ESEF: a new taxonomy and the next phase of digital reporting

The European Single Electronic Format (ESEF) continues to evolve alongside developments in IFRS Accounting Standards and the wider adoption of structured digital reporting across the European Union. The introduction of the 2025 ESEF taxonomy, preparations for IFRS 18 and the extension of Inline XBRL to the tax public country-by-country (pCbCR) reporting are among the principal developments affecting digital reporting for 2027 financial statements of listed companies.

Change in the taxonomy and reporting manual

Last April, the European Securities and Markets Authority published the 2025 ESEF taxonomy files and an updated ESEF Conformance Suite (testing kit). The European taxonomy incorporates the changes introduced by the 2025 IFRS Accounting Taxonomy, including content relating to IFRS 18 Presentation and Disclosure in Financial Statements.

The 2025 ESEF taxonomy is mandatory for annual financial reports containing financial statements for financial years beginning on or after 1 January 2026. However, this does not make IFRS 18 mandatory for those periods.

To support the transition, the taxonomy provides two separate entry points for IAS 1 and IFRS 18 sub-taxonomies. Issuers that have not adopted IFRS 18 should continue to use the entry point to the IAS 1 sub-taxonomy, while the entry point to the IFRS 18 sub-taxonomy is intended for issuers that apply the new standard.

In addition, ESMA is expected to publish an updated version of the ESEF Reporting Manual in the autumn. Issuers, software providers and auditors should review the changes carefully, as they may affect tagging practices beyond the taxonomy update itself.

Through its work within the ESEF working group of XBRL France, which BM&A co-chairs, we contributed to proposals for improve the reporting manual. These proposals were submitted to ESMA in July. If adopted, this should promote more consistent market practices, reduce differing interpretations and ultimately save preparers time.

Preparing for IFRS 18

IFRS 18 replaces IAS 1 and applies to annual reporting periods beginning on or after 1 January 2027, with early application permitted.

The standard introduces significant changes to the presentation of the statement of profit or loss, including defined categories for income and expenses, new required subtotals and disclosures relating to management-defined performance measures.

These changes will affect not only the presentation of financial statements but also their digital structure. Existing ESEF mappings may need to be reconsidered as line items are renamed, reorganised or replaced and new disclosures are introduced.

Companies should therefore assess how IFRS 18 will affect their tags, extension taxonomy and anchoring relationships as part of the wider accounting implementation project. Addressing the digital-reporting implications at this stage should help avoid ESEF becoming a separate exercise at the end of the reporting process.

No separate IFRS accounting taxonomy update in 2026

The IFRS Foundation decided not to issue a separate 2026 IFRS Accounting Taxonomy because there were no changes to its content or technology that would justify a new annual release. The 2025 IFRS Accounting Taxonomy therefore remains the current version for the 2027 report.

Although this provides some stability for issuers and software providers, 2026 will still be an important implementation year. In addition to previously mentioned changes companies should expect changes for block-tagging of notes. The IFRS Foundation is indeed considering categorising text-block elements and organising them through clearer taxonomy hierarchies, which could reduce or remove the need to apply multiple overlapping tags to the same disclosure.  This could also lead to changes to the list of mandatory block tags under the ESEF regulatory framework.

The proposed 2027 IFRS accounting taxonomy update

The IFRS Foundation has published a Proposed IFRS Accounting Taxonomy Update containing general improvements to the 2025 taxonomy. Once finalised, these proposals are expected to contribute to the next IFRS Accounting Taxonomy, scheduled for publication in the first quarter of 2027. One important proposed change concerns the completion of the transition from IAS 1 to IFRS 18. The IAS 1 entry point is expected to be removed from the taxonomy, leaving the IFRS 18 content as the single full-IFRS entry point.

The proposal would also improve the organisation and labelling of text-block elements (new categories and hierarchies). The objective is to make it easier for preparers to identify the appropriate element and improve consistency between reports. This may affect how tagging tools display elements and how companies build their mappings internal guidance and validation controls.

BM&A is participating to the IFRS foundation field test of the proposed taxonomy by applying it to existing annual reports and analysing the practical challenges encountered. Our initial assessment is that the proposed changes could significantly improve access to and usability of ESEF data, provided they are accompanied by coordinated updates to the ESEF regulatory framework.

Public CbCR: Inline XBRL beyond ESEF

The use of Inline XBRL is also extending beyond listed companies’ IFRS financial statements. Under the European public country-by-country tax reporting framework, certain large multinational groups must publish information on their activities, profits and taxation for each EU Member State and specified non-cooperative tax jurisdictions. For financial years beginning on or after 1 January 2025, reports must be prepared using the common EU template and electronic reporting format established by Implementing Regulation (EU) 2024/2952. The information is presented in xHTML and marked up using Inline XBRL.

On 14 July 2026, the European Commission published an updated version of the Public CbCR taxonomy, together with supporting documentation, an iXBRL reporting manual and version 2.0 of its report generator. These resources are intended to facilitate the preparation of reports in XHTML with Inline XBRL mark-up

Although public CbCR is legally and technically separate from ESEF, it follows a similar model: a report that is readable in a web browser while also containing structured, machine-readable information. Its introduction illustrates the broader European move towards digital reporting and the use of Inline XBRL across different regulatory frameworks.

Sustainability reporting: the next step for Inline XBRL

Sustainability reporting is another area in which Inline XBRL is expected to play an important role. EFRAG published the ESRS Set 1 XBRL Taxonomy in August 2024 and is expected to deliver an updated taxonomy reflecting the revised ESRS by December 2026. However, digital tagging is not yet mandatory: under Directive (EU) 2026/470, companies will not be required to mark up their sustainability reporting until the relevant rules have been adopted through an amendment to the ESEF Delegated Regulation.

Conclusion

The implementation of the 2025 ESEF taxonomy, the transition from IAS 1 to IFRS 18, proposed improvements to the next IFRS Accounting Taxonomy and the application of Inline XBRL to public CbCR all point in the same direction: structured data is becoming an increasingly integral part of corporate reporting.

In this evolving regulatory landscape, BM&A’s RegTech team helps issuers interpret ESEF, public CbCR and sustainability-related digital reporting requirements. We also provide support with taxonomy developments, the impact of IFRS 18 and the review of mapping tables, helping issuers prepare compliant XHTML and Inline XBRL reports. We remain available to discuss your upcoming reporting projects.