IFRS 18 — NIIF-UE 18 and the 2027 accounts reset

IAS 1 has been deleted. Not quietly superseded — struck out of the EU’s adopted standards altogether, by the same regulation that inserted IFRS 18 in its place. Every entity applying IFRS as adopted by the European Union restructures its income statement for financial years beginning on or after 1 January 2027, restates its 2026 comparatives, and discloses performance measures it has until now kept outside the accounts. For payment and e-money institutions the change arrives twice: through the EU regulation, and again through the national accounting circular that points at it.

1. What was adopted, and when it bites

Commission Regulation (EU) 2026/338 of 13 February 2026 amends Regulation (EU) 2023/1803 — the consolidated text of IFRS as adopted in the EU — to insert IFRS 18 Presentation and Disclosure in Financial Statements, issued by the IASB on 9 April 2024. It was published in the Official Journal on 16 February 2026, entering into force twenty days later.

Three operative facts sit in three short articles. Article 1 inserts IFRS 18, makes consequential amendments to some forty standards and interpretations — among them IFRS 7, IFRS 9, IAS 7, IAS 21, IAS 33 and IAS 34 — and deletes IAS 1 Presentation of Financial Statements. Article 2 requires every company to apply the change at the latest from the start of its first financial year beginning on or after 1 January 2027.

In Spanish practice the standard is NIIF-UE 18, and the label matters: it is the EU-endorsed text, not the IASB original, that Spanish accounting circulars point at.

2. Five categories, three subtotals

Most summaries say IFRS 18 creates three categories. It creates five. Paragraph 47 requires every item of income and expense in the statement of profit or loss to be classified as operating, investing, financing, income taxes or discontinued operations. The first three carry the judgement; the last two are containers.

Paragraph 69 then requires three totals and subtotals on the face:

The middle subtotal has an exception that catches financial firms squarely. Under paragraph 73, an entity adopting the paragraph 65(a)(ii) policy — classifying income and expenses from liabilities not related to financing customers in the operating category — does not present it, and applies paragraph 24 instead to decide whether an additional subtotal after operating profit is needed.

3. The rule written for firms that finance customers

Paragraph 49 asks a question no previous standard asked: does the entity carry on a specified main business activity — investing in particular types of assets, or providing financing to customers? The answer changes where income and expenses land: under paragraph 50, such an entity classifies in the operating category items that would otherwise sit in investing or financing.

Paragraph 51 attaches disclosure to the answer. An entity that invests in assets, or provides financing to customers, as a main business activity must say so; and an entity whose assessment changes must disclose the fact and date of the change, plus the amount and classification of the affected line items before and after it in the current period. The assessment is therefore not a one-off mapping decision taken in an implementation project — it is a recurring judgement with its own disclosure trail.

For a payments group this is the load-bearing paragraph. A firm whose revenue is interchange and FX margin is not obviously financing customers; the same firm running a credit line, an instalment product or a merchant advance may well be. The assessment drives the shape of the primary statement, not a note.

4. Management-defined performance measures

The second structural change pulls the alternative performance measures firms already publish inside the audited accounts. Paragraph 117 defines a management-defined performance measure (MPM) as a subtotal of income and expenses that the entity uses in public communications outside the financial statements to convey management’s view of an aspect of overall financial performance, and that is not listed in paragraph 118 or required by another IFRS.

Paragraph 118 lists what is not an MPM: gross profit and similar subtotals; operating profit before depreciation and IAS 36 impairment; operating profit plus all equity-accounted investment results; for an entity applying paragraph 73, operating profit combined with the investing category; profit before income tax; and profit from continuing operations.

The mechanism is a rebuttable presumption. Paragraph 119 says an entity shall presume that any subtotal used in public communications outside the accounts communicates management’s view; paragraph 120 allows rebuttal only where the entity holds reasonable and supportable information demonstrating the basis for it. Paragraph 122 then requires all MPMs in a single note, each reconciled to the most directly comparable total or subtotal. An investor-deck metric that has never been near an audit file becomes a reconciled disclosure.

5. What it does to the cash-flow statement

IAS 7 is amended rather than replaced, but the amendment changes a number every firm publishes: paragraphs 6, 10, 12, 14, 16 to 18, 20, 31, 32, 35, 46 and 47 amended, 33 and 34 deleted, 33A and 34A to 34D added.

The substantive change is in paragraph 18(b): under the indirect method the starting point is no longer profit but operating profit, adjusted for non-cash effects, deferrals and accruals, operating-category items whose cash flows are investing or financing, and operating cash flows whose income or expense sits elsewhere. Paragraph 20 is rewritten to match. The old free choice over interest and dividends is replaced by new paragraphs 34A to 34D. Any model, covenant or KPI keyed to “cash generated from operations” needs re-deriving, not re-labelling.

6. Spain: how it reaches a payment institution

A Spanish payment institution or e-money institution does not apply Regulation (EU) 2026/338 directly in its individual accounts. It applies the Banco de España accounting circular — which is being amended now.

