--- title: "EU CSDDD Applicability Test" canonical_url: "https://www.sorena.io/artifacts/eu/csddd/applicability-test" source_url: "https://www.sorena.io/artifacts/eu/csddd/applicability-test" author: "Sorena AI" description: "Use this CSDDD applicability test to check the 1000 employee and EUR 450 million threshold, franchising and licensing triggers, non-EU EU-turnover rules." keywords: - "EU CSDDD applicability test" - "CSDDD scope threshold" - "Directive (EU) 2024/1760 scope" - "CSDDD 1000 employees 450 million" - "CSDDD non-EU company scope" - "CSDDD franchising licensing royalties" - "CSDDD start date 2028 2029" - "EU CSDDD" - "Applicability test" - "Thresholds" - "CS3D" - "Scope" --- **[SORENA](https://www.sorena.io/)** - AI-Powered GRC Platform [Home](https://www.sorena.io/) | [Solutions](https://www.sorena.io/solutions) | [Artifacts](https://www.sorena.io/artifacts) | [About Us](https://www.sorena.io/about-us) | [Contact](https://www.sorena.io/contact) | [Portal](https://app.sorena.io) --- # EU CSDDD Applicability Test Use this CSDDD applicability test to check the 1000 employee and EUR 450 million threshold, franchising and licensing triggers, non-EU EU-turnover rules. *EU CSDDD* *Scope Test* ## EU CSDDD (Directive (EU) 2024/1760) Applicability test A decision ready scope test for legal, finance, ESG, and procurement teams. Use one memo to lock thresholds, group structure, non-EU nexus, and the right application wave before you launch implementation. The first CSDDD control is a defensible scope position. You need a record that explains which entity is in scope, why the thresholds are met or not met, whether a group parent can perform duties on behalf of subsidiaries, and when the obligation starts under the amended Article 37 timing. ## Step 1: test the main EU company threshold Article 2 brings EU formed companies into scope when they had more than 1000 employees on average and net worldwide turnover above EUR 450 million in the last financial year for which annual financial statements have been or should have been adopted. Do not treat this as a one line finance check. Preserve the employee methodology, the turnover source, and the legal entity perimeter used for the decision because supervisory questions usually start there. - Keep the average employee calculation and the period used. - Retain the annual financial statements and the turnover reconciliation used for the test. - Record whether the entity is an operating company or an ultimate parent company. ## Step 2: test the franchising and licensing route separately The Directive also captures companies and groups that operate through franchising or licensing models in return for royalties where the agreements create a common identity, a common business concept, and uniform business methods. That route applies when royalties are above EUR 22.5 million and turnover is above EUR 80 million. This catches models that may miss the general threshold but still exert strong control over how the network operates. - Royalty trigger: more than EUR 22.5 million. - Turnover trigger: more than EUR 80 million. - Document the contracts, royalty calculations, and network model used for the analysis. ## Step 3: test non-EU companies with EU turnover Third-country companies come into scope based on net turnover generated in the Union rather than employee count. The main threshold is more than EUR 450 million in Union turnover in the financial year preceding the last financial year. Where the non-EU company operates in a Member State, Article 23 also requires an authorized representative established or domiciled in a Member State where the company operates. - No employee threshold applies to third-country companies for the scope test. - Keep the Union turnover calculation and the Member State allocation logic. - Prepare authorized representative details early if the company is in scope. ## Step 4: decide who performs the duties in a group The Directive allows parent companies to fulfil Articles 7 to 11 and Article 22 on behalf of in-scope subsidiaries if this ensures effective compliance. That does not eliminate the subsidiary from the enforcement map or from civil liability exposure where the conditions are met. An ultimate parent that mainly holds shares and does not take management, operational, or financial decisions may be exempted, but only if a Union established operational subsidiary is designated and given the means and legal authority to perform the duties. - Write down whether duties are handled centrally or entity by entity. - Document the designated subsidiary arrangement if a holding parent relies on the exemption route. - Do not confuse group performance of duties with immunity from subsidiary supervision or civil liability. ## Step 5: assign the right application wave Directive (EU) 2025/794 changed the original rollout. Member States now transpose by 26 July 2027. The first wave applies from 26 July 2028 for the largest companies, and broader application follows from 26 July 2029. Use the amended timing, not outdated 2026 and 2027 summaries. If your internal roadmap still assumes the original first wave, it is already wrong. - 26 July 2028: EU companies with more than 5000 employees and more than EUR 1.5 billion turnover, and non-EU companies with more than EUR 1.5 billion Union turnover. - 26 July 2029: all other in-scope companies, including the EUR 450 million threshold cohort and qualifying franchising or licensing groups. - Record the exact article basis for the chosen wave in the scoping memo. *Recommended next step* *Placement: after the applicability result* ## Operationalize EU CSDDD (Directive (EU) 2024/1760) Applicability test across ESG workflows ESG Compliance can take EU CSDDD (Directive (EU) 2024/1760) Applicability