Development of policy, preparation and drafting of legislation in relation to the financial reporting of companies; the negotiation of EU proposals on this area of company law and the transposition of EU law into domestic law.
Companies (Accounting) Act 2017
The Companies (Accounting) Act 2017 was enacted in May and all but section 80 was commenced on 9 June 2017.
This Act transposes the EU Accounting Directive (2013/34/EU) and makes a number of changes to the existing financial reporting requirements of Irish companies. In particular, it simplifies financial reporting for small companies. It also introduces a new category of company, the "micro company" and provides for reduced financial reporting obligations on such companies.
The Act also increases the thresholds for the “small company” category so that more companies will qualify as small in future and become eligible for cost saving provisions such as the audit exemption.
Apart from the changes in financial reporting for small and very small companies, the Act also raises the size threshold for medium sized companies and groups. The Act also introduces new reporting requirements for certain companies that are active in extractive industries and obliges some unlimited companies, funds and investment companies to file financial statements in the Companies Registration Office.
The Act applies to financial statements in respect of financial years beginning on or after 1 January 2017. In the case of certain companies, some of its provisions can be applied to financial years beginning before this date.
Non-financial reporting
The European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 (SI No 360 of 2017) were signed into law on 30 July 2017 and came into operation on 21 August 2017.
The regulations, which transpose EU Directive 2014/95/EU, require certain specified large companies such as banks, insurance undertakings and listed companies with more than 500 employees to annually disclose certain company information of a non-financial nature. That information includes environmental matters, social and employee related issues, respect for human rights and bribery and corruption matters. The Regulations also require large listed companies to report annually on the diversity policy applied in respect of the board of directors.
The regulations apply to financial years beginning on or after 1 August 2017.
The European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) (Amendment) Regulations 2018 (SI No 410 of 2018) were signed into law on the 9 October 2018 and came into operation on the 17 October 2018.
These regulations make some technical amendments to Regulations 4 and 5 of the European Union (Disclosure of Non-Financial and Diversity Information by Certain Large Undertakings and Groups) Regulations 2017 (SI No 360 of 2017).
Public country by country reporting of income tax information
The European Union (Disclosure of Income Tax Information by Certain Undertakings and Branches) Regulations 2023 (SI No 322 of 2023) were signed into law on 21 June 2023 and came into operation on 22 June 2023.
The regulations, which transpose EU Directive 2021/2101, require multinational enterprises with turnover exceeding €750 million in each of the last two consecutive financial years to publicly disclose corporate tax information separately for each Member State and each third country on the EU list of non-cooperative jurisdictions and an aggregate figure for all other third countries.
Non-EU multinationals with subsidiaries and branches in the EU must comply with the same reporting obligations as EU multinational undertakings.
The reporting will take place within 12 months of the date of the balance sheet for the financial year in question. The regulations also set out the conditions under which a company may defer the disclosure of certain commercially sensitive information for up to five years.
Where financial statements are required to be audited, the audit report must state whether the undertaking was in scope for the preceding year and if the report was published.
Application of the regulations begins the first financial year on/after 22 June 2024, with 2025 the first potential year for reporting, to be published in 2026.
The undertaking must publish the tax report on its own website unless it makes the report available to the public on the website of the Companies Registration Office (CRO), in which case the company must reference this on its own website and provide information on where the report can be found.
Please note that the company size monetary thresholds in Directive 2013/34/EU have been increased. In Ireland the new rules are in place since 1 July 2024 in the European Union (Adjustments of Size Criteria for Certain Companies and Groups) Regulations 2024 and medium sized undertaking should now be read as such.
Company size thresholds
Adjustments of company size criteria
The European Union (Adjustments of Size Criteria for Certain Companies and Groups) Regulations 2024 (SI No 301 of 2024) were signed into law on 19 June 2024 and came into operation on 1 July 2024, enabling companies to benefit from the adjusted thresholds immediately.
The purpose of the regulations is to adjust company size thresholds in line with 25 per cent inflation, thereby reducing the regulatory and administrative burden on companies, which would otherwise become subject to audit and reporting requirements applicable to larger companies.
The regulations, which transpose delegated Directive 2023/2775/EU, amend the Companies Act 2014 increasing company size thresholds as follows:
- micro company – a balance sheet not greater that €450,000 with a net turnover of €900, 000 and 10 employees
- small company – a balance sheet no greater than €7.5 million with a net turnover of €15 million and 50 employees
- medium sized company – a balance sheet must be no greater than €25 million with a net turnover of €50 million and 250 employees
- large company – a balance sheet no greater than €25 million with a net turnover of €50 million and 250 employees, or that exceeds the thresholds for a medium company
The measures apply for financial years beginning on or after 1 January 2024. Companies may elect to apply the measures for financial years beginning on or after 1 January 2023.
Corporate sustainability reporting
The European Union (Corporate Sustainability Reporting) Regulations 2024 (SI No 336 of 2024) were signed into law on 5 July 2024 and came into effect on 6 July 2024. The regulations require that all large companies and all listed companies (except listed micro-enterprises) report sustainability information in accordance with European Sustainability Reporting Standards in the directors’ report. Sustainability reporting must be provided with an auditor’s opinion with limited assurance and reported digitally.
The Regulations are in 3 Parts. Part 1 provides for the citation, construction and commencement. Part 2 makes several amendments to Companies Act 2014 and inserts a new Part 28 on Sustainability Reporting, whilst Part 3 makes amendments to the Transparency Regulations 2007.
Amending relevant provisions of Companies Act 2014, the regulations provide new rules on sustainability standards and oversight including the registration of statutory auditors and audit firms to carryout assurance of sustainability reporting, along with providing for provisions concerning the audit committees’ role.
The sustainability reporting is gradually applicable across the period 2024 to 2028 commencing for financial years on or after:
- 1 January 2024 for public interest entities in scope of EU non-financial reporting rules (greater than 500 employees)
- 1 January 2025 for other larger companies and public interest entities (greater than 250 employees)
- 1 January 2026 for listed SMEs, with an ‘opt out’ possible until 2028
- 1 January 2028 for large subsidiaries and branches of non-EU companies with a net turnover of €150 million in the EU
The regulations ensure that investors and other stakeholders have access to information to assess investment risks arising from climate change and other sustainability issues.
Accounting standards
Companies (Amendment) Act 2017
The Companies (Amendment) Act 2017 was signed on 7 June 2017 and commenced on 18 July 2017.
The Act amends section 279 of the Companies Act 2014. Section 279 allows certain US-listed holding companies registered in Ireland to use American accounting standards, known as US Generally Accepted Accounting Principles (US GAAP), when preparing and filing their financial statements.
The 2017 Act extends the deadline in section 279 to 31 December 2030. Secondly, the Act provides that companies incorporating in the State after the date of commencement will not be eligible to avail of section 279.