13.03.2024

THE REQUIREMENTS FOR SMALL, MEDIUM AND LARGE ENTERPRISES ARE CHANGING

New criteria that must be met by an enterprise to be defined as micro, small, medium or large, provide for changes to the Accounting Act, uploaded for public consultation.

The reason for the change is dictated by the significant inflationary processes in 2021 and 2022 and the reported growth of inflation in the period from 2013 to 2023, it is written in the reasons for the bill.

Under the Accounting Directive, enterprises and groups are categorized as 'micro', 'small', 'medium' and 'large' according to which two of three size indicators they fulfill. Two of these indicators are financial - book value of assets and net sales revenue, and the third is the average number of employees. The European Commission is obliged to review the financial indicators every five years and, if appropriate, to amend them, taking into account inflation.

In view of inflation, the amount of financial indicators is estimated to be adjusted by 25%.

Thus, according to the changes, micro-enterprises are those which, as of December 31 of the current reporting period, do not exceed at least two of the following indicators: the balance sheet value of assets is BGN 900,000 compared to BGN 700,000 now, and net sales revenue is BGN 1.8 million at BGN 1.4 million now.

Those enterprises where the two indicators do not exceed BGN 10 million and BGN 20 million will be considered small. Medium will be those in which the assets do not exceed 50 million BGN, and the revenues 100 million BGN, and large, those that exceed them, it is written in the draft law.

Enterprises and enterprise groups determine their category for 2024 in accordance with the new requirements according to their indicators as of December 31, 2023, so 2024 will be considered the first reporting period.

The law is scheduled to enter into force on July 6 of this year.

The bill introduces an obligation for enterprises to draw up a sustainability report.

It will be drawn up by large enterprises and by small and medium-sized enterprises (except micro-enterprises) whose transferable securities are admitted to trading on the regulated market in an EU Member State (public interest enterprises), as well as by parent enterprises of large groups of enterprises.

An obligation is also provided for subsidiaries and branches of enterprises regulated by the legislation of a third country to publish such a report under certain conditions.

An obligation to prepare an activity report containing a sustainability report is set to enter into force for the accounting year 2024 for large enterprises that are public interest enterprises and which, on 31 December of the accounting period, exceed the average number criterion in the financial year of 500 employees, as well as public interest enterprises that are parent enterprises of a large group which, as of December 31, exceeds on a consolidated basis the criterion for an average number of employees during the financial year of 500 people. For the remaining enterprises within the scope of the directive, the obligation arises gradually in the following reporting years, until 2028.