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Lessons learned from the first year with ESEF


The European Single Electronic Format places far-reaching requirements on corporate financial reporting. What experiences have companies had with ESEF so far and what lessons have been learned?

by Thorben Burbach  

Wiesbaden, December 10, 2021. In order to make corporate annual reports comparable and machine-readable throughout Europe, the EU adopted a uniform electronic reporting format back in 2013 – the European Single Electronic Format (ESEF). For fiscal years that began after January 1, 2020, issuers now had to label extensive items in, among other things, the balance sheet and income statement as well as selected master data in the notes to the consolidated financial statements for the first time and submit them in Germany to the Bundesanzeiger (Federal Gazette) as the national register.

ESEF tagging mandatory for financial statements

But what concrete requirements does ESEF place on companies? In the first phase, only the primary financial statements, i.e. the balance sheet, income statement, statement of comprehensive income, cash flow statement and statement of changes in equity, must be prepared and tagged with ESEF in accordance with IFRS taxonomy. Obligated companies are those that have issued securities in the EU. Specifically, these are more than 500 companies in Germany and 7,500 in the entire European Union.

These issuers must prepare annual financial reports in XTHML format. For this purpose, the consolidated IFRS financial statements are marked up using inline eXtensible Business Reporting Language (iXBRL). The latter serves primarily to facilitate machine processing. Thus, figures and information in the financial statement tables are provided with a standardized label, the so-called tag. This tagging will be extended again for fiscal years beginning on or after January 1, 2022, and will then also be mandatory for the IFRS notes to the consolidated financial statements via the consolidated financial statements per se. It is also planned that from 2023 ESEF will also be applied to non-financial reporting.

Lessons learned from the first ESEF season

Experience to date shows that early clarification of ESEF responsibilities between IR, accounting and, if necessary, external service providers is very helpful. For example, it is important to clarify in good time how ESEF tagging is to be implemented. The implementation can take place under the company’s own responsibility with the help of software or by an external service provider.

It is also advisable to involve the auditors in the process at an early stage and clarify their requirements for ESEF tagging. This requires appropriate planning of the reporting process and close coordination with all parties involved. Since auditors require more review time because of ESEF, this must be planned accordingly for the final phase of report preparation. In order to be able to estimate the timing for the tagging process, it is still useful to carry out a trial run with a previous year’s report. If a company nevertheless runs into a time bottleneck, it is possible for the auditor to issue a provisional opinion for the targeted publication date of the annual financial statements. A final ESEF certificate can then be issued by the auditor for timely submission to the Federal Gazette.

Finally, it should be noted that despite the EU-wide standardization, the ESEF files must be submitted to the national registry. When working with an external service provider, the file format to be submitted should be taken into account and the process for transmission clarified so as not to jeopardize timely submission.

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Thorben Burbach: Senior Consultant
Thorben Burbach has been a consultant at cometis AG since 2014 and has in-depth know-how in IR and corporate communications thanks to numerous projects. His focus has always been on the reporting of listed companies. Thorben studied media science and business administration with a focus on media management and marketing.