Significant changes in bookkeeping, new definitions of small, medium, and large entities

New Accounting Rules in Force from 2025

As of the beginning of 2025, new regulations have come into force changing the rules for maintaining accounting records. The key change is the increase in the net revenue threshold from sales, the exceeding of which triggers the obligation to keep accounting books and apply the Accounting Act. New definitions of entities have also been introduced.
The amendment results from the so-called “St. Nicholas Act” of 6 December 2024, which implements a number of EU directives into Polish law, including, among others, Commission Delegated Directive (EU) 2023/2775 of 17 October 2023, amending Directive 2013/34/EU of the European Parliament and of the Council with regard to the adjustment of size criteria for micro, small, medium-sized, and large undertakings. One of the outcomes of the amendment is broader access to accounting simplifications, including the exemption from maintaining full accounting books and the use of simplified records and reporting.

According to the rationale behind the implemented directive, the increase in thresholds entitling entities to apply simplified accounting is driven by the evolving economic environment, including the sharp rise in the prices of goods and services due to inflation.

Relaxation of the Obligation to Keep Accounting Books

A major change is the increase in the net revenue threshold from sales of goods and products in the previous financial year from EUR 2 million to EUR 2.5 million (i.e., from over PLN 8.5 million to over PLN 10.5 million, according to the average NBP exchange rate on the first working day of October of the previous year). As of the new financial year, revenues from financial operations will no longer be included when calculating the EUR 10.5 million threshold, in line with the need to standardize the definition of net sales.
This change will certainly benefit entrepreneurs, allowing them to document their income and expenses using simplified accounting methods. This, in turn, will reduce bookkeeping costs and enable companies to manage their own accounting independently.

New Definitions of Micro, Small, Medium, and Large Entities

The amendment introduces more precise classifications of entities covered by the Accounting Act. According to the Ministry of Finance, the new regulations will define micro, small, medium, and large entities more clearly, along with the conditions for acquiring and losing such status. This should provide entrepreneurs (and their accountants) with greater certainty regarding eligibility for simplified reporting and record-keeping rules.
The criteria used to classify an entity into one of the four categories include:

• Net revenue from sales of goods and services (excluding revenues from financial operations),
• Total balance sheet assets,
• Average annual employment expressed in full-time equivalents.

Entities are eligible to apply simplifications if, in the financial year for which the financial statements are prepared and the preceding year, they did not exceed at least two of the three criteria above. An entity loses its status if it exceeds the established values in two consecutive financial years. The new thresholds apply to financial statements prepared for financial years beginning after 31 December 2023.

Potential Consequences of the Changes

Micro and small entities may benefit from the following simplified accounting rules:

• Classifying finance lease contracts under tax law rather than the Accounting Act,
• Waiving the requirement to create provisions and deferred income tax assets,
• Applying simplified valuation methods for financial instruments under the Accounting Act rather than regulations issued by the Minister of Finance,
• Simplifying the calculation of product manufacturing costs by allowing indirect costs to be added to direct costs, regardless of capacity utilization.

Raising the threshold at which maintaining full accounting books becomes mandatory, along with more precise entity classification, will relieve many entrepreneurs from the obligation to maintain extensive accounting records and incur additional administrative costs.
This amendment is part of a broader trend of adapting Polish regulations to the dynamically changing economic environment and growing revenues of businesses. Entrepreneurs are encouraged to familiarize themselves with the new regulations and adjust their accounting practices accordingly.

If you have any questions regarding the amendment to the Accounting Act and its implications, please feel free to contact our law firm.