CSRD for Non-EU Companies: The Article 40a Report, the EUR 450 Million EU Turnover Test and Who Files

The Corporate Sustainability Reporting Directive (CSRD), Directive (EU) 2022/2464 of 14 December 2022, inserted Articles 40a to 40d into the Accounting Directive 2013/34/EU, and Directive (EU) 2026/470 of 24 February 2026, in force since 18 March 2026, replaced the Article 40a values. The rest of the framework is set out where the Corporate Sustainability Reporting Directive (CSRD) is explained.

Both acts are directives: they bind the Member States, which must transpose Directive (EU) 2026/470 by 19 March 2027, and the publishing EU subsidiary or branch follows the national law of its Member State.

The table summarises the Article 40a rules as of 29 October 2026, in the order of the sections below.

When Does a Non-EU Group Have to Report under Article 40a?

A non-EU group has to report under Article 40a when two conditions are met together: Union net turnover of more than EUR 450 million in each of the last two consecutive financial years, and an EU subsidiary or EU branch with net turnover exceeding EUR 200 million in the preceding financial year. The turnover condition applies at the level of the third-country group, or at the level of the undertaking itself where it is not part of a group, under Article 40a(1) of Directive 2013/34/EU as amended by Article 2(13) of Directive (EU) 2026/470. The Article 40a report is one category of who must report under the CSRD, next to EU undertakings, EU groups and issuers on an EU regulated market.

The EUR 450 Million Union Turnover Test in Two Consecutive Years

The first condition is Union net turnover exceeding EUR 450 million "for each of the last two consecutive financial years" (Article 40a(1), fifth subparagraph, as replaced by Article 2(13)(b) of Directive (EU) 2026/470). Article 40a states this two-year period expressly, and the value refers to net turnover in the Union of the third-country group.

Article 40a contains no employee criterion: its test uses net turnover alone, while the EU test of Articles 19a(1) and 29a(1) adds an average of more than 1,000 employees. Article 3(13) of Directive 2013/34/EU lets the Commission review the value for inflation, as the last section sets out.

An EU Subsidiary or Branch above EUR 200 Million

The second condition is an EU anchor: a subsidiary undertaking exceeding a net turnover of EUR 200 million in the preceding financial year (Article 40a(1), second subparagraph, as replaced by Article 2(13)(a)), or a branch above the same value.

The branch counts only where the group has no such subsidiary: the fourth subparagraph, as replaced by Article 2(13)(b), sets a branch net turnover exceeding EUR 200 million in the preceding financial year for groups without a qualifying subsidiary. The subsidiary is now measured by turnover only; before Directive (EU) 2026/470 the test asked whether it was a large undertaking or a listed small or medium-sized undertaking (history table below).

How Union Net Turnover Is Measured

For an Article 40a undertaking, net turnover means revenue as defined by the financial reporting framework on which its financial statements are prepared (Article 2(5) of Directive 2013/34/EU as amended by Directive (EU) 2022/2464). A group that prepares its financial statements under a framework, for example IFRS or US GAAP, takes revenue as that framework defines it and then counts the part earned in the Union. EU undertakings use the other definition in the same Article 2(5): amounts from the sale of products and the provision of services after sales rebates, value added tax and other taxes directly linked to turnover, explained under net turnover under the CSRD thresholds.

Two Routes into Scope: Article 40a or the Rules for EU Undertakings

A non-EU group can meet the CSRD in two ways: through the Article 40a report for the group, and through the ordinary scope test that any EU subsidiary or EU-listed issuer meets on its own figures under Articles 19a and 29a. The two routes are separate and can apply at the same time, so one group can have an Article 40a report and one or more EU subsidiaries that report in their own right. The table compares the three cases.

EU Subsidiaries above 1,000 Employees and EUR 450 Million

An EU subsidiary that itself exceeds a net turnover of EUR 450 million and an average of 1,000 employees reports under Article 19a(1), or under Article 29a(1) as parent of an EU sub-group, from financial years starting on or after 1 January 2027, a year before Article 40a. The Article 40a report of its non-EU parent does not exempt it from that duty, as FAQ 48 of Commission Notice C/2024/6792, published on 13 November 2024 before the Omnibus, states.

The subsidiary is exempt instead when a consolidated report of the non-EU parent, drawn up under the ESRS or equivalent, includes it and the conditions of Article 19a(9) are met. For a third-country parent, the conditions include publication of the consolidated report under Article 30 and Article 8 Taxonomy disclosures for the EU activities. Until 6 January 2030, Article 48i lets Member States permit one EU subsidiary, the one with the greatest EU turnover in at least one of the preceding five financial years, to report on a consolidated basis for all EU subsidiaries. Both options belong to consolidated reporting and the subsidiary exemption for groups.

Third-Country Issuers on an EU Regulated Market

A non-EU company whose securities are admitted to trading on an EU regulated market reports as an issuer under Articles 19a and 29a through Article 4(5) of the Transparency Directive 2004/109/EC, not under Article 40a (Commission Notice C/2024/6792, FAQ 84).

