FAQ - Size criteria for companies

1. A firm with more than 100 employees is no longer always deemed to be large

In the case of accounts for financial years that begin before 1 January 2016, a company with > 100 employees is always considered as large.

In the case of accounts for financial years starting from 1 January 2016, the size of the workforce is no longer a determining factor. A company is still regarded as small if it exceeds no more than 1 of the thresholds. (Company Code Art 15§1)

2. The workforce

(Company Code Art 15,§5 & Art 15/1, §5)

The average workforce is the average number of employees expressed as full-time equivalents (FTE) registered in the DIMONA database at the end of each month of the financial year.

3. (Annual) turnover

(Company Code Art 15,§5 & Art 15/1,§ 5)

The turnover is the amount generated from sales of goods and the provision of services to third parties as part of the company’s normal business activities less the value of discounts (i.e. reduction, rebate, discount) and VAT and any other turnover-related tax. (Art. 96, Royal Decree of 30 January 2001 implementing the Company Code)

  • Derogation: when more than 50 % of the income consists of revenue that does not comply with the above definition, turnover is the total of the corporate and financial revenue excluding non-recurring income.
    see CBN-CNC Opinion 2016/3, pages 4-5
  • If the financial year runs for more or less than 12 months:
    see CBN-CNC Opinion 2016/3, page 5.

4. For business start-ups

(Company Code Art 15,§3 & Art 15/1, §3)

The figures for application of the size criteria are estimated in good faith at the beginning of the financial year. Should it appear from this estimate that more than one of the criteria will be exceeded during the first financial year, this must immediately be taken into account for that first financial year.

  • Transitional measures for the first financial year that begins after 31/12/2015: see CBN-CNC Opinion 2016/3, pages 11-13

5. Exceeding (or no longer exceeding) the criteria – consistency principle

(Company Code Art 15,§2 & Art 15/1, §2)

Whenever the criteria are exceeded or no longer exceeded, this only has implications when it happens over two consecutive financial years. This is called the consistency principle.

Further information and format: see CBN-CNC Opinion 2016/3, page 9

6. Maximum duration of the financial year

(Company Code Art 15,§4 & Art 15/1, §4)

A financial year cannot be longer than 24 months minus 1 calendar day.