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Directive 2013/34/EU and Dutch Implementation: Adjusting Size Criteria in Response to Inflation

In alignment with the Commission’s authority outlined in Directive 2013/34/EU to adapt size criteria to account for inflation, Dutch authorities are currently working on a corresponding directive for implementation in the Netherlands.

Directive 2013/34/EU

The Commission emphasizes the need for a regulatory system ensuring objectives are met at minimal costs, as stated in the Communication on the ‘Long-term competitiveness of the EU.’

The goal is to reduce reporting burdens by 25% without compromising policy goals. Reporting requirements, vital for enforcement and monitoring, can disproportionately burden stakeholders, especially for micro, small, medium-sized and large undertakings or groups. The proposal aims to rationalize reporting obligations using the Commission’s empowerment in Directive 2013/34/EU, adjusting size criteria for inflation effects.

The Accounting Directive provides the framework for financial statement preparation, audit, and presentation for EU undertakings. Periodic adjustments to monetary size criteria are mandated to counter inflation’s impact, maintaining proportional requirements for different company sizes. The last review in 2021 concluded no adjustments were needed, but due to significant inflation in 2021-2022, a review is now deemed necessary. The euro area represents 75% of EU companies, while non-euro area member states and European Economic Area countries may need to adjust national criteria based on exchange rates.

The Dutch government has yet to determine the applicability date, and it remains unclear whether it will be enforced in 2023. However, a more definitive decision is anticipated by mid-December.

Revised Thresholds

The determination of threshold amounts involves three criteria: turnover, balance sheet total, and average number of employees. In line with prior proposals, Brussels is presently proposing a 25% increase in the amounts specified for the balance sheet total and turnover criteria.

The current and adjusted thresholds (for 25% inflation and rounded up) are as follows:

		Balance	Net sales
Micro	Current	350 000	700 000
	Adjusted	450 000	900 000
	Increase	28.6%	28.6%
Small (bottom)	Current	4 000 000	8 000 000
	Adjusted	5 000 000	10 000 000
	Increase	25.0%	25.0%
Small (top)	Current	6 000 000	12 000 000
	Adjusted	7 500 000	15 000 000
	Increase	25.0%	25.0%
Medium/Large	Current	20 000 000	40 000 000
	Adjusted	25 000 000	50 000 000
	Increase	25.0%	25.0%

Source: European Commission (DG FISMA)

Businesses that are subject to inspection

The threshold amounts play a crucial role in determining whether your company is obligated to undergo an audit. Presently, companies are required to audit their annual accounts if they satisfy at least two of the three criteria over two consecutive balance sheet dates:

• The balance sheet total is at least €6,000,000.
• The turnover is at least €12,000,000.
• There are at least 50 employees.

By increasing the first two criteria, fewer companies will be obligated to undergo audits. Additionally, fewer companies will need to adhere to sustainability reporting requirements (CSRD), aiming to alleviate regulatory burdens on SMEs, as stated by the European Commission.