All You Need to Know About ESEF Block Tagging
Requirements for ESEF Tagging
ESEF block tagging is the process of applying Inline XBRL tags to complete sections of narrative information in the notes to consolidated IFRS financial statements. It allows disclosures such as accounting policies, revenue information and financial-risk notes to be extracted and analysed electronically.
For financial years beginning on or after 1 January 2022, issuers subject to ESEF must block tag disclosures in their consolidated IFRS financial statements when those disclosures correspond to mandatory elements listed in Annex II of the ESEF Regulatory Technical Standards.
However, block tagging is not simply a matter of placing one tag over each note. A single disclosure may correspond to multiple taxonomy elements, tables require particular treatment, and information relating to one concept may appear in several parts of the report.
This guide explains how ESEF block tagging works, who must comply and how issuers can improve tagging accuracy.
Key points to note
- Mandatory Compliance: All issuers listed on EU regulated markets are required to prepare their annual financial reports in the European Single Electronic Format (ESEF), which includes XBRL tagging.
- iXBRL Format: Reports must be prepared in Inline XBRL (iXBRL) format, combining human-readable HTML with machine-readable XBRL tags, facilitating both investor understanding and automated data processing.
- Tagging Requirements: Financial statements, including primary financial statements (PFS) and notes, must be tagged with XBRL taxonomy elements, ensuring standardized and comparable financial data.
- Block Tagging and Detailed Tagging: Initial requirements focus on block tagging of the primary financial statements, with detailed tagging of notes becoming mandatory in subsequent years.
- Taxonomy Updates: Issuers must stay updated with the latest ESEF taxonomy, which is revised annually to incorporate changes and updates in IFRS standards.
- Software and Tools: Utilizing robust ESEF reporting software and tools can streamline the tagging process, ensuring accuracy and compliance while reducing manual efforts.
- Review and Assurance: Companies should implement thorough review processes and consider obtaining external assurance to ensure the accuracy and completeness of ESEF tagging.
- Training and Expertise: Investing in training for internal teams or engaging external experts can help companies effectively manage the complexities of ESEF tagging and compliance.
- Consistency with Financial Reporting: ESEF tagging should be consistent with other financial reporting requirements, ensuring that the same financial data is accurately represented across different reporting formats.
- Implementation Timeline: Companies need to be aware of the phased implementation timeline and ensure timely preparation and submission of their ESEF-compliant reports.
ESEF text block tagging is a notable inclusion in the filing requirements for the upcoming 2022 reporting cycle in the EU. In addition to phase 1, where the issuers were only required to tag the primary financial statements, phase 2 of the ESMA ESEF mandate also requires tagging all notes to financial statements using block tagging. Here’s everything you need to know about ESEF block tagging for the phase 2 mandate.
What is ESEF block tagging?
ESEF block tagging applies a taxonomy element to a complete section of content rather than to every individual sentence, number or data point within that section.
A block-tagged disclosure may contain:
- Narrative text
- Tables
- Accounting policies
- Numerical information
- Headings and subheadings
- Other content forming part of the relevant disclosure
The tags used for this purpose are generally taxonomy elements defined using the textBlockItemType data type.
For example, an issuer’s complete disclosure about revenue could be marked up using an applicable revenue-related text-block element. If the same disclosure also contains information covered by a narrower mandatory element, both elements may need to be applied through multi-tagging.
According to the ESMA ESEF Reporting Manual, issuers should select block tags based on the accounting meaning of the disclosure and not merely because a taxonomy label appears similar.
Is ESEF block tagging mandatory?
Yes. Block tagging has been mandatory for financial years beginning on or after 1 January 2022 for in-scope consolidated financial statements prepared under IFRS.
The requirement applies when a disclosure in the financial statements corresponds to a mandatory text-block element in Annex II of the ESEF RTS. Issuers are not required to create a disclosure solely because a related taxonomy element exists.
In practical terms:
- If the corresponding disclosure appears in the financial statements, the relevant mandatory element must be used.
- If the disclosure does not appear, it does not have to be added solely for tagging.
- If no mandatory Annex II element corresponds to the disclosure, block tagging that information is generally not compulsory.
- Issuers may voluntarily apply additional taxonomy elements or create extension elements where this adds value for users.
The ESEF Reporting Manual should be read alongside the legally binding ESEF Regulatory Technical Standards.
Which companies are subject to ESEF block tagging?
The block-tagging requirement generally applies to issuers:
- Whose securities are admitted to trading on an EU-regulated market;
- That are required to prepare an annual financial report under the Transparency Directive; and
- That prepare consolidated financial statements in accordance with IFRS.
The broader ESEF requirement to prepare an annual financial report in XHTML and the requirement to apply Inline XBRL markup are related but not identical.
All issuers within the relevant ESEF scope prepare their annual financial reports in XHTML. The Inline XBRL tagging requirements—including block tagging—apply specifically to consolidated financial statements prepared under IFRS.
National implementation, filing procedures and enforcement can differ between jurisdictions. Issuers should therefore also consider the requirements of their national competent authority and Officially Appointed Mechanism.
How is block tagging different from detailed tagging?
