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Moncloa increases business volume by up to 25%, forcing companies to endure more bureaucracy

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Moncloa increases business volume by up to 25%, forcing companies to endure more bureaucracy

The Council of Ministers approved in the first round the bill which relaxes the size criteria of companies or groups of companies, increasing the net volume of business which obliges companies to present certain information which increases their bureaucratic burdens. In the case of small businesses, this limit increases from 4 to 5 million (25% more), while in medium and large companies it increases from 40 to 50 million (20% more in both cases). This will reduce corporate social and accounting obligations, although the economy will simultaneously demand new sustainability reporting. in terms environmental, social and governance with a new law.

The Ministry of Economy, Trade and Business assures that the extension of the thresholds “will have a positive economic impact since it will reduce the administrative burdens on businesses”. Increasing the size thresholds implies a reduction in the scope of financial statement presentation requirements, which will result in the simplification of accounting obligations for companies.

With the new rules on the table, some companies currently classified as large will be considered mid-sized, which will allow you to take advantage of the possibility of developing abbreviated models or take advantage of the general accounting plan for SMEs. SMEs, except those listed, will be exempt from submitting this information.

The new thresholds respond to an update of the amounts which responds to inflation in recent years. This is the asset, the net volume of activity, although the standard leaves aside the adjustment of the number of employees, what is normally called the curse of “50 workers” which transforms a small company into a medium-sized company.

Sustainable Business Reporting Act

Retouching the thresholds results in a Sustainable Business Reporting Act with which the government intends to improve corporate transparency. This is the obligation to report on environmental, social and governance sustainability which will be applicable to all large companies and groups of companies, as well as medium and small listed companies. (except TPE). Its entry into force will be staggered to facilitate the adaptation of companies to the new European regulations.

To meet all these objectives, the law on auditing of accounts is amended and the register of auditors is renamed Official register of account auditors and sustainability information verifiers. In this way, the Institute of Accounting and Auditing (ICAC) will be responsible for supervising this activity of verifying information on sustainability, in terms analogous to the audit of accounts.

These obligations will apply to all large companies, when their assets exceed 25 million euros and the net amount of annual turnover exceeds 50 million euros. You will distinguish two groups:

  1. Large public interest companies and dominant entities of public interest groups, with more than 500 workers in both cases. From January 1, 2024.
  2. Rest of large companies and dominant entities of large groups. From January 1, 2025.

It will also affect listed SMEs (with the exception of VSEs and small and medium-sized enterprises listed on alternative and growing markets); large captive insurance companies and credit institutions defined as small and non-complex. From January 1, 2026.

Both Spanish subsidiaries and branches of third-country companies that have a turnover in the EU territory of more than 150 million euros will have to present this information from January 1, 2028.

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