On October 17, 2023, the European Commission modified the thresholds in the Accounting Directive, influencing which entities are mandated to file Corporate Sustainability Reporting Directive (CSRD) compliant reports.
The financial thresholds have increased by around 25% to account for inflation over the past decade and alleviate reporting burdens for smaller companies. Micro companies are currently exempt from the reporting. SME companies are companies for which two out of the three criteria are reached.
The threshold criteria for Micro to become SME are increased to:
• Balance sheet total value of over €450,000;
• Net Turnover of greater than €900,000;
• Average number of employees exceeding 10.
The threshold criteria for SME to Large companies (full reporting requirement) are increased to:
• Balance sheet total value of over €25 million;
• Net Turnover of greater than €50 million;
• Average number of employees exceeding 250.
The adjusted thresholds are crucial in determining reporting obligations. Large EU companies and groups must comply for financial years starting on or after January 1, 2025, while certain small and medium-sized enterprises (SMEs) must adhere to the directive for financial years beginning on or after January 1, 2026.
Businesses should assess how these changes impact their operations.