Changes to European rules governing the size of companies

Recently, the European Commission published a Directive (EU 2023/2775 of 17 October 2023) adjusting the size criteria for undertakings, taking into account the inflation that has occurred in recent years.  This Directive has since been transposed into Belgian law.

The new criteria will enter into force for financial years commencing from 1 January 2024 onwards.  This means that companies will continue to be classified as small for longer.

The size of a company is not only important when determining the model of financial statements and reporting but it also has tax implications.  In many cases, small companies therefore enjoy favourable tax regimes, including: a reduced rate, investment deduction and liquidation reserves.

 

Overview of criteria

	Current Belgian thresholds	New Belgian thresholds
Micro enterprise (*)	Balance sheet total: €350,000 Annual turnover: €700,000 Annual average number of employees: 10	Balance sheet total: €450,000 Annual turnover: €900,000 Annual average number of employees: 10
Small enterprise (*)	Balance sheet total: €4,500,000 Annual turnover: €9,000,000 Annual average number of employees: 50	Balance sheet total: €6,000,000 Annual turnover: €11,250,000 Annual average number of employees: 50
Large enterprise	Companies exceeding two of the above criteria	Companies exceeding two of the above criteria

(*) Companies exceeding no more than one criterion on the balance sheet date of the most recent financial year

 

When does a change in size occur?

Exceeding or not exceeding the criteria will only have consequences if it occurs during two consecutive financial years. For companies in formation, the figures at the beginning of the fiscal year are estimated in good faith in order to designate the company a large, small or micro enterprise.

 

In addition, the criteria for companies that together form a group of limited size are also being increased. These figures are calculated on a consolidated basis.