# L_2020331EN.01002001.xml

| 12.10.2020 | EN | Official Journal of the European Union | L 331/20 |
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12.10.2020

EN

Official Journal of the European Union

L 331/20

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COMMISSION REGULATION (EU) 2020/1434

of 9 October 2020

amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Standard 16

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (1), and in particular Article 3(1) thereof,

Whereas:

| (1) | By Commission Regulation (EC) No 1126/2008 (2) certain international accounting standards and interpretations that were in existence on 15 October 2008 were adopted. |
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(1)

By Commission Regulation (EC) No 1126/2008 (2) certain international accounting standards and interpretations that were in existence on 15 October 2008 were adopted.

| (2) | The COVID-19 pandemic caused an unprecedented external shock to the Union and its economy creating a need for measures aimed at alleviating adverse impacts on citizens and companies where possible. |
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(2)

The COVID-19 pandemic caused an unprecedented external shock to the Union and its economy creating a need for measures aimed at alleviating adverse impacts on citizens and companies where possible.

| (3) | Member States and the Union have taken measures to provide financial relief to companies, including payment holidays based on private or public moratoria, to prevent unnecessary bankruptcies and job losses, and to underpin rapid recovery. |
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(3)

Member States and the Union have taken measures to provide financial relief to companies, including payment holidays based on private or public moratoria, to prevent unnecessary bankruptcies and job losses, and to underpin rapid recovery.

| (4) | On 28 May 2020, the International Accounting Standards Board (IASB) published Covid-19-Related Rent Concessions (amendment to International Financial Reporting Standard (IFRS) 16 Leases). |
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(4)

On 28 May 2020, the International Accounting Standards Board (IASB) published Covid-19-Related Rent Concessions (amendment to International Financial Reporting Standard (IFRS) 16 Leases).

| (5) | The amendment to IFRS 16 provides optional, temporary COVID-19 related operational relief for lessees benefitting from lease payments holidays without undermining the relevance and usefulness of financial information reported by companies. Following the consultation with the European Financial Reporting Advisory Group, the Commission concludes that the amendment to IFRS 16 meet the criteria for adoption set out in Article 3(2) of Regulation (EC) No 1606/2002. |
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(5)

The amendment to IFRS 16 provides optional, temporary COVID-19 related operational relief for lessees benefitting from lease payments holidays without undermining the relevance and usefulness of financial information reported by companies. Following the consultation with the European Financial Reporting Advisory Group, the Commission concludes that the amendment to IFRS 16 meet the criteria for adoption set out in Article 3(2) of Regulation (EC) No 1606/2002.

| (6) | The IASB set the effective date of the amendments to IFRS 16 as from 1 June 2020. Therefore, the provisions of this Regulation should apply retroactively to ensure legal certainty for the issuers concerned and consistency with other accounting standards laid down in Regulation (EC) No 1126/2008. |
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(6)

The IASB set the effective date of the amendments to IFRS 16 as from 1 June 2020. Therefore, the provisions of this Regulation should apply retroactively to ensure legal certainty for the issuers concerned and consistency with other accounting standards laid down in Regulation (EC) No 1126/2008.

| (7) | Having regard to the urgency of this COVID-19 related operational relief, this Regulation should enter into force on the day following that of its publication in the Official Journal of the European Union. |
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(7)

Having regard to the urgency of this COVID-19 related operational relief, this Regulation should enter into force on the day following that of its publication in the Official Journal of the European Union.

| (8) | Regulation (EC) No 1126/2008 should therefore be amended accordingly. |
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(8)

Regulation (EC) No 1126/2008 should therefore be amended accordingly.

| (9) | The measures provided for in this Regulation are in accordance with the opinion of the Accounting Regulatory Committee, |
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(9)

The measures provided for in this Regulation are in accordance with the opinion of the Accounting Regulatory Committee,

HAS ADOPTED THIS REGULATION:

Article 1

In the Annex to Regulation (EC) No 1126/2008, International Financial Reporting Standard (IFRS) 16 Leases is amended as set out in the Annex to this Regulation.

