Malta has a new default accounting framework for small and medium-sized entities
In August 2015, the General Accounting Principles for Small and Medium-Sized Entities (GAPSME) in Malta replaced the General Accounting Principles for Smaller Entities (GAPSE).
GAPSME can be applied for financial reporting periods beginning on or after 1 January 2016 and is the default accounting framework for small and medium-sized entities (SMEs) in Malta. However, through a board resolution, SMEs may still opt to prepare their financial statements in accordance with international financial reporting standards (IFRS).
GAPSME applies to entities which satisfy two of the three eligibility criteria listed in Table 1 below. It cannot be applied by large and public interest entities (PIEs), which must prepare their financial statements in accordance with IFRS.
Balance sheet total (€)
≤ 4 million
≤ 20 million
Total revenue (€)
≤ 8 million
≤ 40 million
Average number of employees
GAPSME presents a simplified financial reporting framework with limited disclosures for these companies. In fact, small companies are only required to prepare a balance sheet, an income statement and notes to the financial statements. A statement of changes in equity, a statement of cash flows and a directors’ report are only required by medium-sized entities.
Small groups, which do not exceed any two of the three thresholds in Table 2 below, are exempt from preparing consolidated financial statements.
≤ 4.8 million
≤ 9.6 million
GAPSME’s success in Malta will ultimately depend on its take up by SMEs. Since GAPSME has simplified the financial reporting obligations of these entities, a large number of qualifying companies are expected to apply this reporting framework. However, we need to wait and see the outcome in the years ahead.
For more information, contact:
Nexia BT, Malta
Michelle Vassallo Pulis
T: +356 2163 7778
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