2. Effects of New Financial Reporting Standards

2.1 Financial Reporting Standards Applied for the First Time in the Reporting Period

Initial application of the standards listed in the table had little or no material impact on the presentation of the net assets, financial position and results of operations.

2.2 Published Financial Reporting Standards That Have Not Yet Been Applied

Compared to the information presented in the 2024 consolidated financial statements, no new findings are to be reported regarding the potential effects of reporting standards newly published up to the authorization for issue of the financial statements, but not yet required to be applied; their application is not, however, expected to affect the presentation of the net assets, financial position, and results of operations materially, if at all.

The effects of IFRS⁠ ⁠18 (Presentation and Disclosure in Financial Statements), which was published in fiscal⁠ ⁠2024, are being analyzed. The Group plans to apply the new standard from January⁠ ⁠1, 2027, subject to EU endorsement.

In Germany, the Act for an Immediate Tax Investment Program entered into force in July⁠ ⁠2025; the Act is intended to boost Germany as a business location. In accordance with the Act, the corporation tax rate will be gradually reduced, starting from January⁠ ⁠1, 2028, from the current 15% to 10% by the year 2032. The reduction of the corporation tax rate will have an impact on the measurement of deferred taxes on temporary difference as well as tax loss and interest carryforwards of the German Group companies. The effects on the presentation of the net assets, financial position, and results of operations of the Covestro Group are being analyzed.

The One Big Beautiful Bill Act was approved in the United States in July⁠ ⁠2025. This Act contains tax provisions that could have a direct impact on Covestro’s income taxes in the United States. The areas expected to be affected include immediate depreciation of certain corporate assets (bonus depreciation), immediate deductibility of research and development expenses, including accelerated depreciation of costs already capitalized over one to two years, as well as favorable amendments for business interest limitation. The effects on the presentation of the net assets, financial position, and results of operations of the Covestro Group are being analyzed.