Transposition of Directive Brings About Changes in the Accounting Regime

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Directive 2013/34/EU of the European Parliament and of the Council (the “Directive”), which was published in the EU Official Journal on June 29th 2013, repealed the fourth and seventh accounting directives dealing with the preparation of separate and consolidated accounts. Legal Notice 289 of 2015, under the name of ‘Accountancy Profession (General Accounting Principles for Small and Medium-Sized Entities) Regulations, 2015’ (hereinafter referred to as “GAPSME”) and the Companies Act (the “Act”) transposed the requirements of the Directive into the Maltese Legal Framework.

In accordance with the Directive the thresholds for Small, Medium, and Large Entities are as follows. Entities must satisfy at least 2 of the 3 criteria in order to fall under the respective heading.

Small Medium Large
Balance Sheet Total < €4 Million < €20 Million > €20 Million
Net Turnover < €8 Million < €40 Million > €40 Million
Average Number of Employees < 50 < 250 > 250

The objective of financial statements prepared under GAPSME is to provide information about an entity’s financial position, financial performance, and ability to generate cash and cash equivalents. This information is useful to a wide range of users in assessing the stewardship of management and for economic decision making.

The amendments to the Act include:

  • changes in the provisions applicable to small companies (Article 185);
  • simpler accounts required of small companies, with abridged accounts no longer being possible;
  • small companies do not need to prepare directors’ report;
  • small and private exempt companies do not need to file a profit & loss account;
  • removal of the financial holding company exemption;
  • removal of the extension of the period allowed for laying accounts before a general meeting (Form U);
  • changes to rules regarding the profits available for distribution;
  • redrafting of the Third and Fourth Schedules, removing technical accounting detail;
  • new Fourth Schedule that refers to a new report on Payment to Governments, that is required to be prepared by Large Companies and Public Interest Entities which are active in the extractive industry or the logging or primary forests; and
  • changes to the Sixth Schedule regarding the directors’ report.


These will be applicable to financial reporting periods beginning on or after January 1st 2016