test from deciding whether these obligations apply in practice to a reusable workflow inside Sorena. Teams working on EU CSDDD (Directive (EU) 2024/1760) can keep owners, evidence, and next steps aligned without copying this guide into separate documents. - [Open ESG Compliance for EU CSDDD (Directive (EU) 2024/1760) Applicability test](/solutions/esg-compliance.md): Start from EU CSDDD (Directive (EU) 2024/1760) Applicability test and manage cross team sustainability work, reporting, and evidence from one workflow. - [Talk through EU CSDDD (Directive (EU) 2024/1760)](/contact.md): Review your current process, evidence gaps, and next steps for EU CSDDD (Directive (EU) 2024/1760) Applicability test. ## Primary sources - [Directive (EU) 2024/1760 - Official Journal](https://eur-lex.europa.eu/eli/dir/2024/1760/oj/eng?ref=sorena.io) - Primary legal text for Articles 2 to 29, the Annex, and the original implementation architecture. - [Directive (EU) 2024/1760 - Consolidated text as of 17 April 2025](https://eur-lex.europa.eu/eli/dir/2024/1760/2025-04-17/eng?ref=sorena.io) - Best source for the current operative wording after the 2025 timing amendment. - [Directive (EU) 2025/794 - timing amendment](https://eur-lex.europa.eu/eli/dir/2025/794/oj/eng?ref=sorena.io) - Current law for the postponed transposition deadline and postponed first wave of application. - [European Commission - Corporate sustainability due diligence](https://commission.europa.eu/business-economy-euro/doing-business-eu/sustainability-due-diligence-responsible-business/corporate-sustainability-due-diligence_en?ref=sorena.io) - Official implementation overview, including the status of the 2025 Omnibus proposals. ## Related Topic Guides - [EU CSDDD Chain of Activities and Supplier Scope | Upstream, Downstream, and Boundary Rules](/artifacts/eu/csddd/chain-of-activities-and-suppliers.md): Map the CSDDD chain of activities correctly. This guide explains upstream and downstream coverage, direct and indirect business partners. - [EU CSDDD Checklist | Practical Due Diligence Checklist by Workstream](/artifacts/eu/csddd/checklist.md): Use this CSDDD checklist to move from scope to execution. - [EU CSDDD Climate Transition Plan | Article 22 Requirements and Practical Structure](/artifacts/eu/csddd/climate-transition-plan.md): Understand the Article 22 climate transition plan duty under the CSDDD. - [EU CSDDD Compliance Guide | Operating Model, Evidence, and Readiness](/artifacts/eu/csddd/compliance.md): Build a real CSDDD compliance program. This guide explains how to turn Directive (EU) 2024/1760 into a due diligence operating model across policy, mapping. - [EU CSDDD Deadlines and Compliance Calendar | Current Dates after Directive (EU) 2025/794](/artifacts/eu/csddd/deadlines-and-compliance-calendar.md): Track the current CSDDD rollout dates, including the 25 July 2024 entry into force, 26 July 2027 transposition deadline, 31 March 2027 reporting act deadline. - [EU CSDDD Due Diligence Steps Playbook | Articles 7 to 15 in Practical Order](/artifacts/eu/csddd/due-diligence-steps-playbook.md): Follow the CSDDD due diligence steps in the order teams actually need to execute them: policy, chain mapping, prioritization, prevention, corrective action. - [EU CSDDD FAQ | Current Answers on Scope, Dates, Complaints, Penalties, and Climate Plans](/artifacts/eu/csddd/faq.md): Get grounded answers to common CSDDD questions, including the current application dates, who is in scope, how the chain of activities works. - [EU CSDDD Grievance and Remediation Workflows | Articles 12 to 14 in Practice](/artifacts/eu/csddd/grievance-and-remediation-workflows.md): Design a CSDDD grievance and remediation workflow that fits Articles 12 to 14. - [EU CSDDD Liability and Penalties | Civil Liability, Fines, and Supervisory Action](/artifacts/eu/csddd/liability-and-penalties.md): Understand how Article 27 penalties and Article 29 civil liability interact under the CSDDD. - [EU CSDDD Penalties and Fines | Article 27 Explained Clearly](/artifacts/eu/csddd/penalties-and-fines.md): Focus on Article 27 of the CSDDD. This page explains how Member States must structure penalties, what the at least 5 percent maximum turnover cap means. - [EU CSDDD Requirements | Article by Article Requirement Map](/artifacts/eu/csddd/requirements.md): Map the main CSDDD requirements by article, including Article 7 policy, Article 8 identification, Article 9 prioritization. - [EU CSDDD Scope Thresholds and In Scope Groups | Current Thresholds and Waves](/artifacts/eu/csddd/scope-thresholds-and-in-scope-groups.md): Review the current CSDDD scope thresholds, in scope company groups, franchising and licensing rules, non-EU turnover triggers. - [EU CSDDD Supplier Human Rights Risk Scoring Template | Severity and Likelihood Model](/artifacts/eu/csddd/supplier-human-rights-risk-scoring-template.md): Use this practical CSDDD risk scoring template to prioritize supplier and partner risk based on severity, likelihood, geographic factors, sector. - [EU CSDDD vs CSRD | Due Diligence Duties versus Sustainability Reporting](/artifacts/eu/csddd/csddd-vs-csrd.md): Compare the EU CSDDD and CSRD the right way. This guide explains how due diligence duties under Directive (EU) 2024/1760 differ from sustainability reporting. - [EU CSDDD vs German LkSG | Scope, Chain Rules, and Enforcement Differences](/artifacts/eu/csddd/csddd-vs-german-lksg.md): Compare the EU CSDDD with the German LkSG using official sources. --- [Privacy Policy](https://www.sorena.io/privacy) | [Terms of Use](https://www.sorena.io/terms-of-use) | [DMCA](https://www.sorena.io/dmca) | [About Us](https://www.sorena.io/about-us) (c) 2026 Sorena AB (559573-7338). All rights reserved. Source: https://www.sorena.io/artifacts/eu/csddd/applicability-test