Since Directive (EU) 2026/470, issuers use the same test as other undertakings: Article 3(1)(b) of that act amended the third subparagraph of Article 5(2) of the CSRD, so an issuer reports when it exceeds a net turnover of EUR 450 million and an average of 1,000 employees, from financial years starting on or after 1 January 2027. Micro-undertakings remain excluded from the issuer route.

Who Files the Article 40a Report, and Where It Is Published

The qualifying EU subsidiary, or where there is none the qualifying EU branch, publishes the Article 40a report together with its assurance opinion in the business register within 12 months of the balance sheet date. Article 40c of Directive 2013/34/EU sets the responsibility: the members of the subsidiary's bodies are collectively responsible, and a branch acts to the best of its knowledge and ability.

Article 40d(1) places the publication in the business register under Articles 14 to 28 of Directive (EU) 2017/1132, as the consolidated text of Directive 2013/34/EU of 18 March 2026 shows. Article 40a(2) covers missing data: if the third-country undertaking does not provide all information, the subsidiary or branch publishes the report with all information in its possession and a statement that the third-country undertaking did not make the necessary information available; the statement is published with the report. Article 33a(1), inserted by Directive (EU) 2023/2864, lists third-country sustainability reports, their assurance opinion and the Article 40a(2) statement among the documents for the European Single Access Point.

Financial Holding Groups: The Option Not to Publish

Where the third-country undertaking is a financial holding undertaking whose subsidiaries are independent of one another, its EU subsidiaries and branches may decide not to publish the Article 40a report (Article 40a(1), final subparagraph, added by Article 2(13)(c) of Directive (EU) 2026/470). The option concerns the Article 40a report; an EU subsidiary that exceeds both EU values follows the second route on its own figures. The EU counterpart is Article 29a(7a), inserted by the same act: a parent that is a financial holding undertaking with independent subsidiaries may choose not to include consolidated sustainability information, while subsidiaries in scope in their own right still report (recital 17), as the financial holding option for EU groups explains.

Article 40b and the ESRS-40a Exposure Draft: What Third-Country Groups Will Apply

The Article 40a report follows the standards that the Commission adopts by delegated act under Article 40b of Directive 2013/34/EU, which Directive (EU) 2024/1306 requires by 30 June 2026. The original date in Article 40b was 30 June 2024; Article 1(2) of Directive (EU) 2024/1306 moved it by two years, and Directive (EU) 2026/470 did not change it.

EFRAG has published an exposure draft, ESRS-40a, for certain non-EU undertakings, for public consultation. Its earlier names were Non-EU ESRS (N-ESRS, often searched as "NESRS") and ESRS for third countries (ESRS-TC). As of 29 October 2026 ESRS-40a is an EFRAG exposure draft, and an EFRAG draft is not law.

The first financial year of Article 40a reports, starting on or after 1 January 2028, comes from Article 5(2), second subparagraph, of Directive (EU) 2022/2464, not from the Article 40b act. The Commission's delegated acts for EU undertakings are listed under the ESRS delegated acts.

What the Article 40a Report Must Cover

The Article 40a report covers Article 29a(2) points (a)(iii) to (v), (b) to (f) and, where appropriate, (h), at the group level of the third-country undertaking. Article 40a(1) sets this list in its first and third subparagraphs, so the report covers part of the Article 29a(2) content, not every point of it.

Article 8 Taxonomy disclosures are not required in the Article 40a report, according to FAQ 46 of Commission Notice C/2024/6792, published before the Omnibus. The exemption route of Article 19a(9), described above, differs on this point: it requires them from the third-country parent for its EU activities.

Assurance of the Article 40a Report

The Article 40a report is published with an assurance opinion given by a person or firm authorised to give an opinion on the assurance of sustainability reporting under the national law of the third-country undertaking or of a Member State (Article 40a(3) of Directive 2013/34/EU). Where the third-country undertaking does not provide the assurance opinion, the subsidiary or branch issues a statement to that effect (Article 40a(3), second subparagraph). The signatories are compared under who can assure a CSRD report, including third-country auditors.

Third-country auditors have a transitional regime: under Article 45(5b) of the Audit Directive 2006/43/EC, inserted by Article 1(4)(b) of Directive (EU) 2026/470, Member States do not apply Article 45(1) to (5a) to assurance reports for financial years starting from 1 January 2025 to 31 December 2030 where the auditor provides the information listed in points (a) to (f), such as its legal structure and the assurance standards applied. Recital 6 ties the regime to auditors of third-country issuers. For EU undertakings on the second route, assurance is limited assurance only (Article 34(1)(aa) of Directive 2013/34/EU as replaced by Directive (EU) 2026/470).

From Which Financial Year: FY 2028 and First Reports in 2029

Article 40a applies for financial years starting on or after 1 January 2028 (Article 5(2), second subparagraph, of Directive (EU) 2022/2464), a date neither the Stop-the-clock Directive (EU) 2025/794 nor Directive (EU) 2026/470 changed. With publication within 12 months of the balance sheet date under Article 40d(1), the report for a calendar financial year 2028 is due by 31 December 2029.

