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Updating the Government's SME Size Criteria to Adjust for Inflation

Baker Tilly 29 April, 2024

Find out how the Government is proposing major changes to SME size criteria to bring them in line with inflation.

The Ministry of Economy is preparing a Draft Bill that seeks to modify the criteria for determining the size of companies and business groups in terms of corporate reporting. The proposal raises the thresholds of assets and annual income to classify a company as a small or micro-enterprise, adjusting them for inflation. This will expand the number of companies that can file abridged balance sheets, simplifying reporting and reducing the administrative burden and costs for smaller companies.

Under the new rules, companies will be able to submit abridged accounts if they meet at least two of three criteria for two consecutive years: assets of less than 5 million euros, turnover of less than 10 million euros and fewer than 50 employees. The Audit Law will also be amended to simplify audit obligations by defining small and medium-sized entities according to updated thresholds.

The European Commission has adjusted the asset and turnover criteria by 25% to reflect inflation, which will reduce the scope of the financial statement presentation, audit and publication requirements, as well as the sustainability reporting requirements set out in the relevant Directive.

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Baker Tilly • 29 April, 2024
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