Directive 2013/34/E

​​Comparable and clear company financial statements across the EU


​SUMMARY OF:

Directive 2013/34/EU on the annual financial statements, consolidated financial statements and related reports of certain types of businesses

AIM OF THE DIRECTIVE

It aims to:
  • ensure the clarity and comparability of financial statements, other than international financial reporting standards (IFRS);
  • limit administrative burdens and provide for simple and robust accounting rules, especially for small and medium-sized enterprises (SMEs);
  • increase transparency of the payments made by the mining and logging industries to governments.

KEY POINTS

  • The legislation applies to limited liability types of companies in the European Union (EU).
  • The legislation defines and differentiates between micro-, small, medium and large companies, on the basis of their:
    • balance sheet;
    • net turnover; and
    • average number of employees during a financial year.
  • For each category, it sets 3 limits, 2 of which must not be exceeded:
    • micro-undertakings: balance sheet (€350,000), net turnover (€700,000), employees (10);
    • small undertakings: balance sheet (€4 million), net turnover (€8 million), employees (50);
    • medium-sized undertakings: balance sheet (€20 million), net turnover (€40 million), employees (250);
    • large undertakings: balance sheet (€20 million), net turnover (€40 million), employees (250).
  • Annual financial statements must:
    • contain, as a minimum, the balance sheet, the profit and loss account and the notes to the financial statements*;
    • give a true and fair view of the company’s assets, liabilities, financial position and profit or loss;
    • be published by each company in the relevant national business register.
  • The directive sets out general financial reporting principles, such as consistent application of accounting policies and measurement bases from one year to the next.
  • Detailed rules cover the presentation of the balance sheets, profit and loss accounts and the notes to the financial statements, as well as management reports, non-financial information, corporate governance and consolidated statements.
  • The obligations may vary depending on a company’s size and the directive allows for exemptions or simplifications in many areas for micro-undertakings and SMEs. It is up to each EU country to decide on the extent of these exemptions and simplifications.
  • The financial statements of public-interest entities, medium-sized and large undertakings must be audited by one or more statutory auditors.
  • Large companies involved in mining minerals, oil, natural gas or other materials or involved in logging in primary forests* must publish details of payments over €100,000 in total that they make to governments in any financial year.
  • Amending Directive (EU) 2021/2101 inserts a new chapter (10a) in Directive 2013/34/EU concerning the disclosure of income tax information by multinational groups with annual consolidated revenue of more than €750 million:
    • the parent companies of such groups will be required to declare, in a specific report published on their website, their revenues, the profits they have made, the corporate income tax paid and the number of employees per Member State, and per non-EU country that does not cooperate with the EU on tax matters or that does not meet all standards and has committed to reform;
    • business registers will also provide public access to these reports;
    • non-EU country multinational groups doing business in the EU are required to report similarly.
  • Directive 2013/34/EU repeals earlier accounting directives (78/660/EEC and 83/349/EEC) and amends Directive 2006/43/EC (see summary).

FROM WHEN DOES THE DIRECTIVE APPLY?

It has applied since 19 July 2013. EU countries had to incorporate it into national law by 20 July 2015.

BACKGROUND

  • The directive is part of the European Commission’s better regulation programme. This emphasises the importance of quality legislation that ensures administrative burdens are proportionate to the benefits they bring.
  • For more information, see:

KEY TERMS

Notes to the financial statements: additional information to that contained in a company’s financial statements. This information is provided in the interests of clarity and may include, for example, accounting methodologies used for recording and reporting transactions and pension plan details.
Primary forests: forest of native species, where there is no clearly visible indication of human activities and the ecological processes are not significantly disturbed.

MAIN ACTS

Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, pp. 19-76)
Successive amendments to Directive 2013/34/EU have been incorporated in to the original document. This consolidated version is of documentary value only.

RELATED ACTS

Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC (OJ L 157, 9.6.2006, pp. 87-107)

See consolidated version of the Directive 2013/34/EU Directive