 thousand (December 31, 2023: EUR 21,068 thousand). Payments are sometimes uncertain, especially the timing of payments due to the occasionally long duration of proceedings. For this reason, as at December 31, 2024, write-downs of EUR 4,596 thousand were recognized (December 31, 2023: EUR 4,887 thousand).

Current liabilities for current taxes include a provision for uncertain tax items of EUR 13,380 thousand (December 31, 2022: EUR 12,992 thousand) in connection with regular tax audit procedures.

On July 23, 2024, the B&C Group announced that a 25 percent interest in Lenzing AG had been transferred by way of an intragroup restructuring. This led to the withdrawal of Lenzing AG from the tax group with B&C Holding Österreich GmbH as the group parent and of Lenzing AG and further subsidiaries of Lenzing AG as group members pursuant to Section 9 of the Austrian Corporation Tax Act (ÖKStG).

As the financial link between B&C KB Holding GmbH and Lenzing AG ended retroactively during the year on December 1, 2023, the tax group of Lenzing AG was no longer financially linked to B&C KB Holding GmbH for its entire 2023 financial year. As a consequence, the group membership of all companies in the Lenzing AG tax group ended as at the end of the 2022 financial year, as this is the last financial year in which they were directly or indirectly financially linked to B&C KB Holding GmbH for their entire financial year. Until the 2023 financial year, a provision of EUR 48,001 thousand was formed for the obligation to retax the foreign losses recognized in the tax group’s tax result. This provision was utilized in the course of the termination of the tax group with B&C Holding Österreich GmbH in the 2024 financial year in the amount of EUR 28,061 thousand and reversed in the amount of EUR 19,940 thousand. In addition, deferred tax assets were reversed in the 2024 financial year insofar as they were recognized on foreign loss carryforwards. Further details about the financial effects of the withdrawal from the tax group with B&C Holding Österreich GmbH are elucidated in note 38 (in the “Relationship with related companies” section).

Due to the retroactive withdrawal of Lenzing AG from the B&C tax group, no group taxation could be established for the former group members for the 2023 financial year. As a consequence, these companies are assessed individually for the 2023 financial year. For the 2024 financial year, a new tax group was established with Lenzing AG as the group parent and five subsidiaries of Lenzing AG as group members. As part of this, a group and tax equalization agreement was concluded, so that tax profits and losses are offset between the group parent and the group members that are included. The deferred tax assets and deferred tax liabilities of the group members that are included are also offset based on their joint tax assessment.

The Lenzing Group includes the effects of uncertain tax positions in the calculation of current and deferred taxes. Tax claims are recognized at the expected reimbursement amount in cases where the claim is sufficiently certain. The tax returns of the Lenzing Group’s subsidiaries are reviewed regularly by the taxation authorities. Appropriate provisions have been recognized for possible future tax obligations based on a number of factors which include interpretations, commentaries and legal decisions relating to the respective tax jurisdiction and past experience. In addition, uncertain tax positions are evaluated on the basis of estimates and assumptions for future events. New information can become available in the future that leads the Group to change its assumptions regarding the appropriateness of tax positions. Any such changes will affect tax expense in the period in which they are identified.