Small companies will have to reveal less information in annual financial statements as a result of a red-tape cutting measure formally accepted by a vote in the European parliament in Strasbourg on 12 June, 2013.

The new directive merges and updates two existing accounting directives. Over the past 30 years, amendments to these existing directives added many new disclosures and valuation rules making them more complex and increasing the regulatory burden for companies. The new accounting directive permits small companies to prepare only abridged balance sheets and profit and loss accounts, although such enterprises remain entitled to provide more information if they wish.

The new rule affects companies with less than 50 employees, a turnover of not more than €8 million and/or a balance sheet total of not more than €4 million, which are defined as small in the directive. The New Accounting Directive is to be transposed by Member States into national laws between 2013-2015.