The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has published the 2024 European Single Electronic Format (ESEF) XBRL taxonomy files and an update to the ESEF Conformance Suite to facilitate the implementation of the ESEF Regulation on 8th January, 2025.
What’s New in the 2024 ESEF Taxonomy?
The 2024 ESEF taxonomy incorporates updates from the 2023 and 2024 IFRS taxonomy, reflecting the latest changes in International Financial Reporting Standards (IFRS). These enhancements aim to:
- Improve Data Accuracy: The taxonomy includes new elements and refinements to better represent financial disclosures.
- Enhance Usability: Adjustments have been made to simplify tagging processes for preparers and ensure seamless integration with existing systems.
- Support Consistent Reporting: The updates align with regulatory requirements, fostering comparability across EU markets.
Additionally, the taxonomy package includes labels in all EU languages, supporting issuers across the region in meeting their reporting obligations.
The ESEF Conformance Suite: A Tool for Compliance
To complement the taxonomy files, ESMA has also released the updated ESEF conformance suite. This tool is designed to help issuers and software vendors validate their filings against the ESEF requirements. Key features include:
- Validation of XBRL Files: Ensures compliance with technical and regulatory specifications.
- Error Detection: Identifies and rectifies potential issues in filings before submission.
- Streamlined Testing: Facilitates testing for software providers to ensure their tools meet the ESEF standards.
Supporting Global and EU Reporting Obligations
The 2024 ESEF taxonomy and conformance suite also aim to assist EU issuers listed on US capital markets (known as ‘Foreign Private Issuers’) in meeting their reporting obligations with the US Securities and Exchange Commission (SEC). However, the updated taxonomy files and conformance suite will only discharge issuers from their EU ESEF obligations for financial years beginning on or after 1 January 2024, following the entry into force of the 2024 update to the ESEF Regulation.
For annual financial reports concerning financial years beginning on or after 1 January 2024, issuers may alternatively use the 2022 ESEF taxonomy files and conformance suite published by ESMA in December 2022.
Background
The 2024 draft update to the ESEF Regulation was submitted by ESMA in May 2024, adopted by the European Commission on 27 September 2024, and cleared the scrutiny of the European Parliament and Council on 27 December 2024 without objection. This update reflects the limited changes in the 2023 IFRS taxonomy and incorporates further enhancements from the 2024 IFRS taxonomy.
Under the ESEF Regulation, all issuers with securities listed on an EU-regulated market must prepare their annual financial reports in xHTML and mark up the IFRS consolidated financial statements using XBRL tags and iXBRL technology.
Next Steps
The 2024 update to the ESEF Regulation will take effect on the twentieth day following its publication in the European Official Journal, expected by mid-January 2025. Issuers are encouraged to:
- Update Reporting Tools: Work with software vendors to integrate the latest taxonomy and conformance suite.
- Train Teams: Equip financial reporting teams with the knowledge and tools to apply the updated taxonomy effectively.
- Conduct Pre-Validation: Test filings using the conformance suite to identify and address issues early.
Conclusion
The release of the 2024 ESEF taxonomy files and conformance suite underscores ESMA’s commitment to enhancing the quality and transparency of financial reporting in the EU. By adopting these updates, issuers can ensure compliance, build investor confidence, and contribute to a robust financial reporting ecosystem.
For more details, visit the official ESMA announcement.
Stay tuned for more updates on the latest taxonomy and Conformance Suites.
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As the distinguished specialist at IRIS CARBON®, Neha leads the way in advancing XBRL reporting. With 13 years of domain expertise, she navigates reporting mandates across the US, UK, EU, Israel, and Nigeria. Neha streamlines XBRL integration for European businesses, raising reporting standards. Her expertise extends to the digital transformation of ESG data and authoring reports using the Disclosure Management platform. Neha’s blogs offer practical insights for mastering XBRL reporting and financial disclosure, recognized for turning complex concepts into strategic assets. She guides industry leaders, ensuring each initiative is a roadmap for successful ESG integration and impactful financial reporting.
