What happens if annual accounts are not filed or filed late?

 

What are the deadlines for preparing, approving and filing the annual accounts?

Companies must:

• Prepare the annual accounts within the first three months of the following financial year.

• Approve them in the general meeting within the first six months of the year.

• File the annual accounts with the Mercantile Registry within the month following approval.

Penalties for not filing annual accounts

Not filing or filing annual accounts late may lead to a sanctioning procedure. In general, the fine ranges from 1,200 to 60,000 euros for each year of delay. This maximum can rise to 300,000 euros per year for companies or groups with an annual turnover of more than 6 million euros.

The exact amount is calculated as 0.5% of total assets plus 0.5% of sales declared in Corporate Income Tax. If this sum exceeds 2% of share capital, a 10% reduction applies. If the ICAC (Accounting and Auditing Institute) has no data, the fine is 2% of share capital, with a minimum of 1,200 euros.

Filing late

If the accounts are filed late but before the sanctioning procedure begins, the fine is imposed at its minimum level and reduced by 50%.

However, if one year passes from the year-end without filing the accounts, the registry is closed: the company cannot register most corporate actions such as capital increases or change of address, which can block operations. Only essential documents such as director resignations or dissolutions can be registered.

Other consequences of non-compliance

Not filing annual accounts can damage the company’s reputation and credibility with clients, suppliers and financial institutions. It can also lead to liability for directors, who may have to cover company debts or damages with their own assets.

For entrepreneurs with limited liability status, not filing accounts within seven months from year-end means losing the benefit of limited liability for debts incurred afterwards. This benefit is recovered once the accounts are filed.

When can abbreviated annual accounts be filed?

The abbreviated balance sheet and profit and loss account allow small companies to simplify the presentation of their financial statements.

• To file an abbreviated balance sheet, during two consecutive years the company must meet at least two of these conditions: no more than 50 employees, total assets not exceeding 4,000,000 euros, and annual turnover not exceeding 8,000,000 euros.

• To file an abbreviated profit and loss account, items can be grouped if during two consecutive years the company meets at least two of these: total assets not exceeding 11,400,000 euros, turnover not exceeding 22,800,000 euros and an average workforce of no more than 250 employees.

The notes to the financial statements can also be filed in an abbreviated format if the company qualifies to file an abbreviated balance sheet.

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