On 4 September 2026 the Banco de España opened an audiencia e información pública on a draft circular amending Circular 4/2017 (credit institutions), Circular 4/2019 (establecimientos financieros de crédito) and Circular 5/2020 of 25 November, on payment institutions and e-money institutions. Comments close on 25 September 2026. The stated purpose is to keep the circulars aligned with NIIF-UE subject to the Código de Comercio, avoiding different criteria in individual and consolidated accounts — and it names Regulation (EU) 2026/338 as the reason.

The transmission route explains why an EMI has to read a credit-institution circular. Circular 5/2020 sets out which accounting documents these institutions prepare and the structure of their public primary statements, then cross-refers to Circular 4/2017 for line items and models. The draft therefore amends 4/2017’s norma 55 (profit and loss account) to describe the operating, investing and, where applicable, financing categories, and norma 60 to require the MPM note — then amends 4/2019 and 5/2020 only to state that the new structure applies in their scopes. The models flow through the existing cross-references.

The dates are specific. Entry into force is 1 January 2027, with certain norma 67 and anejo 4 changes deferred to 1 January 2028. The first transitional provision applies the presentation changes in the 2027 individual and consolidated accounts, retrospectively under norma 17 paragraphs 6 to 8 of Circular 4/2017, with one relief and one extra burden: no need to give, in the 2027 notes, the adjustment amount for each affected line item, but for 2026 presented as a comparative, a note reconciling the restated and previous amount of each profit-and-loss line. The draft also removes certain national reserved requirements, including some FINREP states carried into the national framework as an extension under Regulation (EU) 2015/534 (ECB/2015/13); updates CNAE-2009 references to CNAE-2025 (Royal Decree 10/2025, following NACE Rev. 2.1) including in reserved state FI 130; and drops reserved statements for branches of non-EEA credit institutions in light of Implementing Regulation (EU) 2026/1757 of 20 July 2026, first reference date 31 March 2027.

7. The rest of the NIIF-UE pipeline

IFRS 18 is the largest item but not the only one. EFRAG’s endorsement status report of 17 July 2026 gives the position.

Two points follow. The IAS 21 hyperinflation amendment is expected only in Q4 2026 for a 1 January 2027 effective date — the Spanish draft circular already anticipates it, citing the adopting regulation with its number left blank. And IFRS 19 is a group-structure decision, not a technical one: it lets a subsidiary without public accountability apply reduced disclosures, worth assessing before the 2027 cycle rather than during it.

8. Three worked examples

Three situations with determinate answers.

Example one: the EMI that started lending. Facts: an e-money institution earning interchange and FX margin launches a merchant cash-advance product that becomes material in 2027. Rule: paragraph 49 asks whether providing financing to customers is a main business activity, paragraph 50 moves items into operating if it is, and paragraph 51 requires disclosure of the fact and of any change with amounts before and after. Action: make the assessment an annual, documented judgement with a stated basis, and build the before/after disclosure into the close. Outcome: a change in the answer produces a disclosure rather than an unexplained restatement.

Example two: the metric in the investor update. Facts: a group has reported “adjusted EBITDA excluding one-offs” every quarter for three years. Rule: paragraph 119 presumes any subtotal used outside the accounts is an MPM, paragraph 120 permits rebuttal only on reasonable and supportable information, and paragraph 118 excludes operating profit before depreciation and IAS 36 impairment — but not an “excluding one-offs” variant. Action: inventory every such subtotal, test each against paragraph 118, and prepare the single note with reconciliations. Outcome: the metric survives inside the accounts instead of being quietly dropped in year one.

Example three: the Spanish comparative nobody budgeted. Facts: a Spanish EMI plans an IFRS 18 project for 2027. Rule: the draft circular applies the changes retrospectively in the 2027 accounts and requires, for 2026 as comparative, a note reconciling the restated and previous amount of each profit-and-loss line. Action: freeze the 2026 line-item mapping now, while the year is open, and keep the crosswalk as an auditable artefact. Outcome: the reconciliation is a report rather than a reconstruction.

9. What to do, today

• Fix the two dates: application from the first financial year beginning on or after 1 January 2027, and a retrospective transition that makes the year now running your comparative.
• Make the paragraph 49 assessment explicitly — is providing financing to customers, or investing in assets, a main business activity? — and record the basis, because a change in the answer carries its own disclosure.
• Inventory every subtotal published outside the accounts and test each against the paragraph 118 exclusion list; assume it is an MPM unless you can support a rebuttal.
• Re-derive any covenant or model input keyed to “cash generated from operations” against the amended IAS 7.
• If you report in Spain, read the draft circular now: the consultation closes 25 September 2026, and the 2026 comparative reconciliation is cheapest to build while 2026 is open.
• Put IFRS 19 on the agenda for subsidiaries without public accountability, and track the IAS 21 hyperinflation amendment, expected in Q4 2026 for a 1 January 2027 effective date.

Related: Own funds and initial capital for payment and e-money institutions · The regulatory reporting guide for EU payment firms · COREP under the IFR for Spanish investment firms · What is supervisory reporting?