EU officially adopts IFRS 18

Posted on February 22, 2026 by Editor

After nearly two years of endorsement deliberations, the European Union has formally adopted IFRS 18 Presentation and Disclosure in Financial Statements, publishing the Commission Regulation in the Official Journal on 16 February 2026. The new standard, issued by the International Accounting Standards Board in April 2024, replaces IAS 1 and represents the most significant overhaul of the structure of the statement of profit or loss in decades. Despite the deliberations, the EU's implementation date remains aligned with the global timetable: annual reporting periods beginning on or after 1 January 2027, with retrospective application required.

IFRS 18 does not change how companies measure performance, but it fundamentally reshapes how they present it. Income and expenses must be classified into operating, investing and financing categories, with new mandatory subtotals, including operating profit and profit before financing and income tax, designed to support investor analysis.

The standard also introduces rigorous disclosure requirements for management-defined performance measures (MPMs), requiring reconciliation to IFRS subtotals and bringing greater discipline to metrics often (Ed - Overwhelmingly!) presented outside of the audited statements.

In a public statement, the European Securities and Markets Authority (ESMA) has called for "high-quality implementation", warning that the changes will affect IT systems, management reporting, internal controls and European Single Electronic Format (ESEF) tagging, and reminding issuers that 2026 comparatives will need to be restated.

For digital reporting in Europe, the implications are substantial and overall extremely positive. The updated IFRS Accounting Taxonomy and forthcoming ESEF taxonomy revisions incorporate IFRS 18's new structure, categories and dimensional modelling for MPM reconciliations, requiring issuers to review extension taxonomy elements identified by the change. In short, IFRS 18 is a structural reset that promises a more consistent machine-readable earnings language for data-driven analysis.

Read the European Commission Regulation endorsing IFRS 18 in the Official Journal of the European Union and ESMA's statement here.