As a result of the amendments to the Accounting Law, new definitions of micro and small entity are effective as
of January 1, 2025. Together with the accompanying simplifications, they apply to reports prepared for the financial year beginning on or after January 1, 2024.
Micro unit
A micro-entity is one that, in the financial year for which it prepares financial statements and in the year preceding that financial year (and, in case of a start-up entity, in the financial year in which it began operations), did not exceed at least two of the following three sizes:
a) PLN 2,000,000 – in the case of total assets of the balance sheet at the end
of the financial year,
b) PLN 4,000,000 – in the case of net revenues from sales of goods and products
for the financial year,
c) 10 persons – in the case of average annual full-time employment
– whereby an entity loses its status as a micro entity if it exceeded at least two of these three figures in the financial year for which it prepares financial statements
and in the year preceding that financial year.
Small unit
A small entity is a non-micro entity that in the financial year for which it prepares financial statements and in the year preceding that financial year (and, in the case
of a start-up entity, in the financial year in which it began operations) did not exceed at least two of the following three sizes:
a) PLN 33,000,000 – for total assets of the balance sheet at the end of the financial year,
b) PLN 66,000,000 – in the case of net revenues from sales of goods and products
for the financial year,
c) 50 persons – in the case of average annual full-time employment
– whereby an entity loses its status as a small entity if it exceeded at least two of these three figures in the financial year for which it prepares financial statements and in the year preceding that financial year.
Status of micro or small entity
It is important to note that prior to the amendment of the Accounting Act, whether an entity was a micro/small entity was determined by whether the approving authority decided to prepare any of the elements of the statements according to Appendix 4 or Appendix 5. For some of the recognition and measurement simplifications, this was a condition for their application, for others, it was only analyzed whether the entity met the definition. This caused many problems of interpretation.
After the amendment, the authority’s decision will not matter. The status of a micro or small unit will be obtained automatically by units if they meet the thresholds indicated in the statutory definition. The criteria for recognizing a unit as a micro
or small unit are the same for all types of units. What is important is that in order
to maintain the status of micro/small unit, it will be necessary to not exceed the size thresholds for two consecutive years. This means that the status of a micro/small entity that can apply simplifications is more stable than under the previous legal status.
Simplified report
After the amendments to the Accounting Law, the micro and small entity shall prepare a report consisting of three elements:
- balance sheet,
- income statement,
- additional information.
In principle, micro and small entities are exempt from preparing a cash flow statement and a statement of changes in equity. No resolution of the approving authority
is needed to apply the above exemption.
Resolution of the approval authority
According to the amended law, in order for an entity to prepare a simplified report,
it is necessary for the approving body to adopt a provision or resolution explicitly indicating the provisions defining the scope of the simplification:
- Article 46(5)(4), Article 47(4)(4) or Article 48(3), or to take advantage of the exemption from preparing an activity report in accordance with Article 49(4) – in the case of a micro entity,
- Article 46(5)(5), Article 47(4)(5), or Article 48(4), or to take advantage of the exemption from preparing an activity report in accordance with Article 49(5) – in the case of a small entity.
If the relevant resolution was adopted on the basis of previous regulations, it remains valid.
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