Ireland has modernised its audit-exemption rules for small and micro companies. From 16 July 2025, a company only loses audit exemption if it files its annual return late twice within a rolling five-year period, a clear shift from the former “one-strike” rule.
Why this matters
Mandatory audits can cost SMEs thousands of euro and consume management time. The new approach recognises that an occasional administrative slip should not automatically trigger two years of audited financial statements, while still penalising persistent non-compliance.
At a glance: What changed on 16 July 2025
- Legal basis: Section 22 of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 commenced on 16 July 2025.
- New threshold: audit exemption is lost only after two late filings in five consecutive years.
- Who benefits: small and micro companies that are not part of a group.
- Transition rule: late filings before 16 July 2025 do not count toward the new two-strikes test (but any audit already triggered under the old regime still stands).
- Timing unchanged: CRO filing windows and late-filing penalties still apply.
Old vs New: side-by-side comparison
| Criterion | Old regime (pre-16 Jul 2025) | New regime (from 16 Jul 2025) |
|---|---|---|
| Legal basis | Companies Act 2014, Section 363 | Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024, Section 22 |
| Loss of audit exemption | After one late annual return | After two late annual returns within 5 years |
| Who can use it | Qualifying small & micro companies | Qualifying small & micro companies not in a group |
| Effect of first late filing | Automatic loss for next two financial years | No automatic loss; late-filing penalties still apply |
How the new two-strikes rule works
Commencement date: 16 July 2025. Late filings made before this date are ignored when counting strikes under the new regime, though any audit already triggered under the old rule still applies for the two subsequent financial years.
| Scenario | Late filing date | Outcome |
|---|---|---|
| Old rule still bites | 10 July 2025 | Audit exemption lost for the next two financial years (late filing preceded commencement). |
| First strike under new rule | 20 August 2025 | Penalties apply, but audit exemption is retained (unless a second late filing occurs within five years). |
| Second strike within five years | Any time up to 20 August 2030 | Audit exemption lost for the next two financial years. |
Important exceptions & safety valve
- Groups excluded: small/micro group companies are not covered by the new leniency; a single late filing can still cause loss of exemption for that company. Where any member of a group files late, an application to the District Court may be the only route to retaining audit exemption for the group.
- District Court extension (Section 343): where exceptional circumstances apply, a court order can extend the time to file; if granted and complied with, the company is deemed on-time, avoiding late penalties and preserving audit exemption. This route remains available even after a missed filing deadline.
Costs & risk: why staying exempt matters
Audits for SMEs commonly run into the low thousands of euro; avoiding unnecessary audits preserves cash and management bandwidth. Even under the new regime, late-filing fees and potential enforcement remain in place, so disciplined compliance is essential.
Practical checklist to protect your audit exemption
- Track your ARD & filing window: diarise the CRO Annual Return Date and the 56-day e-filing period.
- File financial statements with the return: ensure small-company filings meet format requirements.
- If you may be late, act fast: explore a Section 343 District Court application before the deadline passes.
- Avoid a “second strike”: set internal controls so the first slip never repeats within five years.
Official resources
- Section 22, Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 (full text, Irish Statute Book)
- Department of Enterprise announcement (16 July 2025)
- CRO guidance: Audit Exemption | CRO guidance: Missed Deadlines | CRO update on Section 22 commencement
- Chartered Accountants Ireland – change summary | Law Society Gazette – overview | KPMG Law – insight
Conclusion
The 2025 reform brings welcome proportionality to Ireland’s audit-exemption regime for small and micro companies, rewarding generally compliant businesses while targeting repeat late filers. Use the “first-strike buffer” wisely: build robust filing routines, and take advice early if exceptional circumstances threaten your deadline.
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