Following the publication of Omnibus I (Directive (EU) 2026/470, in force 18 March 2026), many Spanish manufacturers that had begun preparing for the Corporate Sustainability Reporting Directive now fall outside its revised scope – but confirming that position requires a structured legal and governance reassessment rather than a simple headcount check. This illustrative scenario, based on a profile typical of mid-sized Spanish industrial groups, sets out how such a reassessment was approached, what complications arose, and what the exercise reveals for similar cross-border matters. It is presented as an illustrative scenario and does not represent or describe any specific client matter, transaction or outcome.
Client Profile and the Challenge Created by Omnibus I
The entity at the centre of this scenario is a Spanish manufacturer operating in the capital goods sector, with its registered seat recorded in the Registro Mercantil and its shares admitted to a regulated market supervised by the CNMV. Prior to Omnibus I, the group had invested significantly in CSRD readiness: it had mapped its value chain, begun double-materiality assessments, and engaged external auditors to prepare for sustainability reporting under the European Sustainability Reporting Standards (ESRS). Its employee count sat above 500 but below 1,000; its consolidated net turnover exceeded EUR 150 million but remained well below EUR 450 million.
The publication of Omnibus I on 26 February 2026 fundamentally altered that picture. Under the revised scope, the CSRD now applies to EU undertakings with more than 1,000 employees and more than EUR 450 million net turnover. The group met neither threshold. For non-EU parent groups, the applicable threshold is more than EUR 450 million in EU turnover, with an EU subsidiary or branch exceeding EUR 200 million – equally out of reach for this entity as currently structured.
The immediate commercial question was straightforward: could the group suspend its CSRD programme and reallocate the associated budget? The legal question was considerably more nuanced. Spain had not yet transposed the Omnibus I amendments at the time this scenario unfolds, and the Commission had not yet revised the ESRS by delegated act. National transposition is required by 19 March 2027; CSDDD amendments must follow by 26 July 2028. Until Spanish legislation formally incorporates the revised thresholds, the pre-existing domestic rules implementing the earlier CSRD text remained technically on the books – creating a period of regulatory limbo that demanded careful analysis rather than immediate action.
If your organisation is navigating a similar threshold reassessment, our team is available to discuss the specific facts of your situation. Please contact us at info@ferrazwhitmore.com or visit our contacts page.
Strategy and Rationale
The advisory approach centred on four distinct workstreams, pursued in parallel given the time-sensitive nature of the pending transposition deadline.
Workstream 1: Threshold Mapping and Group Perimeter Verification
Before any compliance decision could be made, it was necessary to confirm the precise group perimeter. This required a review of the group's corporate governance structure at holding company level, including the identity of the beneficial ownership chain as maintained for anti-money laundering and CNMV disclosure purposes. The exercise revealed a subsidiary structure that, if certain dormant entities were consolidated, could marginally affect the employee and turnover figures. Each entity was reviewed against its Registro Mercantil filing to confirm current status.
Where the group had contemplated any structural simplification – including the possibility of company re-domiciliation of one intermediate holding company from a higher-cost EU jurisdiction – the analysis assessed whether such steps would affect the non-EU group threshold calculation under Omnibus I. The conclusion was that reorganisation steps undertaken primarily for CSRD avoidance purposes carried reputational and regulatory risk, and that the group's existing structure independently placed it outside the revised thresholds without any restructuring.
Workstream 2: Assessment of Voluntary and Contractual Reporting Obligations
Falling outside the mandatory CSRD scope does not automatically end all sustainability reporting obligations. The group's financing arrangements – including green bonds and a revolving credit facility with ESG-linked margin ratchets – contained contractual covenants referencing ESRS-aligned disclosures. These covenants survived any change to public law scope. Similarly, major customers in Germany and France had embedded supply-chain due diligence clauses that referenced CSRD-level reporting, independent of whether the manufacturer was itself legally required to report. The advisory strategy therefore distinguished sharply between statutory obligations (now likely suspended for this entity pending transposition) and contractual obligations (unaffected by Omnibus I).
For the German supply-chain dimension, useful comparative analysis was drawn from the evolving position in that jurisdiction – for further context, see our alert on CSRD Omnibus scope developments in Germany.
Workstream 3: Tax and Corporate Governance Sequencing
Any restructuring of the group's reporting obligations had implications for the relationship with the AEAT (Agencia Estatal de Administración Tributaria), particularly in relation to transfer pricing documentation, the deductibility of costs associated with the CSRD programme and, prospectively, any incentives linked to sustainability investment under Spanish corporate income tax rules. The tax law implications were assessed in close coordination with the corporate team – an integration of disciplines that is critical where sustainability compliance costs have already been booked and may require reclassification. Our tax law practice in Spain regularly advises on exactly this intersection.
On the governance side, the CNMV's existing requirements for listed companies regarding non-financial information reporting were reviewed separately from the CSRD implementation question, since Spanish capital markets rules have their own disclosure framework that does not automatically mirror CSRD thresholds. This distinction is frequently overlooked in initial reassessments.
