The EU Single Accounting Directive 2013/34/EU, which repealed
the 4th and 7th Accounting Directives on Individual and
Consolidated Accounts, introduced a simplified procedure for
financial statement reporting. This Directive was transposed into
Maltese law via legal notice 289 of 2015 in virtue of the
ministerial powers conferred on the Minister of Finance in virtue
of the Accountancy Professions Act (Chap. 281 of the Laws of
The aim of the Directive is to prescribe the general accounting
principles, and simplify the procedure in relation to the
preparation of statutory financial statements for qualifying micro,
small and medium entities. GAPSME is now the default accounting
framework for SMEs in relation to financial reporting periods
starting on or after 1 January 2016, unless a resolution is passed
by the Board of Directors to the effect that IFRSs (or the
"International Financial Reporting Standards" as adopted
by the EU) are to be used. GAPSME superseded the previous GAPSE
framework, widening thresholds and increasing eligibility.
How does one classify SMEs in terms of the rules?
In order for an entity to qualify as an SME , 2 out of the 3
following criteria must be satisfied:
number of employees
Large and Public Interest Entities fall outside the scope of
GAPSME, and are therefore obliged to prepare a full set of
financial statements in accordance with IFRS (as adopted by the
Disclosure Requirements for Financial Statements:
All SME's financial statements should (as a minimum)
the balance sheet,
income statement and
notes to the financial
A statement of changes in equity and statement of cash flows are
only required for medium sized entities.
Entities are also required to disclose:
the information necessary to identify
the register with which the entity is registered,
the number of the company in the
the legal form of the company, the
location of the registered office and,
(where appropriate) the fact that the
company is being wound-up.
The Directive imposes only a limited number of disclosers for
small entities, these are then increased for medium sized
Requirements for Small Entities
Requirements for Medium Entities
changes in equity
Consolidation for Small Groups
Small groups of companies are now exempt from preparing
consolidated financial statements. In order for a group to be
considered "small", it should not exceed any 2 of the
number of employees
Amendments to the Companies Act
Along with the introduction of GAPSME, the Maltese Companies Act
(Cap. 386) was amended in order to reflect the provisions of the
Single Accounting Directive. The main amendments include, inter
The thresholds for entities to be
considered 'small' are now in line with the rules contained
in GAPSME. Companies are now obliged to enquire whether they fall
within the GAPSME thresholds in order to benefit from simpler
Small companies are no longer
required to prepare a director's report.
Financial holding companies are no
longer exempt from preparing consolidated financial
Companies are no longer able to
extend the filing deadline for accounts with the registry of
companies to 18 months. (This option was previously available to
companies carrying on business, or having business interests of
more than 90% outside Malta).
Oversea companies are now required to
file copies of their accounts within 12 months from the end of
every accounting period.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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