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3. What are the main benefits of the new Directive?
Unnecessary and disproportionate administrative costs imposed on small companies hamper economic activity and impede growth and employment. The Directive simplifies the preparation of financial statements for small companies. It introduces the obligation for each Member State to distinguish small companies from larger ones. Small companies will be those with less than 50 employees, a turnover of not more than €8 million and/or a balance sheet total of not more than €4 million. Member States may alternatively use thresholds for turnover and balance sheet total up to €12 million and €6 million, respectively.
The Directive reduces and limits the amount of information to be provided by small companies in the notes to the financial statements. For small companies only a balance sheet, a profit and loss account and notes are to be prepared to satisfy regulatory requirements. Member States may also permit small companies to prepare only abridged balance sheets and profit and loss accounts. Any small company remains entitled to provide more information or statements on a voluntary basis.
The Directive requires that in cases where there is a single filing system, the information to be prepared by small companies be similar to the tax returns if a Member State so wishes.
There will be no EU requirement for small companies to have an audit. In case a Member State would nevertheless see the need for assurance, the new Directive will allow for a more proportionate approach.
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