By Carina Schneeberger and Marijke Janz
The CSRD, Corporate Sustainability Reporting Directive, means a big change for many companies and is a challenge that demands internal and external resources. It is therefore hardly surprising that one of the most important questions is regarding the CSRD: Who is in scope? On this point, there has been a recent change. This is because the European Commission raised the previous thresholds.
Current thresholds for CSRD: Companies covered by the reporting obligations
The CSRD reporting thresholds have always been based on the Accounting Directive 2013/34/EU. The values contained therein for determining the size category of a company have not been changed since 2013. However, on October 17, 2023, the European Commission approved the request to increase the thresholds. The increase resulted in the redefinition of micro, small, medium and large enterprises. As a result, some companies are exempt from financial and sustainability reporting requirements that were previously covered by CSRD reporting requirements.
SME definition: What are the new CSRD thresholds?
The CSRD thresholds are based on the three criteria of the Accounting Directive’s company definitions: balance sheet total, net turnover and the number of employees. However, the latter was not changed with the adjustment of the SME size criteria. As before, the 2-out-of-3 rule also applies to be able to assign a company to a category. The following table shows the adjusted financial thresholds compared with the previous ones.
| Criterion | Large enterprises | Medium-sized enterprises | Small enterprises* | Micro-enterprises |
|---|---|---|---|---|
| Balance sheet total (EUR) | > 25 Mio. (before: > 20 Mio.) |
5 Mio. - 25 Mio. (before: 4 Mio. - 20 Mio.) |
450,000 - 5 Mio. (before: 350,000 - 4 Mio.) |
Max. 450.000 (before: 350,000) |
| Net turnover (EUR) | > 50 Mio. (before: > 40 Mio.) |
10 Mio. - 50 Mio. (before: 8 Mio. - 40 Mio.) |
900,000 - 10 Mio. (before: 700,000 - 8 Mio.) |
Max. 900,000 (before: 700,000) |
| Employees (annual average) | > 250 | Max. 250 | Max. 50 | Max. 10 |
| Criterion | Large enterprises | Medium-sized enterprises |
|---|---|---|
| Balance sheet total (EUR) | > 25 Mio. (before: > 20 Mio.) |
5 Mio. - 25 Mio. (before: 4 Mio. - 20 Mio.) |
| Net turnover (EUR) | > 50 Mio. (before: > 40 Mio.) |
10 Mio. - 50 Mio. (before: 8 Mio. - 40 Mio.) |
| Employees (annual average) | > 250 | Max. 250 |
| Criterion | Small enterprises* | Micro-enterprises |
|---|---|---|
| Balance sheet total (EUR) | 450,000 - 5 Mio. (before: 350,000 - 4 Mio.) |
Max. 450.000 (before: 350,000) |
| Net turnover (EUR) | 900,000 - 10 Mio. (before: 700,000 - 8 Mio.) |
Max. 900,000 (before: 700,000) |
| Employees (annual average) | Max. 50 | Max. 10 |
Definition of size criteria as CSRD thresholds from October 1, 2023.
*Member States were and still are allowed to define a higher end for small enterprises (adjusted/before). Maximum balance sheet total in EUR: 7,5 Mio./6 Mio., maximum net turnover in EUR: 15 Mio./12 Mio.
From which fiscal year do the new application criteria of the CSRD apply?
The delegated act amending Directive 2013/34/EU of the European Parliament and the Council by adapting the size criteria for micro, small, medium and large enterprises or groups will enter into force after the publication in the Official Journal. The new thresholds are applicable for financial years from January 1, 2024. However, EU member states may also allow companies to apply the new thresholds from January 1, 2023.
Why were the criteria adjusted?
The European Commission is required to review the criteria every five years and to amend them if necessary. Adjusting the criteria is intended to prevent micro and small companies from being involuntarily subjected to stricter and more burdensome accounting rules intended for companies in a higher size category due to inflation. Due to significant inflation in 2021 and 2022, two of the criteria, balance sheet total and net turnover, have been adjusted for inflation by approximately 25% and increased accordingly.
CSRD consulting: What does this change mean in terms of CSRD and EU taxonomy?
In any case, we recommend companies check the threshold values for themselves. Get even more information on the CSRD, Directive details, an overview of the CSRD meaning, and the most important facts on the European Sustainability Reporting Standards (ESRS).