From financial years starting on or after 1 January 2027, a company or group must exceed both EUR 450 million net turnover and 1,000 average employees at the balance sheet date. Both tests are strict, so a figure exactly at either threshold does not bring the company in.
Article 2(4)(a) of the amending directive replaces the first subparagraph of Article 19a(1) of Directive 2013/34/EU. An undertaking must include sustainability information in its management report where, at its balance sheet date, it exceeds a net turnover of EUR 450 million and an average number of 1,000 employees during the financial year. Article 2(5)(a) makes the same change for a parent undertaking on a consolidated basis. The word is exceeds, so a company at exactly EUR 450 million or exactly 1,000 employees is outside the test.
Why are both figures needed?
The old population was defined by size bands and by public-interest status. The amendment replaces that with a single economic test: a large turnover and a large workforce. The conjunction matters. A capital-intensive company with EUR 600 million turnover and 700 employees is out. A labour-intensive company with EUR 300 million turnover and 4,000 employees is out. A company must plan for the answer to change as either figure moves.
What about the years before 2027?
The transitional rule is different. For financial years starting between 1 January 2024 and 31 December 2026, the population is public-interest entities above 500 employees on average. A Member State may exempt companies that do not exceed EUR 450 million turnover or 1,000 employees for financial years starting between 1 January 2025 and 31 December 2026. That option does not reach 2024, and it does not change the 2027 test.
How is the headcount measured?
The text uses the average number of employees during the financial year, measured against the position at the balance sheet date. The directive does not prescribe the payroll calculation in this provision; the national measure and the accounting rules do. A company should record the method it used, the figure for each year and the source, because the auditor will ask.
Does the turnover figure include VAT?
The directive does not define the turnover figure in this provision beyond net turnover. Use the net turnover in the financial statements, record the basis, and check the national measure for any specific rule.
What if the company is just below the threshold?
It is out for that financial year, but the answer is not permanent. The test is applied at each balance sheet date. A company near the boundary should keep a two-figure scoping memo for each year and re-run the check.
Where this comes from
The article record states each requirement in our own words and cites the article. The free check returns the year-by-year scope answer. The official text is Directive (EU) 2026/470.
Not legal advice; does not certify. The national transposing measure controls the route and any option it uses.