The transposition of the Annual Financial Statements Directive is coming

Although the deadline for transposing the "Annual Financial Statements Directive" ^[1] already passed on July 20th, the necessary drafts of the Act and Royal Decree are still awaiting review by the Council of State. Given that this transposition will have a significant impact on various companies, it is worthwhile to briefly go over the future changes.

For example, the Annual Financial Statements Directive changes the criteria for defining what is a "small" or a "large company".

The law currently provides that every company that exceeds at least two of the following thresholds shall be regarded as a "large company": 50 personnel members, annual turnover of 7.3 million euros and a balance sheet total of 3.65 million euros (art. 15, §1 of the Companies Code). Qualification as either a "small" or "large" company is important, because the large companies are subject to more formalities (e.g. extensive annual accounts, reporting duties, statutory auditor, etc.) than are small companies.

The Annual Financial Statements Directive provides that a company is “large” if two of the following thresholds are exceeded: 8 million euros annual turnover, four million euros for the balance sheet total and 50 employees (the latter threshold thus remains unchanged). The Annual Financial Statements Directive gives Member States the possibility to increase these thresholds even further. Given that the Accounting Standards Committee is arguing for just such an increase, one can expect that the Belgian thresholds will be higher than the minima set in the Annual Financial Statements Directive.

Finally, the Annual Financial Statements Directive offers Member States the possibility of introducing the qualification of "micro-companies". This category can be a sub-category of the small companies and will be subject to even more limited information obligations (e.g. no social balance sheet). For small companies groaning under the weight of administrative obligations, it is worthwhile to keep an eye on whether/how the Belgian legislator will introduce this qualification.   

The coming changes mean that more companies will meet the qualification of "small" company. In light of the company-law consequences (e.g. simplified administration, annual accounts, possible appointment of Statutory Auditor, etc.) and tax consequences (e.g. more flexible depreciation possibilities, etc.) of this qualification, potentially affected companies must monitor this future legislation closely, and the role of lawyers and bookkeepers will become more important in this respect.

^[1] Directive 2013/34/EU of 26 June 2013.

For more information on this subject, you can contact Gwen Bevers (head of department).