IFRS 18: A new era for presentation and disclosure — what it means for reporters and ESEF Filers 

Effective for reporting periods beginning on or after 1 January 2027 (with earlier adoption permitted), IFRS 18 Presentation and Disclosure in Financial Statements replaces IAS 1 Presentation of Financial Statements and fundamentally reshapes how entities present their financial performance. The change represents the culmination of the IASB’s Primary Financial Statements project, launched to address longstanding concerns about comparability and transparency across income statements and related disclosures. 

All EU listed companies, including CoreFiling customers, are affected by this change. This post is to share our expert point of view on the changes to help understand what they are and when it makes sense to adopt the new taxonomy that includes IFRS 18. 

Why has IFRS 18 been introduced: Objectives 

The core objectives of IFRS 18 are driven by investor and user feedback: 

• Improve comparability across entities by standardising key subtotals and structuring the statement of profit or loss more consistently. Previously, entities had wide latitude under IAS 1, leading to diverse presentation formats that made cross-entity analysis challenging.  

• Increase transparency of performance metrics, especially those communicated outside strict IFRS requirements, by embedding management-defined performance measures (MPMs) within the audited financial statements and requiring clear reconciliations to IFRS subtotals. 

• Enhance the communication of financial information, including principles for aggregating and disaggregating line items and clear guidance on what belongs in the primary statements versus the notes. 

In essence, IFRS 18 doesn’t change recognition or measurement — it rearranges and enriches how results are presented so users can understand performance drivers more reliably and consistently. 

What’s new under IFRS 18: Key changes 

IFRS 18 introduces several defining features: 

• New defined subtotals in the income statements: operating profit and profit or loss before financing and income tax. These are mandatory and provide a consistent starting point for analysis and a consistent structure for this primary statement.  

• Classification into five categories of income and expense — operating, investing, financing, income taxes and discontinued operations — replacing the more flexible presentation under IAS 1. 

• Management-Defined Performance Measures (MPMs) must be disclosed in a dedicated note, with a reconciliation to IFRS subtotals and explanations of usefulness and calculation. This bridges the gap between reported IFRS performance and non-GAAP metrics.  

• Clearer aggregation/disaggregation principles to ensure material items are presented with sufficient detail. Aggregated items now require meaningful descriptions and any items labelled as “other” require additional information to be disclosed. 

• Limited consequential amendments to related standards (e.g., IAS 7 Statement of Cash Flows) to align the starting point for the indirect method of reporting cash flos from operating activities and eliminating options for the classification of interest and dividend cash flows. 

Collectively, these changes raise the bar for consistency and user relevance, but they also require closer coordination between accounting, investor relations, and systems teams ahead of adoption. 

Which companies will be most affected 

Almost all IFRS reporters will need to prepare for IFRS 18 — the standard applies broadly across industries, including banks, insurers and industrial groups. Its impact is most pronounced for entities that: 

• currently present widely differing income statement formats under IAS 1; 

• actively communicate non-GAAP performance measures to the market; or 

• have complex financing structures or significant investing activities that will materially affect the new operating, investing and financing categories in the statement of profit or loss and possibly the cash flow statement. 

Because IFRS 18 affects presentation and disclosures rather than recognition or measurement, preparers in every sector should assess the impact on narrative reporting and electronic tagging solutions well before the effective date.  

Endorsement status: EU & UK 

• The European Union formally endorsed IFRS 18 on 13 February 2026, with publication in the Official Journal on 16 February 2026. The standard becomes effective in the EU for annual periods beginning on or after 1 January 2027.  

• In the United Kingdom, the UK Endorsement Board approved IFRS 18 for use on 10 December 2025, confirming the standard’s application for UK reporters (also for periods beginning on or after1 January 2027 with early application permitted).  

These endorsements mean IFRS 18 will be recognised for regulatory and statutory filings in both jurisdictions, and preparers must align their transition plans accordingly. 

IFRS 18 meets XBRL: What preparers should know about the ESEF Taxonomy 2025 

With the ESEF Taxonomy 2025 package published on 21 April 2026, IFRS 18 becomes a significant consideration for digital reporting and tagging strategy. We also note that this taxonomy includes amendments to IFRSs 7 and 9 (effective for periods beginning on or after 1 January 2026), as well as the introduction of the new IFRS 19 standard (effective for periods beginning on or after 1 January 2027) which is not yet EU/UK endorsed. 

Should you early adopt the ESEF Taxonomy 2025? 

For Annual Financial Reports (AFRs) relating to period beginning before 1 January 2026, the effective Regulatory Technical Standard is the one dated 1 January 2025 and the related taxonomy is the ESEF Taxonomy 2024. The ESEF taxonomy 2025 is linked to the Regulated Technical Standard published 18 March, which is effective for period beginning on or after 1 January 2026. It should only be early adopted if using it will be a better representation of the disclosures in the AFR. 

Two entry points in the ESEF Taxonomy 2025 

The new ESEF Taxonomy 2025 provides two distinct entry points for each of the 22 supported languages, linked below on CoreFiling’s Yeti Taxonomy Viewer: 

1. Full IFRS (IAS 1) entry point — reflecting the traditional presentation under IAS 1; and 

1. Early application of IFRS 18 entry point — tailored to IFRS 18 presentation and disclosure requirements. 

Issuers will therefore have the option to select the appropriate entry point based on whether they are early adopting IFRS 18 or continuing with the IAS 1 format. 

Implications for ESEF filers 

• Mandatory adoption of the 2025 ESEF taxonomy is planned for annual reports covering periods beginning on or after 1 January 2026.  

• Voluntary early adoption of ESEF 2025 is permitted for filings carried out 20 days after the publication of the RTS on the Official Journal — allowing issuers to adopt the taxonomy for 2025 year-end filings if they choose.  

• IFRS 19 taxonomy elements (e.g. Statement of compliance with IFRS Accounting Standards and requirements in IFRS 19) may not be used in live filings until the standard is formally endorsed by the EU and the UK (unless they relate to other financial reporting standards too).  

• Preparers must select the correct taxonomy entry point for tagging: 

• • IAS 1 entry point if not early adopting IFRS 18; or 

• • IFRS 18 entry point if early adopting.

• The choice of entry point will also determine the list of mandatory tags which appears in the [000000] group of the taxonomy, in line with the two separate lists in the latest Regulatory Technical Standard.

This dual-entry approach enables smooth transition and testing ahead of mandatory IFRS 18 adoption, giving companies more runway to adapt their systems and governance around tagging IFRS 18 subtotals and disclosures. 

Scenario planning 

The table below outlines various scenarios to help issuers navigate their taxonomy choice and subsequently, their choice of entry point. 

Practical takeaways for preparers 

• Assess early whether your entity will early adopt IFRS 18. The decision affects not only narrative reporting but also your XBRL taxonomy selection in ESEF filings. 

• Plan your taxonomy strategy to align with the appropriate entry point in the ESEF Taxonomy 2025 and ensure your AFR templates support both IFRS 18 subtotals and MPM disclosures where relevant. 

• Engage cross-functional teams — accounting, technical reporting, investor relations and IT — early in the transition to capture requirements for both presentation and digital tagging. 

• Use the transition period as a testing ground to build systems, processes and controls around IFRS 18 before it becomes mandatory for 2027 reporting. 

Tagging and digital reporting 

Whenever you choose to transition to IFRS 18, CoreFiling are ready to support the creation of your digital ESEF report through our accounting, tagging and audit partners. See here for more details.