Small and micro-undertakings benefit from several exemptions. To be classified as a small or micro-undertaking, a company may not exceed certain thresholds. The law of 28 March 2024 has amended the applicable thresholds in the Belgian Code of Companies and Associations (“BCCA”). Additionally, the law of 15 May 2024 provides for a clarification of the transitional rules.
The recent changes transposed the Commission Delegated Directive (EU) 2023/2775, amending Directive 2013/34/EU, which amended the thresholds on a European level and aims to take into consideration the significant inflation of recent years.
I. Updated thresholds
A company1 is classified as a small or micro-undertaking, or a limited-sized group if it does not exceed two of the following thresholds over two consecutive financial years: (i) balance sheet total, (ii) annual turnover (excluding VAT) and (iii) average number of employees. The thresholds for employees remains unchanged, only the financial thresholds have been updated:
- Micro-Undertakings:
- Balance sheet total: EUR 450,000
- Annual turnover (excl. VAT): EUR 900,000
- Average number of employees: 10
- Small Undertakings:
- Balance sheet total: EUR 6,000,000
- Annual turnover (excl. VAT): EUR 11,250,000
- Average number of employees: 50
- Limited-sized Groups (“groepen van een beperkte omvang” / “groupes de taille réduite”):
- Balance sheet total: EUR 21,250,000
- Annual turnover (excl. VAT): EUR 42,500,000
- Average number of employees: 250
[1] Note: the thresholds for associations and foundations were similarly amended by the Royal Decree of 25 May 2024.
II. Transitional rules
The increased thresholds are applicable to financial years starting after 31 December 2023.
As a result of the consistency principle, a company will only cease to qualify as a small or micro-undertaking if it exceeds at least two thresholds for two consecutive years. The consequences thereof have a deferred effect, i.e. only starting from the following financial year will the company cease to qualify as a small or micro-undertaking. If a company qualifies as a small or micro-undertaking, it will remain a small or micro-undertaking if it exceeds two or more thresholds for one year only.
However, the law of 15 May 2024 temporarily sets aside this rule of deferred effect when two or more thresholds are exceeded. This means that for the first financial year in which the new thresholds apply (i.e. the first financial year starting after 31 December 2023), it is sufficient that at least two thresholds are exceeded for one financial year only. In other words, for this first financial year, it is not required that at least two thresholds are exceeded for two consecutive years.
For the first financial year starting after 31 December 2023, a company will immediately cease to be considered a small or micro-undertaking if two or more thresholds are exceeded at the closing of the first financial year ending after 31 December 2023. The temporary exclusion of the deferred effect facilitates a faster transition to the new thresholds.
III. Legal consequences from a corporate perspective
The classification as a small or micro-undertaking is relevant for companies as they can then benefit from several exemptions, such as:
- milder accounting obligations as they may draw up the annual accounts according to a simplified scheme (shortened scheme respectively micro-scheme), and they are allowed to file this simplified version. This corresponds to lower filing fees as well;
- exemption from the obligation of drawing up and filling an annual report; and
- no obligation to appoint a statutory auditor (“commissaris” / “commissaire”).
In addition, small and micro-undertakings benefit from certain tax advantages, which are not further discussed in this contribution.
IV. Opinion of the Commission for Accounting Standards
The Belgian Commission for Accounting Standards (“Commissie voor Boekhoudkundige Normen” / “Commission des Normes Compatbles”) issued an opinion on 11 September 2024, giving practical examples of the calculation method in light of the transitional rules.
The following two key principles must be considered:
- the transitional exclusion of the deferred effect only applies to the first financial year starting after 31 December 2023; and
- to determine whether a company qualifies as a small or micro-undertaking for that first financial year, the first financial accounts with a closing date after 31 December 2023 must be considered.
The examples provided by the Commission differentiate scenarios based on whether the financial year coincides with the calendar year.
In case the financial year coincides with the calendar year:
- The financial accounts closed on 31 December 2024 determine whether the company qualifies as a small or micro-undertaking for the financial year starting on 1 January 2024 and ending on 31 December 2024. If two or more thresholds are exceeded, the company will immediately cease to qualify as a small or micro-undertaking for that financial year (and will therefore qualify as a ‘large’ undertaking).
- In the following financial years (i.e. for the first time in the financial year starting on 1 January 2025), the requirement of exceeding two or more thresholds for two consecutive years applies again. In other words, the qualification of the company as a ‘large’ undertaking will require that at least two thresholds are exceeded for two consecutive years prior to the relevant financial year. For instance, at least two thresholds must be exceeded for the financial years ending on 31 December 2023 and 31 December 2024 to qualify as a ‘large’ undertaking for the financial year ending on 31 December 2025.
In case the financial year does not coincide with the calendar year:
- The first financial accounts closed after 31 December 2023 determine the company’s qualification as a small or micro-undertaking for the first financial year starting after 31 December 2023. For instance, if the financial year starts on 1 April, the financial accounts closed on 31 March 2024 determine whether the company qualifies as a small or micro-undertaking for the financial year starting on 1 April 2024 and ending on 31 March 2025.
- The requirement of exceeding two or more thresholds for two consecutive years applies again in the following financial years (i.e. for the first time in the financial year starting on 1 April 2025). For instance, at least two thresholds must be exceeded for the financial years ending on 31 March 2024 and 31 March 2025 to qualify as a ‘large’ undertaking for the financial year ending on 31 March 2026.
V. Conclusion
The Commission for Accounting Standards has provided practical examples in relation to the application of the transitional rules. The opinion is particularly relevant as it refers to the ratio legis of the transitional rules and clarifies the application thereof depending on whether a company’s financial year coincides with the calendar year.
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This article is not a legal advice or opinion. You should seek advice from a legal counsel of your choice before acting upon any of the information in this article.
