34 » Income Taxes

adidas AG and its German subsidiaries are subject to German corporate and trade taxes. For the years ending December 31, 2025 and 2024, the statutory corporate income tax rate of 15% plus a surcharge of 5.5% thereon is applied to earnings. The municipal trade tax is approximately 11.5% of taxable income. For the measurement of deferred taxes, the gradual reduction of the corporate income tax rate to 10%, which will be enacted during the fiscal years 2028 to 2032, is considered.

For non-German subsidiaries, deferred taxes are calculated based on tax rates that have been enacted or substantively enacted by the closing date.

Deferred tax assets and liabilities

Deferred tax assets and liabilities are offset and presented in the consolidated financial position as follows:

The movement of net deferred taxes is as follows:

Gross company deferred tax assets and liabilities before appropriate offsetting are attributable to the items detailed in the table below:

Deferred tax assets are recognized only to the extent that future taxable profits will be available against which the related benefit can be utilized. For the assessment of future taxable profits, in addition to past performance and the respective prospects for the foreseeable future, appropriate tax structuring measures are also taken into consideration.

Deferred tax assets for which the realization of the related tax benefits is not probable decreased from € 219 million to € 180 million for the year ending December 31, 2025. The majority of this amount relates to capital tax losses in the US, which expire in 2027 and can only be offset against capital income. The remaining unrecognized deferred tax assets relate to subsidiaries operating in markets where the realization of the related tax benefit is not considered probable.

Tax expenses

Tax expenses are split as follows:

The deferred tax expense includes tax expense of € 4  million in total (2024: tax income of € 104  million) related to the origination and reversal of temporary differences.

The company’s applicable tax rate is 27.4% (2024: 27.4%), which corresponds to the applicable income tax rate in fiscal year 2025 of adidas AG.

The company’s effective tax rate differs from the applicable tax rate of 27.4% as follows:

In 2025, the effective tax rate was 24.3%. The effective tax rate in 2024 was 26.5%.

The line item ‘Non-deductible expenses and tax-free income’ includes tax expense/benefits relating to tax-free income, movements in provisions for uncertain tax positions, and tax expense/benefits relating to prior periods. In 2025, the tax income relating to prior periods is € 26 million (2024: tax expense of € 35 million).

For 2025, the line item ‘Losses for which benefits were not recognizable and changes in write-down of deferred tax assets’ relates to reversals of previous write-downs (€ 13 million) mainly for Hong Kong and Brazil. For 2024, this line item mainly related to write-downs in respect of Argentina (€ 8 million) and a reversal of previous write-downs for Hong Kong (€ 8 million) and Russia (€ 6 million).

For 2025, the total tax benefit arising from previously unrecognized tax losses, credits, or temporary differences in prior years that lead to a reduction of current tax expense is € 5 million (2024: € 1 million).

For 2025 the line item ‘Changes in tax rates’ mainly reflects the upcoming tax rate decrease in Germany which is considered in the valuation of deferred taxes. For 2024, the effect was mainly related to Switzerland.

The group is within the scope of the OECD Pillar Two model rules (Global Minimum Tax) and it applies the IAS 12 exception to the recognition and disclosure of information about deferred tax assets and liabilities related to Pillar Two income taxes.

Considering the impact of the Pillar Two legislation, the group recognized a current income tax expense of € 10 million for the year 2025 (2024: € 4 million). This is included in income tax in the statement of profit or loss.