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THRESHOLDS REGARDING ANNUAL ACCOUNTS INCREASED

On 13 March 2023 the Order in Council ("OiC") pursuant to which the thresholds for, among other things, the audit requirement of annual accounts are increased entered into force. The OiC transposes Directive 2013/34/EU of the European Commission which was published on October 19, 2023 into Dutch legislation.

As a result of the OiC coming into force, fewer companies will be required to have an audit of their annual accounts performed by an auditor and fewer companies will have to prepare and publish comprehensive financial statements.

To determine whether a legal entity is required to have its annual accounts audited and what requirements its financial statements must meet, it is necessary to define which category the legal entity falls into. There are four possible categories: micro, small, medium and large. A legal entity falls into a particular category if at least two of the three criteria (value of assets, net turnover and average number of employees) as listed in the chart below for each category are met. With the implementation of the OiC, the thresholds defining these categories have been increased by an average of 25%, which results from accounting for inflation over the past ten years.

The new thresholds are as follows:

An audit requirement exists if a legal entity qualifies as medium or large, which is the case if the legal entity meets at least two of the following three criteria:

1. Balance sheet total of more than € 7,500,000;
2. Net turnover of more than € 15,000,000;
3. Average of 50 employees (or more) during the financial year.

The directive stipulates that all member states must make the new thresholds effective no later than the financial year beginning on or after 1 January 2024. However, in line with the wishes of the business community, the Council of Ministers has determined that - at the option of the company - these new thresholds may already be applied for financial years beginning on or after 1 January 2023.