An EU subsidiary of a non-EU group must publish the group sustainability report only if its net turnover exceeded EUR 200 million in the preceding year, a branch only if it generated more than EUR 200 million and the group has no such subsidiary, and either route applies only if the group's Union turnover exceeded EUR 450 million in each of the last two financial years.
The requirement, in our words
An EU subsidiary of a non-EU ultimate parent must publish the group-level sustainability report only if the subsidiary's net turnover exceeded EUR 200 million in the preceding year; an EU branch must do so only where the non-EU undertaking has no such subsidiary and the branch's net turnover exceeded EUR 200 million in the preceding year; and in both cases only where the non-EU group (or undertaking) generated EU net turnover above EUR 450 million in each of the last two consecutive years. Where the non-EU undertaking is a financial holding whose subsidiaries are independent in business model and operations, the subsidiaries and branches may decide not to publish the report.
Why it matters
The provision narrows the third-country route and adds a two-year test. It also adds a financial holding derogation for third-country groups whose subsidiaries are operationally independent. For an EU subsidiary controller, the practical question is which entity in the chain is the reporting entity and whether the group has already published a report that can be used.
What changed
The old Article 40a(1) used a EUR 150 million Union turnover test and did not have the subsidiary and branch turnover figures in the same form. The replacement raises the figures, adds the two consecutive year test and the holding derogation.
What to do
- Calculate the subsidiary or branch turnover for the preceding financial year and the group's Union turnover for each of the last two years.
- Confirm whether the group has an EU subsidiary that already triggers the route, because the branch route applies only where it does not.
- If the group is a financial holding with independent subsidiaries, record the derogation analysis.
Evidence to have ready
| Category | Artefact |
|---|---|
| Third-country reporting | Calculation of the subsidiary's or branch's prior-year net turnover and the group's EU turnover for two consecutive years |
| Third-country reporting | Request letter to the non-EU parent for the information needed for the report |
| Third-country reporting | Decision record where the financial holding derogation is used, with the independence analysis |
Common failures
- EU turnover of the group measured for one year only
- Branch report prepared although an in-scope EU subsidiary already carries the duty
Dates
Applies to financial years starting on or after 1 January 2027. Transposition by 19 March 2027.
The question to test
Can you show the group's Union turnover for each of the last two years, not only the latest year?
Cross-references
A2-8 Consolidated statement threshold · A2-11 Financial holding option · A4-3 Holding company designation
Source
Article 2(13), amending Article 40a(1) of Directive 2013/34/EU; OJ L 2026/470, 26 February 2026; https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32026L0470. Our statement of the duty, read from the Official Journal text and the held control record, not the instrument verbatim.
Not legal advice; does not certify. A reading of the duty and the evidence commonly sampled, not a substitute for the Official Journal text, the national transposing measure or your auditor's judgement.