Block tagging and detailed tagging operate at different levels of granularity.
| Block tagging | Detailed tagging |
|---|---|
| Applies one or more tags to a complete disclosure or section | Applies tags to individual facts or data points |
| Primarily used for notes and accounting policies | Mandatory for individual facts in the primary financial statements |
| May cover narrative text, tables and numbers together | Commonly applies to individual monetary, numeric or textual facts |
| Uses text-block taxonomy elements | Uses specific line-item or fact-level elements |
ESEF requires detailed tagging of the primary consolidated financial statements. It requires block tagging of relevant disclosures in the notes and accounting policies.
Issuers may voluntarily tag information in the notes at a more detailed level. However, voluntary detailed tagging does not replace the requirement to apply the mandatory block tags.
There is currently no general phased requirement under ESEF that will automatically make detailed tagging of every individual fact in the notes mandatory.
What is ESEF multi-tagging?
Multi-tagging means applying more than one block tag to the same disclosure when it corresponds to taxonomy elements at different levels of detail.
For example, a financial-risk note may contain information about credit, liquidity and market risks. The complete note may require a broader financial-risk tag, while its individual sections may require narrower tags.
Where both broader and narrower mandatory elements apply, issuers should use each relevant tag based on the disclosure’s underlying accounting meaning.
Key block-tagging rules
| Area | ESMA guidance |
|---|---|
| Tag selection | Select elements based on accounting meaning, not labels alone. |
| Headings | Include relevant headings and titles within the tagged content. |
| Multi-tagging | Apply wider and narrower mandatory elements where both correspond to the disclosure. |
| Tables | Apply the relevant text-block tag to the entire individual table rather than selected rows or columns. |
| Numbers in notes | Numbers within a block do not automatically require individual numeric tags. |
| Split disclosures | Connect related content appearing in different sections using supported Inline XBRL mechanisms. |
| Readability | Ensure extracted text and tables remain complete and understandable. |
Detailed tagging of facts within the notes is voluntary. If used, it does not replace mandatory block tagging.
Are extension elements required?
Issuers do not have to create an extension element when a note or accounting policy does not correspond to a mandatory Annex II element.
However, they may voluntarily:
- Use a suitable core taxonomy element outside Annex II; or
- Create an issuer-specific extension element.
Extensions created for block tagging notes and accounting policies generally do not have to be anchored. Any voluntary tagging should be applied consistently across reporting periods.
Common ESEF block-tagging challenges
| Challenge | What can go wrong? |
|---|---|
| Incorrect tag selection | A similar-sounding element may not represent the disclosure’s accounting meaning. |
| Missing multi-tagging | The broader tag is applied, but relevant narrower tags are omitted. |
| Incomplete tag coverage | A related heading, table or continuation is excluded. |
| Excessive tagging | Unnecessary tags make the extracted information less precise. |
| Table-tagging errors | Selected rows or cells are tagged without the context of the complete table. |
| Poor readability | The report looks correct visually, but extracted facts are incomplete or distorted. |
| Overreliance on validation | Technical checks pass even though the selected tag is conceptually incorrect. |
| Inconsistent tagging | Unnecessary year-on-year changes reduce comparability. |
Automated validation can detect technical and structural issues, but human review is still needed to confirm that each tag accurately represents the disclosure.
ESEF block tagging: A practical process
- Use near-final financial statements
Reduce rework caused by late changes to notes and tables. - Map the disclosures
Compare each note and accounting policy with the mandatory Annex II elements. - Assess granularity
Identify wider elements, narrower elements, tables and disclosures spread across multiple sections. - Apply the tags
Include all relevant headings, narrative content and tables. - Review extracted content
Confirm that every tagged disclosure remains complete and readable outside the original layout. - Validate the report
Perform technical validation and an accounting review of the selected elements. - Compare with the previous year
Confirm that changes in tags, extensions or note structure are justified.
Why accurate block tagging matters
Effective block tagging makes narrative financial information easier for regulators, investors and analysts to find, extract and compare.
It supports:
- Better access to financial disclosures;
- More efficient comparison between issuers;
- Easier retrieval of specific notes and policies; and
- Greater consistency between reporting periods.
A filing may pass automated validation and still contain poorly selected or incomplete tags. High-quality ESEF reporting therefore requires reliable technology, taxonomy knowledge and accounting judgement.
How DataTracks supports ESEF block tagging
DataTracks helps issuers prepare accurate, submission-ready ESEF reports through a combination of reporting technology and specialist support.
Our services cover:
- Taxonomy mapping;
- Block tagging and multi-tagging;
- Extension and anchoring review;
- Layout and readability checks;
- Technical validation;
- Error and warning resolution; and
- Year-on-year tagging consistency.
With more than 20 years of regulatory-reporting experience, DataTracks helps reporting teams manage ESEF compliance while retaining control over review and approval.
write to contact@datatracks.com to know more
Frequently asked questions
Is ESEF block tagging mandatory?
Yes. It is mandatory for in-scope consolidated IFRS financial statements for financial years beginning on or after 1 January 2022.
Does every note require one block tag?
No. Depending on its content, a note may require multiple tags, one tag or no mandatory block tag.
Must numbers in the notes be tagged individually?
Not automatically. Numbers included within a block-tagged disclosure do not necessarily require individual numeric tags.
Does detailed tagging replace block tagging?
No. Voluntary detailed tagging of the notes does not replace mandatory block tagging.
Can ESEF block tagging be automated?
Software can assist with tagging and validation, but human judgement is required to confirm that the selected elements accurately represent the disclosures.
