EC would cut accounting burden for micros

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26 Feb 2009

The European Commission has sent to the European Parliament and the Council of Ministers a proposal to exempt 'micro entities' from the accounting and financial reporting requirements of the 4th Company Law Directive.

Micro entities are the smallest companies. For this proposal they have to meet two of the three following criteria:

  • A balance sheet total of not more than €500.000;
  • A net turnover of not more than €1.000.000;
  • Not more than ten as average number of employees during the financial year.
Currently, the Accounting Directives require around 5.4 million limited liability companies in Europe to prepare financial statements and, in many cases, have them audited. The Commission's proposal acknowledges that the Accounting Directives 'have led to improved financial reporting environment in the EU'. At the same time, though, the Commission has concluded that the Directives impose a burden on micro entities that can be reduced. Under the Commission's prpoposal, EU Member States would decide whether to retain the requirements of the Accounting Directives for micro entities or to exempt micro entities from them. Of course, apart from the Directives, EU Member States generally have their own national financial reporting requirements. The proposal would not affect those. Member States could keep their existing requirements or design simplified rules for micros. Click for:

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