Implementing IFRS 18 in Your ESEF Report: A 5-Step Guide

Shubhangi Sharma
October 9, 2026
5 min read

IFRS 18 changes how your P&L looks. Your ESEF report must change with it.

New categories, new subtotals and new disclosures all need new tags. And because you must restate comparatives, the work starts before your first IFRS 18 filing is due.

Here’s how to implement IFRS 18 in your ESEF report, step by step.

Where Your Implementation Starts

ESMA’s 2025 ESEF taxonomy includes a dedicated IFRS 18 entry point, and ESMA doesn’t plan another update in 2026. For the background on what changed, see how IFRS 18 shaped the 2025 ESEF taxonomy.

It has also asked issuers to implement IFRS 18 on a timely basis, including in their ESEF reporting.

This guide focuses on what your team needs to do.

Five Steps to IFRS 18 ESEF Implementation

The five steps: choose your entry point, re-map your P&L, review your extensions, tag the new disclosures and align your comparatives.

1. Choose the Right ESEF Entry Point

Decide whether you’ll early-adopt IFRS 18 for FY2026. If not, use the IAS 1 entry point for FY2026 and switch to the IFRS 18 entry point for FY2027.

Then confirm your software supports the new entry point and ESMA’s latest Conformance Suite before mapping starts.

2. Re-Map Your P&L to IFRS 18 Elements

Start with your two new subtotals, operating profit and profit before financing and income taxes. Then re-map each line by category.

Watch for items that now need category-specific elements. Finance costs are the clearest case. Interest on borrowings, lease liabilities and pension obligations now sit in financing for most companies, each needing its own tag. Rental income is another, with separate operating and investing elements.

3. Review Your ESEF Extensions and Anchoring

Your extensions were built for IAS 1. For each one, take one of three actions:

Retire it if the ESEF taxonomy now has a suitable element. ESMA expects you to use it.
Re-anchor it if it’s anchored to an IAS 1-era element.
Record why you kept it. Auditors and regulators will expect a rationale.

Share your approach with your auditor before year-end. Agreeing on new element choices early avoids late challenges to your ESEF opinion.

4. Tag Your New IFRS 18 Disclosures

The standard adds two main disclosures to tag:

The MPM note: each measure, its rationale, its calculation, its reconciliation to the most directly comparable IFRS subtotal, and the tax and non-controlling interest effects of each reconciling item
Specified expenses by nature: required if you present any expense by function

Both use dimensional modelling in the IFRS Taxonomy, because they link back to P&L line items. Under the current ESEF rules, notes need only block tagging, so detailed tagging of these tables is optional. Choosing it makes IFRS 18 XBRL tagging more complex than tagging a single line, so build and test these tables early.

ESEF tagging applies only to annual reports, even though IFRS 18 also requires MPM disclosures in interim reports.

5. Align Your Restated Comparatives

Your first IFRS 18 ESEF report includes restated comparatives, plus a reconciliation of each restated P&L line item to the amount previously presented under IAS 1, which has its own IFRS Taxonomy text block element. Tag them on the same basis as your current-year figures, so both columns follow the IFRS 18 structure.

Then check consistency across formats. Your ESEF report, your PDF and your designed annual report must show the same restated numbers.

Run an IFRS 18 test filing on your FY2026 figures. You’ll need those restated numbers for FY2027 anyway.

Your IFRS 18 ESEF Implementation Timeline

The steps are the same whichever path you take. Only the timing changes.

Standard path: first IFRS 18 ESEF report for FY2027

When	What to do
Q4 2026	Confirm your adoption date and that your software is ready (step 1)
H1 2027	Re-map your P&L, review extensions and agree element choices with your auditor (steps 2 and 3)
H2 2027	Build your MPM and expense tables, then run a test filing on restated FY2026 figures (steps 4 and 5)
Early 2028	File your first IFRS 18 ESEF report, within four months of year-end

Early adoption: first IFRS 18 ESEF report for FY2026

When	What to do
H1 2026	Confirm early adoption and that your software is ready (step 1)
Mid-2026	Re-map your P&L, review extensions and agree element choices with your auditor (steps 2 and 3)
Q4 2026	Build your MPM and expense tables, then run a test filing on restated FY2025 figures (steps 4 and 5)
Early 2027	File your first IFRS 18 ESEF report, within four months of year-end

Adopting early? You should already be at the Q4 2026 stage. If you’re behind, prioritise the new disclosures and your test filing.

How IRIS CARBON Simplifies the Transition

IFRS 18 adds work at every step. IRIS CARBON’s AI-powered platform reduces it.

Catch up if you’re adopting early: AI-assisted tagging and expert support help compressed timelines, so steps 2 to 5 can run parallel instead of a sequence.
Re-map faster: AI-assisted tagging suggests IFRS 18 elements, so your team reviews mappings instead of building them from scratch.
Catch gaps before your auditor does: Every disclosure is checked against the regulation, so a missing MPM reconciliation or expense note surfaces in draft.
Trust your restated numbers: Comparatives, notes and the P&L are checked against each other and against last year’s signed filing.
File right the first time: Real-time validation against ESMA rules means fewer rejections and less rework.

You spend less time re-mapping, less effort checking, and less on errors caught late.

IFRS 18 ESEF FAQs

1. Which IFRS 18 tagging decisions should I document?

Your element choices for new categories and subtotals, and why you kept each extension. Auditors and regulators will expect that rationale.

2. Do interim reports need ESEF tagging under IFRS 18?

No. ESEF covers annual financial reports only. Your interim MPM disclosures still apply, but they aren’t tagged.

3. Which IFRS 18 disclosures are new to tag?

Mainly the MPM note and the specified expenses by nature disclosure, plus the one-off IAS 1 reconciliation of comparatives in your first IFRS 18 year.