New EU Taxonomy simplifications published on January 8th

On the 8th of January, the European Commission officially published the delegated act to simplify the EU Taxonomy Regulation. The act had already been adopted on January 4th and will enter into force on the 20th of January. The aim of the changes is to significantly reduce the administrative burden of EU Taxonomy reporting without undermining the objectives of the EU Taxonomy.

As early as July 4th, the Commission had presented a draft proposal for simplification. This was followed by a four-month scrutiny period during which the European Parliament and the Council of the EU could have raised objections. This period was subsequently extended by a further two months. As no objections were raised during this time, the delegated act was finalized as planned.

The three most important changes

1. Introduction of a financial materiality threshold of 10%
   Economic activities no longer need to be assessed for Taxonomy eligibility and Taxonomy alignment if they cumulatively account for less than 10% of the respective KPI. This assessment is carried out separately for the three KPIs turnover, CapEx and OpEx. Activities above this threshold must continue to be reported, meaning that 90% are still covered.
   In addition, companies may fully exclude OpEx reporting if the OpEx KPI is not material to their business model. It is important to note that this refers to the OpEx definition under the EU Taxonomy, which only covers part of the traditional OpEx definition. If this option is used, only the total value of the OpEx KPI needs to be reported, together with an explanation of why it is not material. As this is not clearly defined in the EU Taxonomy, companies can, for example, assess whether the share of Taxonomy OpEx in total OpEx falls below the exclusion threshold commonly applied by auditors for materiality assessments, usually between 2 and 5%.
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2. ‍Reduction of datapoints and simplification of reporting templates
   Another key element of the simplification is the significant reduction in the number of datapoints to be reported. For non-financial undertakings, the number of datapoints per activity is reduced from 78 to 28, representing a reduction of around 64%. For financial undertakings, in particular banks and credit institutions, the number of datapoints is reduced by up to 89%. In addition, a new summary reporting template is introduced, focusing on the information relevant for financial undertakings to calculate their KPIs. Separate templates for fossil gas and nuclear energy are removed or integrated into general templates. The structure and presentation of KPIs for financial undertakings are also adjusted.
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3. Adjustment of the Do No Significant Harm criteria
   Furthermore, the Do No Significant Harm criteria in the area of pollution by chemicals have been simplified. Companies no longer need to assess a large number of self-classified substances. Instead, the focus is now on substances that are classified by the European Chemicals Agency as substances of very high concern and that are subject to authorisation. This significantly simplifies compliance with the DNSH criteria.

What this means for companies

The new rules will be mandatory for the 2026 financial year. For reports covering the 2025 financial year, companies may choose between the old and the new rules. On December 17th, the European Commission had already published a draft FAQ clarifying key questions of interpretation. This includes, among other things, the treatment of prior-year data and the practical application of the new materiality threshold.

Overall, the Commission is sending a clear signal with the simplified delegated act. The EU Taxonomy is intended to continue serving as a steering instrument while becoming significantly more practical to implement. The introduction of the materiality threshold, the reduction of datapoints and the simplification of the DNSH criteria noticeably reduce the reporting burden and at the same time improve feasibility for companies.

How Tanso supports

Tanso is implementing the changes promptly and at the same time expanding the EU Taxonomy reporting functionality to include features from the ESG module. This enables EU Taxonomy data to be collected across the organisation in a decentralised, clearly structured and audit-proof manner in the future.