Small and micro-companies: adapting the size criteria

Author: Isabelle Caluwaerts (Legal Expert)
Read time: 4min
Publication date: 21/06/2024 - 15:44
Latest update: 21/06/2024 - 15:45

For a company to be considered small or very small (micro-company) for accounting and tax purposes, certain thresholds in terms of number of employees, balance sheet total and turnover must not be exceeded. These thresholds will be adjusted upwards for the financial years starting after 31 December 2023. The number of companies likely to meet the conditions is therefore increasing.

New size criteria

Certain accounting and tax advantages (in particular partial exemption from payment of withholding tax) depend on the size of the company. For tax purposes, the Income Tax Code refers to the criteria and procedures applicable under company law.

A recent law of 27 March 2024 increased the size criteria for small and micro-companies by 25%.

The new criteria are as follows:


Small companies
Small companies are companies with legal personality which, on the balance sheet date of the last completed financial year, do not exceed more than one of the following criteria:

  • average annual number of employees: 50 (unchanged);
  • annual turnover excluding VAT: €11,250,000 (instead of €9,000,000);
  • balance sheet total: €6,000,000 (instead of €4,500,000).

As soon as one of these thresholds is exceeded in two successive financial years, the company is no longer considered to be a small company.

Micro-companies
Micro-companies are small companies with legal personality which are not a subsidiary or parent company and which, at the balance sheet date of the last completed financial year, do not exceed more than one of the following criteria:

  • average annual number of employees: 10 (unchanged) ;
  • annual turnover excluding VAT: €900,000 (instead of €700,000) ;
  • balance sheet total: €450,000 (instead of €350,000).

As soon as one of these thresholds is exceeded in two successive financial years, the company is no longer considered to be a micro-company.

Entry into force

The new criteria apply to accounting periods beginning after 31 December 2023. Thus, for a company that keeps its accounts on a calendar year basis, the new thresholds already apply to the current financial year (which began on 1 January 2024).

In principle, the Companies and Associations Code applies the principle of deferred effect. This means that exceeding or no longer exceeding more than one of the criteria only has an impact if this circumstance occurs during two consecutive financial years. 

However, in the context of the adjustment of the thresholds described above, the legislator has set aside this principle of deferred effect for one time only, for the first financial year beginning after 31 December 2023. As a result, the deferred effect rule does not apply, and this only once, to the drafting and publication of annual accounts that companies close after 31 December 2023. For this closing, only the increased amounts will be taken into account, as regards the annual turnover and the balance sheet total for the financial year concerned.


Example

At 31 December 2023, close of the 2023 financial year: the company does not qualify as a small company because it exceeds the criteria applicable in 2023 (old criteria). It will therefore not be considered "small" in 2024;

At 31 December 2024, close of the 2024 financial year: the company meets the new criteria to be considered a ‘small’ company. Due to the non-application of deferred effect, it may be considered a ‘small’ company for the following financial year;

Financial year 2025: the company is considered ‘small’ for accounting and tax purposes.

Impact on partial exemptions from payment of withholding tax

Certain exemptions from payment of withholding tax are reserved for small or micro-companies. This is the case with the structural exemption, where the exemption percentages vary depending on whether or not the company can be considered ‘small’. This is also the case for the exemption applicable to companies just starting up, which must meet the definition of a ‘small company’ within the meaning of the Companies and Associations Code.

Other exemptions provide for more favourable regimes or conditions of application for small companies. This is particularly the case for the exemption applicable to companies employing scientific researchers with bachelor's degrees. This is also the case for the exemption applicable to employers who provide their employees with more training than is required by law, under which certain derogations apply to ‘small companies’.

Sources: Law of 27 March 2024 containing provisions on the digitisation of justice and various provisions 1bis, Belgian Official Gazette 29 March 2024; Law of 15 May 2024 containing provisions on the digitisation of justice and various provisions II (1), Belgian Official Gazette of 28 May 2024 and Royal Decree of 25 May 2024, Belgian Official Gazette of 7 June 2024.

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