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CSDDD FAQThird-country scope

What EU turnover triggers CSDDD scope?

Under Directive (EU) 2026/470, a third-country company generally enters scope when it generates more than EUR 1.5 billion net turnover in the Union, including the relevant consolidated ultimate-parent route.

The old EUR 450 million general scope threshold and EUR 900 million application-wave threshold are not current law; a separate higher-threshold franchise and licensing route still applies.

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Author
Sorena AI
Published
May 9, 2026
Updated
Jul 24, 2026
Questions
2

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2

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Sorena AI
Published May 9, 2026
Updated Jul 24, 2026
Overview

The general third-country test uses Union turnover, not an EU employee count. It looks to the financial year preceding the last financial year, applies to a company or an ultimate parent whose group meets the threshold on a consolidated basis, and must be met in two consecutive financial years.

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Question 1

Build the turnover calculation

A passes the general Article 2(2) amount test when it generated more than EUR 1.5 billion in in the Union in the financial year preceding the last financial year. The threshold is strict: EUR 1.5 billion exactly does not pass. The same route applies to an ultimate parent company when its group reaches that amount on a consolidated basis even if the parent does not reach it alone.

Use under the financial reporting framework used for the company's financial statements, then isolate the amount generated in the Union on a consistent and supportable basis. The Directive does not replace the accounting framework with a special revenue measure. A legal entity list, customer or transaction geography, accounting policy, ledger-to-statement reconciliation, consolidation eliminations, and currency conversion should let a reviewer reproduce the result.

Example: if the relevant Union is EUR 1.6 billion in each of two consecutive test years, the amount and duration conditions are met. If it then falls to EUR 1.4 billion for one year, scope does not end at once; Article 2(5) requires the conditions to cease to be met for each of the last two relevant financial years.

  • Identify the exact third-country entity and relevant ultimate parent.
  • For the general route, test more than EUR 1.5 billion generated in the Union in the financial year preceding the last financial year.
  • If the company does not meet that threshold itself, test whether it is the ultimate parent of a group that meets it on a consolidated basis.
  • Reconcile Union turnover to the applicable financial statements and document the accounting basis, financial period, currency conversion, and consolidation eliminations used.
  • Apply the two-consecutive-financial-years entry rule and the corresponding two-year exit rule.
  • Test the separate franchise or licensing route where qualifying Union royalties exceed EUR 75 million and Union exceeds EUR 275 million; do not mix those figures into the EUR 1.5 billion general route.
  • Record pass, fail, or unresolved for the entity and group routes, the first qualifying year, the expected application date, and reviewer approval.
  • Reassess after acquisitions, disposals, restructurings, changes in the ultimate parent, revised Union-allocation rules, financial-statement restatements, or a threshold result changing in either relevant year.
Citations
Question 2

Connect the result to timing and representation

A scope result does not itself appoint the regulator or complete implementation. For a , the competent Member State is normally where it has a branch. If it has no Union branch or branches in several Member States, competence follows the Member State where it generated the highest Union in the Directive's reference year.

The company must also designate an in a Member State where it operates. Keep the signed and accepted mandate, notified contact details, evidence of the representative's powers and resources, authority correspondence, and any reasoned request to change competent authority after a change in turnover geography.

  • 26 July 2028: Member State transposition deadline.
  • 26 July 2029: national measures apply to companies remaining in scope.
  • 1 January 2030: Article 16 measures apply for financial years starting on or after this date.
  • Designate an established or domiciled in a Member State where the company operates, obtain acceptance, and notify the name, address, email address, and telephone number to the relevant supervisory authority.
  • Identify the competent Member State: normally the Member State of a branch, or, where there is no branch or branches in several Member States, the Member State where the company generated the highest Union turnover in the specified reference year.
  • Treat indirect customer requests separately from direct Article 2 scope.
Citations

Make the EU-turnover answer reviewable

Connect the calculation, group route, representative, authority, timing, and reassessment decision.

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Discuss CSDDD implementation

Review the relevant entity, national-law dependency, evidence gap, and next control decision with Sorena.

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