A group whose financial year starts on 1 April first reports for the year starting 1 April 2028, with publication by 31 March 2030. EU subsidiaries above both EU values start a year earlier, with financial years starting on or after 1 January 2027 under Articles 19a(1) and 29a(1). Every date per category is shown with non-EU groups from FY2028 on the CSRD timeline.

Earlier Article 40a Values and What Changed in 2026

Before Directive (EU) 2026/470, Article 40a as inserted by Directive (EU) 2022/2464 set more than EUR 150 million Union turnover with a large or EU-listed subsidiary, or a branch above EUR 40 million, and these values no longer apply. The table compares each element with its current value and the amending provision.

Directive (EU) 2026/470 entered into force on 18 March 2026, and Member States must transpose it by 19 March 2027 (Article 5(1)). Its Article 2(13) replaced the second, fourth and fifth subparagraphs of Article 40a(1) and added the financial holding subparagraph; the rest of the act is set out under what Omnibus I changed in the CSRD.

Worked Examples: Groups Headquartered in the UK, the US and Elsewhere

Six cases show how the two Article 40a conditions and the separate EU-undertaking test combine for groups headquartered outside the EU.

The figures are calculated illustrations, not statements about any company. In case D, the group also needs an Article 40a report from FY 2028 if its Union net turnover exceeds EUR 450 million in each of the last two consecutive financial years, because its subsidiary exceeds EUR 200 million. The country of the headquarters changes nothing in either test.

How to Prepare an Article 40a Report

Prepare in six steps, in this order, and keep the turnover figures, the filing entity and the article behind each step on file.

1. Measure Union net turnover for each of the last two consecutive financial years (Article 2(5)).
2. Identify each EU subsidiary or branch above EUR 200 million in the preceding financial year; check the rules for banks and insurers under the CSRD where one applies.
3. Test each EU subsidiary against more than EUR 450 million net turnover and more than 1,000 employees.
4. Decide which subsidiary or branch publishes, and whether the financial holding option applies.
5. Plan assurance and publication within 12 months of the balance sheet date.
6. Follow the Article 40b standard and the national law in the CSRD transposition tracker, then run the CSRD scope check.

Once a group meets the Article 40a conditions, the reporting steps are set out in CSRD compliance after the Omnibus.

How Article 40a Can Still Change

Article 40a can still change in three ways: the Commission reviews its turnover values for inflation at least every five years, Member States write the amended text into national law by 19 March 2027, and the Commission reports by 30 April 2031 on extending scope to third-country undertakings without an EU subsidiary or branch. The inflation review under Article 3(13)(b) and (c) of Directive 2013/34/EU, as replaced by Article 2(2) of Directive (EU) 2026/470, covers the values in the second, fourth and fifth subparagraphs of Article 40a(1); the Commission may adjust them by delegated act, under a delegation for an indeterminate period from 18 March 2026 (Article 49(2a)).

The review report comes from Article 6 of Directive (EU) 2022/2464 as amended by Article 3 of Directive (EU) 2026/470 and recurs every three years. The provisions behind these changes are set out in Articles 19a, 29a and 40a explained.

Non-EU Reporting Questions

Six questions recur from groups outside the EU.

Does the CSRD apply to UK companies?

A UK-headquartered group is a third-country undertaking, so it reports under Article 40a only if its Union net turnover exceeds EUR 450 million in each of the last two consecutive financial years and it has an EU subsidiary or branch above EUR 200 million, from financial years starting on or after 1 January 2028. Its EU subsidiaries above both EU values report themselves from FY 2027.

Does the CSRD cover US companies?

The same test applies to a US-headquartered group: the CSRD reaches it through Article 40a and through any EU subsidiary or EU-listed security that meets the EU-undertaking test. No official count of US companies in scope after the Omnibus exists.

Is there a UK equivalent of the CSRD?

The UK has its own sustainability reporting standards, UK SRS S1 and S2, published on 25 February 2026 by the Department for Business and Trade and available for voluntary use. How they differ from the ESRS is set out in the ESRS vs UK SRS comparison.

Does a non-EU company without an EU subsidiary or branch have to report?

No: Article 40a requires an EU subsidiary or branch above EUR 200 million, so a group selling into the EU without one has no Article 40a report, whatever its Union turnover. The Commission's report due by 30 April 2031 covers extending scope to such third-country undertakings.

Do Swiss and Canadian groups follow the same test?

Yes: Article 40a uses one test for every third-country undertaking, whatever its home state, and the national rules of Switzerland or Canada are not covered here.

What happens to non-EU suppliers of an in-scope company?

A supplier outside the EU with an average of not more than 1,000 employees in the preceding financial year is protected by the value-chain cap: under ESRS 1 paragraph 66 of the revised (simplified) ESRS, Delegated Regulation (EU) 2026/1563, what may be asked of it only comprises the datapoints in Annex II to Delegated Regulation (EU) 2026/1560, also for non-EU value-chain undertakings. Details are under the value-chain cap for suppliers with up to 1,000 employees.