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Company Size Thresholds Increased by 25% in Ireland

Minister for Enterprise Peter Burke signed into the law of the European Union also known as the Adjustments of Size Criteria for Certain Companies and Groups. The 2024 regulations increase the balance sheet and turnover thresholds for all companies, from micro to large, as defined by the Companies Act 2014. The increase is by 25% to account for inflation. The new company size thresholds come into effect on 1st July 2024.

It is expected these new regulations will expand the opportunities for companies that may qualify for exemptions like the audit exemption and/or the option to submit abridged instead of full financial statements at the Companies Registration Office (CRO) for businesses under the micro and small companies’ regime. 

What are Company Size Thresholds in Ireland

To understand the importance of company size thresholds, first, let’s discuss the definition of a company size threshold. It’s a special criteria used to categorise different businesses based on their sizes. Irish companies are divided into micro, small, medium, and large. So, what is the essential importance of the company size thresholds?

Regulatory and Compliance Requirements

The first significant benefit of threshold sizes is the convenience of financial reporting. That way, small and micro companies can file the necessary documentation that is less demanding than larger companies. Micro and small companies can also reach audit exemption in case they meet certain criteria. In addition, large companies are subject to more comprehensive and strict reporting requirements.

Taxation and Financial Incentives

Another benefit is that smaller companies can receive significant tax relief, especially at the beginning of the business path. For example, any Irish startup company that meets the established criteria can apply for grants that provide significant financial support. For instance, in Ireland, there is an Employment and Investment Incentive (EII) and a Research & Development (R&D) Tax Credit. In addition, even though Ireland is already known for small corporate taxes of only 12,5 %, small companies and startups can count on even greater reliefs. 

Access to Funding

Depending on the size of your company, it can receive access to various loans, grants, and programs. Micro and small companies can access specific options designed specifically for SMEs ( Small and Medium Enterprises)

New Company Size Thresholds

Let’s take a closer look at the new company size thresholds recently implemented in the Republic of Ireland. These changes apply to companies whose financial year starts on or after 1 January 2024.

  • Micro company: balance sheet total does not exceed €450,000, a net turnover of €900,000, and the company has no more than 10 employees
  • Small company: balance sheet total does not exceed € 7.5 million with net turnover of €15 million, and the employment state should not surpass 50 employees
  • Medium company: balance sheet does not exceed €25 million with a net turnover of €50 million and no more than 250 employees
  • Large company: balance sheet does not exceed €25 million, with a net turnover €50 million. Large companies are allowed to hire over 250 employees

Group size thresholds have also increased as set out below: 

  • Small group: the sheet total should not exceed €7.5 million net (or €9 million gross), the turnover should not not exceed €15 million net (or €18 million gross) with no more than 50 employees
  • Medium group: the group balance sheet total should not exceed €25 million net ( or €30 million gross), and the total turnover should not exceed €50 million net (or €60 million gross), with no more than 250 employees.

Conclusion

Compliance of the company with the updated size thresholds is not only a necessity but an opportunity to greatly improve your business processes. Working under the correct threshold size can unlock significant benefits like funding incentives, tax reliefs, and support from governmental institutions. If you’re looking for assistance with company formation and tax compliance, contact Chern & Co experts.

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