Workstream 4: Litigation Risk and Contractual Exposure
A residual concern was whether counterparties or investors who had relied on the group's stated CSRD readiness – for example, in prospectus-related disclosures or in pre-contractual negotiations – could assert claims if that commitment was now effectively withdrawn. The risk of a proceso monitorio or broader contractual claim was assessed as low but not negligible, depending on the specific language used in prior representations. The relevant communications were reviewed against Spanish contract law principles and, where necessary, amended or supplemented by clarificatory notices to the relevant counterparties. The Tribunal Supremo's case law on representations made during commercial negotiations was considered in assessing the scope of any residual liability.
Key Milestones
The scenario unfolds across a compressed timeline driven by the gap between Omnibus I's entry into force (18 March 2026) and Spain's transposition deadline (19 March 2027).
- March 2026: Initial triage following Omnibus I entry into force; preliminary threshold analysis confirms probable exclusion from mandatory scope; decision taken not to suspend CSRD programme unilaterally until legal analysis is complete.
- April–May 2026: Full group perimeter review completed; beneficial ownership chain confirmed; dormant entities assessed for consolidation impact; conclusion reached that no structural change is required or advisable.
- May–June 2026: Contractual audit of financing covenants and customer supply-chain clauses; identification of obligations that survive mandatory scope change; negotiation strategy developed for lender and customer discussions.
- June–July 2026: CNMV disclosure framework reviewed; determination that certain non-financial reporting obligations under Spanish capital markets rules remain independently applicable; adjusted reporting plan prepared.
- July–August 2026: AEAT-related review of CSRD programme costs; transfer pricing file updated to reflect revised reporting posture; no material reclassification required.
- September–October 2026: Counterparty communications reviewed and updated; clarificatory notices issued where prior representations required qualification.
Complications Encountered
Three complications merit particular attention, as they are likely to recur in analogous situations across Spain and the wider Iberian market.
First, the absence of Spanish transposition legislation at the time of the reassessment created genuine uncertainty about the temporal effect of Omnibus I on entities that had already begun CSRD preparation. There is a respectable legal argument that the Directive's revised scope, once in force at EU level, should be applied by national authorities in conformity with the Directive's purpose even before formal transposition – but this argument is not without risk, and reliance on it without domestic legal confirmation would have been imprudent.
Second, the ESRS revision process was still ongoing at the time of the scenario. The Commission is required to revise the ESRS by delegated act, but no final revised standards had been published. This meant that even entities which might wish to report voluntarily – to satisfy contractual covenants or investor expectations – could not be certain which standards would ultimately be applicable. A pragmatic approach was adopted: continuing to use the existing ESRS as a reference framework for voluntary reporting, on the basis that any future revision was likely to result in standards of equal or lesser scope.
Third, the intersection of CSRD scope reassessment with CSDDD obligations (transposition deadline 26 July 2028) required careful boundary-setting. Some value-chain due diligence work undertaken as part of the CSRD programme was also relevant to CSDDD compliance. Suspending that work entirely on the basis of CSRD exclusion risked creating gaps in CSDDD readiness, which remained a live obligation for entities above the relevant thresholds. The two instruments were therefore assessed on separate timelines.
Outcome Category
In this illustrative scenario, the outcome falls within the category of structured scope rationalisation: the group achieves a defensible and documented basis for reducing its CSRD compliance burden, while maintaining the voluntary and contractual reporting commitments that its financing and commercial relationships require. No formal enforcement proceedings arose; the CNMV disclosure obligations were met on the existing framework; and the AEAT file was closed without adjustment. The group retained core elements of its sustainability data infrastructure, both for voluntary reporting purposes and in anticipation of potential future threshold changes as the regulatory landscape continues to develop.
Three Transferable Lessons
1. Threshold Exclusion Is a Legal Conclusion, Not a Business Decision
The most common error in scope reassessments is treating a favourable threshold calculation as an automatic permission to disengage from compliance. As this scenario illustrates, the legal position is not determined solely by headcount and turnover figures. Group perimeter, consolidation methodology, the status of domestic transposition, and the continued application of other instruments – including CSDDD and capital markets disclosure requirements – must all be assessed before any programme decision is made. For listed Spanish companies, the relationship with the CNMV adds a further layer that sits outside the CSRD framework entirely.
2. Contractual and Statutory Obligations Require Separate Analysis
Omnibus I changes the public law position; it does not rewrite commercial contracts. Supply-chain clauses, ESG-linked financing covenants and investor representations made prior to the Directive's entry into force retain their independent legal force. Any organisation that suspends sustainability reporting on the basis of revised statutory scope without reviewing its contractual commitments runs a material risk of breach, potentially engaging Spanish contract law remedies that a lawyer in Spain familiar with both CNMV practice and commercial litigation – including proceedings before the Tribunal Supremo – would need to manage.
3. Integrated Corporate and Tax Advice Is Not Optional
Sustainability compliance programmes generate real costs that interact with corporate income tax positions, transfer pricing documentation and, in some cases, specific incentive regimes. When the scope of a programme changes – whether expanded or contracted – the tax file must be updated in parallel. Treating this as a secondary step, to be addressed after the corporate restructuring or reporting decisions are finalised, creates unnecessary exposure. Our corporate law practice in Spain works alongside the tax team precisely to avoid this sequencing problem.
If you are a manufacturer, fund manager or cross-border investor reassessing your CSRD obligations in light of Omnibus I, we would welcome the opportunity to discuss your situation in detail. Please reach out to us at info@ferrazwhitmore.com or through our contacts page to arrange an initial conversation with a member of our Spanish practice group.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.