15. Income tax expense

This item includes current income tax expense as well as income/expense from deferred taxes (changes in deferred tax assets and deferred tax liabilities) and comprises the following:

The item “Change in capitalized loss carryforwards” relates to the capitalization of loss carryforwards incurred in the financial year in the amount of minus EUR 973 thousand (2024: minus EUR 16,094 thousand) and the utilization of capitalized loss carryforwards in the amount of EUR 8,933 thousand (2024: EUR 0 thousand). Moreover, a valuation allowance on deferred tax assets recognized in prior years for loss carryforwards not yet utilized amounting to EUR 47,377 thousand was included in this item in the 2024 financial year.

The reconciliation of calculated income tax expense based on the Austrian corporate tax rate of 23 percent (December 31, 2024: 23 percent) to effective income tax expense is shown in the following table:

As in the previous year, the ratio of effective income tax expense to earnings before tax is disproportionate in the 2025 financial year. The Group reports significant reconciliation items arising from write-downs on tax assets (in particular from non-capitalized loss carryforwards arising in the Austrian tax group as well as in Indonesia, China, and Thailand). Furthermore, tax expense was affected by currency effects from the translation of tax items from the local currency into the functional currency. In addition, a tax-deductible distribution to hybrid capital holders was realized in the 2024 and 2025 financial years.

In the 2024 financial year the “Taxes from prior periods” item included an additional tax claim of EUR 23,019 thousand of the former tax group with the B&C Group (see also note 38). This additional tax claim resulted from the retroactive withdrawal from the B&C tax group as early as the 2022 financial year (EUR 22,209 thousand), and from a correction of the tax allocation for the 2021 financial year in the amount of EUR 810 thousand.

Lenzing AG and the Austrian subsidiaries of the Lenzing Group are subject to an income tax rate of 23 percent. The income tax rates for foreign companies range from 9.9 percent to 34 percent (December 31, 2024: from 9.9 percent to 34 percent).

B&C Privatstiftung, Vienna, is the ultimate parent company of Lenzing AG and its subsidiaries for the purposes of the minimum taxation rules. In accordance with minimum taxation rules, Lenzing AG is a partially owned parent company.

An evaluation of the effects of the new minimum taxation rules for the Lenzing Group as a subgroup of the B&C Group was conducted. Due to the temporary safe harbor regulations and based on the minimum tax calculation, no material impact on the recognition and measurement of tax assets and liabilities was identified in a stand-alone analysis of the Lenzing Group subgroup for the 2025 and 2024 financial years. Insofar as minimum taxation rules are applicable (as is currently the case in Hong Kong and Malta), the financial impact was assessed for the 2025 financial year (taking into account the primary supplementary taxes applicable in Austria and Malta, as well as the national supplementary tax in Hong Kong). At EUR 1 thousand, no material effects were identified for the Lenzing Group.

The Lenzing Group applies the temporary, mandatory exemption with regard to the recognition of deferred taxes arising from the introduction of global minimum taxation and recognizes these as current tax expense/income when they arise.