Earlier this year, we informed you about the changes in the size criteria for companies that came about as a result of the transposition of a European Directive into the Companies and Associations Code. For the first time since the introduction of this code, the size criteria have been indexed to take into account the high inflation of recent years. Initially, no transitional provisions were foreseen in the legislation, but thanks to the law of 15 May 2024, they were finally introduced. Recently, the Accounting Standards Commission (Commissie voor Boekhoudkundige Normen) also issued a new opinion (CBN Opinion 2024/07) on the application of these new size criteria. We explain the main points of these changes and the consequences for you.
What are the new size criteria?
First of all, we list the new thresholds applicable to financial years starting after 31 December 2023:
Microenterprises
“Microenterprises” means small companies with legal personality which are not subsidiaries or parent companies and which, on the balance sheet date of the last completed financial year, do not exceed more than one of the following criteria:
| Old thresholds | New thresholds | |
| Turnover | EUR 700,000 | EUR 900,000 |
| Balance sheet total | EUR 350,000 | EUR 450,000 |
| Personnel | 10 employees | 10 employees |
Small companies
Small companies are companies with legal personality which, on the balance sheet date of the last completed financial year, do not exceed more than one of the following criteria:
| Old thresholds | New thresholds | |
| Turnover | EUR 9,000,000 | EUR 11,250,000 |
| Balance sheet total | EUR 4,500,000 | EUR 6,000,000 |
| Personnel | 50 employees | 50 employees |
If the company does exceed more than 1 of the latter criteria, it is considered a large company.
Groups of limited size
A company together with its subsidiaries, or companies forming a consortium, are deemed to constitute a group of limited size if these companies together, on a consolidated basis, do not exceed more than one of the following criteria:
| Old thresholds | New thresholds | |
| Turnover | EUR 34,000,000 | EUR 42,500,000 |
| Balance sheet total | EUR 17,000,000 | EUR 21,250,000 |
| Personnel | 250 employees | 250 employees |
When are they applicable?
The new criteria are applicable to financial years beginning after 31 December 2023.
Exceeding more than one of these thresholds only has consequences if it happens two financial years in a row (the principle of consistency). If a small company exceeds the thresholds in years X and X+1, it only becomes large in year X+2. However, the legislator has provided for a one-off exception. For the first financial year ending after 31 December 2023, the principle of consistency does not apply and only the turnover, the balance sheet total and the number of employees of the financial year concerned are taken into account on a one-off basis. The first financial year starting after 31 December 2023 is then the financial year to which the consequences apply. Some examples for clarification:
For financial years which follow the calendar year, 2024 is therefore the first financial year covered by the new legislation and the new criteria will therefore only be applied to the figures of the financial year ending on 31 December 2024. Whether the company was large or small in previous financial years does not play a role in determining the 2024 financial year. As of financial year 2025, the 2nd financial year after the new criteria apply, the previous 2 financial years (financial years 2023 and 2024) will be looked at again to determine the size of the company in 2025.
If your company has a split financial year, the situation is slightly more complex. Suppose that the financial year ends on 31 March 2024, then the first financial year to which the new criteria apply is the financial year starting after 31 December 2023, i.e. the financial year that runs from 1 April 2024 to 31 March 2025. However, the new size criteria will be tested against the figures of the financial year that has a cut-off date after 31 December 2023. In this example, that is 31 March 2024. Does the company exceed more than one of the new criteria on 31 March 2024? Then it is immediately assessed as large for the financial year ending on 31 March 2025. Here, too, as of the 2nd financial year after the new criteria came into effect, in this case the financial year ending on 31 March 2026, the previous 2 financial years are taken into account to determine the size.
Within a few months, the first financial years will close (with a cut-off date of 31 December 2024) under the new regime. Beware, your company may therefore potentially be considered large immediately on the basis of that financial year alone. In the past, due to the principle of consistency, there was a delay of 2 years that only had an effect on the 3rd financial year. Moreover, the company may only determine that it is suddenly large when the financial year is already over. Does it look as if your company is close to the thresholds? Then consider the consequences now.
Why does it matter whether my company is large or small?
Large, small or micro companies are treated differently in various areas, for example:
- More extensive financial reporting for large companies such as preparing annual accounts in the full schedule instead of the abridged or micro schedule as well as preparing an annual report. In addition, for groups that cannot be considered a small group, consolidated annual accounts must also be prepared and published.
- The mandatory appointment in large companies of an auditor to conduct the statutory audit of the annual accounts. We also note that if a Belgian company is part of a(n) (international) group that draws up, has audited and publishes consolidated figures, it is always obliged to appoint an auditor for the Belgian company, even if it is considered small by the size criteria. For this reason, there are many ‘small’ Belgian subsidiaries of international groups which are still required to appoint an auditor.
- Favourable tax measures for micro and small companies, such as reduced corporate tax rates, the possibility of distributing dividends under the VVPR-bis regime, the creation of liquidation reserves or a more favourable investment deduction. Please note that for tax purposes, the criteria are always assessed on a consolidated basis (in the case of groups).
- Often, small companies are spared or additionally supported in new legislation or benefit exclusively from subsidies and other support measures.
In short, the qualification of your company as large or small is not just a label, it also has significant consequences.
Our PKF BOFIDI Experts will be happy to help you
Do you have any questions about the calculation of the size criteria or their impact on your company? Please do not hesitate to contact us. We are here to help you.
This article was written by Jasper Meert, Audit Manager at PKF BOFIDI Audit.