BREAKING WITH 40 YEARS OF STABILITY IN BELGIAN ACCOUNTING LAW

The “Think Small First” principle

Especially for small (and medium-sized) enterprises, the administrative burden will decrease. This arises, inter alia, in the following changes:

• Indexing criteria for determining whether one constitutes a small company or not.
• The criterion of annual turnover increases from EUR 7,300,000 to EUR 9,000,000 (excl. VAT) and the total assets criterion increases from EUR 3,650,000 to EUR 4,500,000. As of 01 January 2016, whether or not these criteria have been exceeded will only have consequences if exceeding them occurs for two financial years in a row. The calculation on consolidated basis is restricted to parent companies. A small company needs to publish less information in its annual accounts;
• Introduction of the Belgian micro-company.
• This new type of company will need to provide much less information in explanation of its annual accounts and will be able to enjoy a number of additional tax benefits. It concerns the companies which do not exceed more than one of the following criteria: annual average number of employees 10, annual turnover excl. VAT EUR 700,000 and total assets of EUR 350,000;
• Exemption from consolidation obligation for groups of limited size.
• Also for groups with limited size, the thresholds for exemption from consolidation are indexed to EUR 17 million total assets and EUR 34 million annual turnover.

Change of valuation rules

• Providing guidelines for estimating amount in case a provision is recorded;
• Research costs can no longer be capitalized;
• Orders/Work in progress may be compensated directly with prepayments received (also for companies which are not members of Belgian Construction Federation or Bouwunie).

Tax implications

Due to adaptation of the thresholds for determining whether a company is small or not, more enterprises will be able to enjoy tax benefits that are meant for small companies. However, the criteria must still be established on consolidated basis for the tax authority.

Publication obligations

In Belgium, most companies in which the liability of its shareholders or partners is limited to their contributions, must publish their annual accounts. Application of the European Directive leads to the following, among other things:

• Introduction of a specific model for micro-companies;
• Restructuring of the balance structure, including, inter alia, the concept of exceptional result disappearing;
• The social balance sheet is no longer part of the annual accounts and will have to be published separately;
• Abolishment of publication annual accounts in the Appendices to the Belgian Official Gazette, resulting in a decrease of the filing costs.

Contact

For more information you can get in touch with your usual BDO contact or send an email to [email protected].