On May 25, 2024, the Royal Decree was published that amends the criteria for determining whether an association or foundation should be classified as a micro or small entity. This decree is relevant to every association or foundation, as it has direct implications for, among other things, accounting obligations. These changes take effect for fiscal years beginning after December 31, 2023.
Change to the size criteria for micro and small associations and foundations
A summary of the most important changes
1. Small nonprofit organizations (Article 1:28, § 1 of the Nonprofit Organizations Act)
- Annual revenue: The threshold increases from 9,000,000 euros to 11,250,000 euros.
- Total assets: The threshold increases from 4,500,000 euros to 6,000,000 euros.
2. Micro Nonprofit Organizations (Article 1:29, § 1 of the Nonprofit Organizations Act)
- Annual revenue: The threshold increases from 700,000 euros to 900,000 euros.
- Total assets: The threshold increases from 350,000 euros to 450,000 euros.
3. Small foundations (Article 1:30, § 1 of the WVV)
- Annual revenue: The threshold increases from 9,000,000 euros to 11,250,000 euros.
- Total assets: The threshold increases from 4,500,000 euros to 6,000,000 euros.
4. Micro-foundations (Article 1:31, § 1 of the WVV)
- Annual revenue: The threshold increases from 700,000 euros to 900,000 euros.
- Total assets: The threshold increases from 350,000 euros to 450,000 euros.
What does this mean for your association or foundation?
The increased thresholds mean that more associations and foundations may now fall under the “micro” or “small” categories. This can result in less stringent accounting requirements, simplified administrative burdens, and various tax benefits. Below is a non-exhaustive list of the potential benefits: - No obligation to prepare and publish an annual report; - No obligation to appoint an auditor; - Option to file abbreviated financial statements; - Reduced corporate income tax rate; - …
Effective Date and Temporary Exceptions
The decision applies to fiscal years beginning after December 31, 2023. There is an important temporary exception for the first fiscal year beginning after that date: the provisions of Articles 1:28, § 2, 1:29, § 2, 1:30, § 2, and 1:31, § 2, regarding the consequences of exceeding one or more of these criteria, shall not apply on a one-time basis.
What should we do now?
It is essential for associations and foundations to thoroughly review their current financial situation and assess how recent changes are affecting them. It is advisable to consult with your accountant or financial advisor to gain a full understanding of the implications and to take full advantage of the simplified rules.
Do you have any questions or need advice?
At Crowe Legal, we are here to help you navigate these changes. For more information or specific questions about how these changes might affect your association or foundation, please contact one of our specialists.
Despite the care taken in drafting this text, inaccuracies may still exist, and the information contained herein may have become outdated due to recent changes in the law. The content of this newsletter is for informational purposes only and should not be considered comprehensive legal advice. Crauwels Advocaten and the authors of this newsletter therefore cannot be held liable for the legal completeness of our newsletters. For specific questions or information tailored to your personal situation, please feel free to contact our firm.
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