From 1 July 2024, amendments to the size criteria laid down for companies in the Companies Act 2014 (the 2014 Act) are in operation. The European Union (Adjustments of Size Criteria for Certain Companies and Groups) Regulations 2024 (the Regulations) implement changes made to the EU Accounting Directive (2013/34/EU) by Commission Delegated Directive (EU) 2023/2775.
Why change?
The purpose of these amendments is to increase company size thresholds by 25%, in line with inflation, and reduce the regulatory and administrative burden on certain companies.
How is size determined?
Company size in the 2014 Act is typically determined by the company meeting at least two of the three size criteria of balance sheet total, net turnover and employee numbers (although other factors may also be relevant). The balance sheet and net turnover thresholds in the 2014 Act for micro, small, medium and large companies have been increased by the Regulations. The thresholds relating to employee numbers remain unchanged.
When do the Regulations apply?
The new criteria apply to financial years beginning on or after 1 January 2024. Companies may also elect to apply the adjusted thresholds to financial years on or after 1 January 2023.
The following table sets out the new and previous thresholds.
|
Company type |
Companies Act 2014 before 1 July 2024 |
Companies Act 2014 after 1 July 2024 |
|
Micro (section 280D) |
Not exceeding two or more criteria for current and preceding year: Balance sheet €350,000 Net turnover €700,000 Employees 10 |
Not exceeding two or more criteria for current and preceding year: Balance sheet €450,000 Net turnover €900,000 Employees 10 |
|
Small (section 280A) |
Not exceeding two or more criteria for current and preceding year: Balance sheet €6m Net turnover €12m Employees 50 |
Not exceeding two or more criteria for current and preceding year: Balance sheet €7.5m Net turnover €15m Employees 50 |
|
Small group (section 280B) |
Not exceeding two or more criteria for current and preceding year: Aggregate balance sheet €6m net or €7.2m gross Aggregate turnover €12m net or €14.4m gross Employees 50 |
Not exceeding two or more criteria for current and preceding year: Aggregate balance sheet €7.5m net or €9m gross) Aggregate turnover €15m net or €18m gross Employees 50 |
|
Medium (section 280F) |
Not exceeding two or more criteria for current and preceding year: Balance sheet €20m Net turnover €40m Employees 250 |
Not exceeding two or more criteria for current and preceding year: Balance sheet €25m Net turnover €50m Employees 250 |
|
Medium group (section 280G) |
Not exceeding two or more criteria for current and preceding year: Aggregate balance sheet €20m net or €24m gross Aggregate turnover €40m net or €48m gross Employees 250 |
Not exceeding two or more criteria for current and preceding year: Aggregate balance sheet €25m net or €30m gross Aggregate turnover €50m net or €60m gross Employees 250 |
|
Large (section 280H) |
Exceeding two or more criteria for current and preceding year: Balance sheet exceeding €20m Net turnover exceeding €40m Employees exceeding 250 |
Exceeding two or more criteria for current and preceding year: Balance sheet exceeding €25m Net turnover exceeding €50m Employees exceeding 250 |
What are the consequences of these changes?
These changes will allow more companies to move into the micro and small categories and, therefore, to benefit from less onerous accounting and reporting requirements, such as abridged financial reporting and the audit exemption. Hopefully this may lead to reduced costs for those companies.
The changes may also impact on the number of companies falling within scope of the Corporate Sustainability Reporting Directive, which is due to be transposed into national law by 6 July 2024.