Article 2

Each company shall apply the amendments referred to in Article 1, at the latest, as from 1 June 2020 for financial years starting on or after 1 January 2020.

Article 3

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 9 October 2020.

For the Commission

The President

Ursula VON DER LEYEN

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(1)  
  OJ L 243, 11.9.2002, p. 1.

1

(2)  Commission Regulation (EC) No 1126/2008 of 3 November 2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council (OJ L 320, 29.11.2008, p. 1).

2

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ANNEX

Covid-19-Related Rent Concessions

Amendment to IFRS 16

Amendment to IFRS 16

  Leases

Paragraphs 46A, 46B, 60A, C1A, C20A and C20B are added. A new heading is added before C20A. For ease of reading these paragraphs have not been underlined.

LESSEE

Measurement

Subsequent measurement

Lease modifications

| 46A | As a practical expedient, a lessee may elect not to assess whether a rent concession that meets the conditions in paragraph 46B is a lease modification. A lessee that makes this election shall account for any change in lease payments resulting from the rent concession the same way it would account for the change applying this Standard if the change were not a lease modification. |
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46A

| 46B | The practical expedient in paragraph 46A applies only to rent concessions occurring as a direct consequence of the covid-19 pandemic and only if all of the following conditions are met:






  (a) | the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; |
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46B

(a)

the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;

| (b) | any reduction in lease payments affects only payments originally due on or before 30 June 2021 (for example, a rent concession would meet this condition if it results in reduced lease payments on or before 30 June 2021 and increased lease payments that extend beyond 30 June 2021); and |
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(b)

any reduction in lease payments affects only payments originally due on or before 30 June 2021 (for example, a rent concession would meet this condition if it results in reduced lease payments on or before 30 June 2021 and increased lease payments that extend beyond 30 June 2021); and

| (c) | there is no substantive change to other terms and conditions of the lease. |
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(c)

there is no substantive change to other terms and conditions of the lease.

Disclosure

| 60A | If a lessee applies the practical expedient in paragraph 46A, the lessee shall disclose:






  (a) | that it has applied the practical expedient to all rent concessions that meet the conditions in paragraph 46B or, if not applied to all such rent concessions, information about the nature of the contracts to which it has applied the practical expedient (see paragraph 2); and |
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60A

(a)

that it has applied the practical expedient to all rent concessions that meet the conditions in paragraph 46B or, if not applied to all such rent concessions, information about the nature of the contracts to which it has applied the practical expedient (see paragraph 2); and

| (b) | the amount recognised in profit or loss for the reporting period to reflect changes in lease payments that arise from rent concessions to which the lessee has applied the practical expedient in paragraph 46A. |
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(b)

the amount recognised in profit or loss for the reporting period to reflect changes in lease payments that arise from rent concessions to which the lessee has applied the practical expedient in paragraph 46A.

Appendix C

Effective date and transition

EFFECTIVE DATE

| C1A | Covid-19-Related Rent Concessions, issued in May 2020, added paragraphs 46A, 46B, 60A, C20A and C20B. A lessee shall apply that amendment for annual reporting periods beginning on or after 1 June 2020. Earlier application is permitted, including in financial statements not authorised for issue at 28 May 2020. |
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C1A

TRANSITION

Covid-19-related rent concessions for lessees

| C20A | A lessee shall apply Covid-19-Related Rent Concessions (see paragraph C1A) retrospectively, recognising the cumulative effect of initially applying that amendment as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of the annual reporting period in which the lessee first applies the amendment. |
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C20A

| C20B | In the reporting period in which a lessee first applies Covid-19-Related Rent Concessions, a lessee is not required to disclose the information required by paragraph 28(f) of IAS 8. |
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C20B

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