The Council of Ministers has approved in the first round the draft law that makes the size criteria of companies or groups of companies more flexible, increasing the net volume of business that requires companies to present certain information that increases their bureaucratic burdens. In the case of small companies, this limit goes from 4 to 5 million (25% more), while in medium and large companies it goes from 40 to 50 million (20% more in both cases). It will reduce the corporate and accounting obligations of companies, although Economy will simultaneously require new reports on sustainability in terms environmental, social and governance with a new law.
The Ministry of Economy, Commerce and Business assures that the extension of the thresholds “will have a positive economic impact since it will reduce the administrative burdens of companies.” The increase in the size thresholds implies a reduction in the scope of application of the financial statement presentation requirements, which will mean the simplification of accounting obligations for companies.
With the new rules on the table, certain companies currently classified as large will be considered medium-sized companies and this will will allow you to take advantage of the possibility of developing abbreviated models or take advantage of the general accounting plan for SMEs. SMEs, except those listed, will be exempt from presenting this information.
The new thresholds respond to an update of the amounts that responds to inflation in recent years. These refer to assets, net business volume, although the standard leaves out the adjustment of the number of employees, what is normally known as the curse of the ’50 worker’ that turns a small company into a medium-sized one.
Sustainability Business Reporting Act
The retouching of the thresholds entails a Sustainability Business Reporting Act with which the Government intends to improve business transparency. This is the obligation to present a report on sustainability in environmental, social and governance matters that will be applicable to all large companies and groups of companies, and also to medium and small listed companies. (except microbusinesses). Its entry into force will be staggered to facilitate the adaptation of companies to the new European regulations.
To meet all these objectives, the Account Audit Law is modified and the Registry of Auditors is renamed Official Registry of Account Auditors and Sustainability Information Verifiers. In this way, the Institute of Accounting and Audit of Accounts (ICAC) will be in charge of supervising this activity of verifying information on sustainability, in terms analogous to the audit of accounts.
These obligations will apply to all large companies, when their assets exceed 25 million euros and the net amount of the annual turnover exceeds 50 million euros. You will distinguish two groups:
- Large public interest companies and dominant entities of public interest groups, with more than 500 workers in both cases. From January 1, 2024.
- Rest of large companies and dominant entities of large groups. From January 1, 2025.
It will also reach listed SMEs (with the exception of microenterprises and small and medium-sized companies listed on alternative and growth markets); captive insurance companies that are large, and credit institutions defined as small and not complex. From January 1, 2026.
Both Spanish subsidiaries and branches of third-country companies that have a turnover in the EU territory of more than 150 million euros must present this information from January 1, 2028.
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