Proposed Increases to Size Thresholds Impact CSRD Scope
The European Commission has published for consultation a draft delegated regulation adjusting the size criteria applicable to undertakings and groups under the Accounting Directive.
Under the Accounting Directive, the classification of undertakings or groups into “micro”, “small”, “medium-sized”, and “large” is based on meeting two out of three size criteria:
- balance sheet total;
- net turnover; and
- average number of employees.
The proposed adjustments increase the monetary size criteria. For example, the monetary thresholds for a “large” undertaking or group would be adjusted as follows:
- Balance sheet total: from exceeding EUR 20,000,000 (currently) to exceeding EUR 25,000,000; and
- Net turnover: from exceeding EUR 40,000,000 (currently) to exceeding EUR 50,000,000.
No adjustments are proposed to the criteria in relation to the average number of employees.
The consultation is open for feedback until 6 October 2023. It is proposed that the adjusted provisions would apply for financial years beginning on or after 1 January 2024.
The increase in size criteria may impact whether or when an undertaking or group falls within scope of the new sustainability reporting obligations under the Accounting Directive as amended by Corporate Sustainability Reporting Directive, and consequently under Article 8 of the Taxonomy Regulation.