Annual accounts: preparing, approving and filing with the registry

Key rules

• Drawing up: Administrators must sign the accounts within three months of the year-end, which is 31 March for a calendar-year company.
• Approval: The shareholders' meeting must approve the accounts within six months of the year-end, which is 30 June for a calendar-year company.
• Deposit: File the approved accounts with the Registro Mercantil within one month of the approval date.
• Audit: An audit is mandatory if you exceed two of three limits for two years running: €2.85 million assets, €5.7 million turnover, 50 employees.

The deadlines in order

Each deadline starts from the financial year-end. For most companies that is 31 December.

1. Draw up and sign the accounts: within three months of the year-end. For a calendar-year company, that is 31 March.
2. Approve them at the shareholders' meeting: within six months of the year-end. For a calendar-year company, that is 30 June.
3. Deposit them in the Registro Mercantil: within one month of the approval date. If you approve on 30 June, the deposit is due by the end of July.

The sequence below shows the steps in order. The month for the deposit runs from the day the meeting approves the accounts, so hold the meeting early if you want more margin.

Step 1: drawing up the accounts

All administrators must sign the accounts, the management report and the proposal for allocating profit or loss. If a signature is missing, the document must state the reason.

The accounts always include a balance sheet, a profit and loss account and the notes (the memoria). Full, non-abbreviated accounts also include a statement of changes in equity and a cash flow statement. The documents list below shows what to prepare.

Step 2: the shareholders' meeting

The ordinary general meeting approves three things: the accounts, the management of the company, and what to do with the profit or loss. The meeting's approval is what starts the one-month deposit clock.

Step 3: depositing at the registry

File online with the Registro Mercantil, in the registry's required format. Many companies use a gestoría or another professional for this. If the registrar finds defects, you must correct them.

If you have missed a deadline, see the "What if you have not deposited your annual accounts?" section below.

Can you use abbreviated accounts?

Abbreviated accounts are shorter and simpler. You can use them if, for two consecutive years, you do not exceed two of these three limits:

• Balance sheet, statement of changes in equity and notes: total assets of €4 million, net turnover of €8 million, 50 average employees.
• Profit and loss account: total assets of €11.4 million, net turnover of €22.8 million, 250 average employees.

Does your company need an audit?

An audit is mandatory if, for two consecutive years, you exceed two of these three limits: total assets of €2.85 million, net turnover of €5.7 million, 50 average employees. Companies that qualify for the abbreviated balance sheet are normally exempt.

Even below those limits, shareholders holding at least 5% of the capital can ask the Registro Mercantil to appoint an auditor. They must ask within three months of the year-end, and they pay the cost.

From year-end to registry deposit: the annual accounts sequence

From year-end to registry deposit

• Close the financial year: On the year-end date, 31 December for a calendar-year company

• Administrators draw up and sign the annual accounts, the management report and the proposal for allocating profit. Every administrator signs; if a signature is missing, the document states why.: Within three months of the year-end Deadline: 31 March.

• Call the shareholders' meeting and hold it to approve the accounts, the management of the company and the allocation of profit or loss: Within six months of the year-end Deadline: 30 June.

• The secretary, with the chair's approval, certifies that the meeting approved the accounts: Right after the meeting, so the deposit can be filed

• Prepare the accounts in the registry's required format with filing software, and sign the file electronically (certifier and administrators): After the certificate is ready, before filing

• Correct any defects the registrar notifies after reviewing the filing: If the registrar finds defects, after you receive the notice

Documents you need

• Balance sheet, drawn up and signed by all administrators. If a signature is missing, the document states the reason.

• Profit and loss account, signed by all administrators.

• Notes to the accounts (memoria), signed by all administrators.

• Statement of changes in equity, needed unless your company qualifies for the abbreviated format.

• Cash flow statement, needed only for non-abbreviated accounts.

• Management report, drawn up and signed by the administrators with the accounts.

• Proposal for allocating profit or loss, signed by the administrators.

What if you have not deposited your annual accounts?

What happens if the accounts are late

Late or missing accounts bring two separate problems: fines and a blocked registry sheet. Both are fixed by depositing the overdue accounts, but the fines can still follow.

Fines

The state accounting and audit body can fine a company that does not deposit its annual accounts. The fine is €1,200 to €60,000. For companies with turnover over €6 million, it is €60,000 to €300,000 per year of delay. The commercial registry reports companies in default, and the fining process starts from that report.

The blocked registry sheet

If the accounts are not deposited within one year after the year-end, the registry closes the company's sheet and blocks most new registrations.

While the sheet is closed, the registry still accepts only these:

• appointing, removing or accepting the resignation of administrators, liquidators or auditors
• revoking powers of attorney
• dissolving and liquidating the company
• depositing the overdue accounts

Anything else waits, such as changing the registered address or recording a capital increase. Plan for this if you need a registration soon, for example for a sale, a new bank mandate or a new director.

How to fix it

1. Hold the general meeting. The shareholders must approve the accounts for every missing year, even though the meeting is late. The administrator then certifies the approval.
2. Prepare the accounts for each unfiled year. These are the balance sheet, profit and loss account and notes. Add the management report if your company needs one, and the audit report if it was audited.
3. File them electronically with the registry. Include the approval certificate and the declaration on the beneficial owner (the person who ultimately owns or controls the company).
4. Wait for acceptance. Every unfiled year must be deposited. The registrar reopens the sheet once the deposit is accepted.

An accountant or administrative adviser can usually prepare and file this within days or weeks. Several missing years take longer, because each needs its own approval.

Watch for

Reopening the sheet does not cancel fines. Depositing quickly is still the best way to limit them, since the range is set per year of delay. If you receive a notice about a fine, answer it within the deadline it gives. The amounts are set by law and can change, so check the current figures with your adviser.

Frequently asked questions

When can my company use abbreviated accounts?

Your company can use an abbreviated balance sheet if, for two consecutive years, it stays under two of three limits: €4 million in total assets, €8 million in net turnover and 50 average employees. The abbreviated profit and loss account has higher limits: €11.4 million in assets, €22.8 million in turnover and 250 employees. The abbreviated notes follow the same limits as the balance sheet.