Better Audit Relief for Small Companies — What Section 22 Means for Your Business
As your trusted company formations and secretarial services partner, we’re always watching for legal changes that directly impact how your business operates. One such change came into effect on 16 July 2025 — Section 22 of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024, which introduces a more flexible audit exemption regime designed to ease compliance for small and micro‑sized enterprises.
What’s Changed?
Previously under Section 363 of the Companies Act 2014, any company qualifying as “small” under Irish law would immediately lose its audit exemption if it filed its annual return late just once. This meant costly audit preparation for two years — even for first-time oversights.
Now, with Section 22, the regime is more forgiving:
-
A small company only loses audit exemption for the following two financial years if:
-
It files an annual return late, and
-
Has also failed to file an annual return once or more in the previous five financial years.
-
-
Importantly:
-
First annual return failures, or any filing failures before 16 July 2025, do not count as prior failures. Irish Statute BookLexology
-
-
Though the audit exemption may be retained under these more lenient conditions, please note that late filing fees still apply regardless.
Who Qualifies as a “Small Company”?
Under the Companies Act 2014, a small company must meet at least two of these three criteria:
-
Balance sheet total ≤ €7.5 million
-
Turnover less than or equal to €15 million
-
Employees less than or equal to 50
If your company meets this definition and is not excluded by special categories (e.g., public limited companies, credit institutions, etc.), it can benefit from the updated audit exemption rules.
Why This Change Matters
| Benefit | What It Means for Clients |
|---|---|
| One‑off leniency | A single late filing in a five‑year window won’t strip you of audit exemption |
| Less cost‑pressure | Avoids the burden of mandatory audited financials for two years after a minor slip |
| Encourages compliance, not penalises | Late filing fees remain, keeping the system fair and visible |
| Protects first‑time filers | Past filing failures before July 2025 don’t jeopardise exemption status |
From our perspective at Irish Formations, this reform reduces the risk of disproportionate penalties for minor administrative delays, especially for startups and small owners. If you are looking to create a company in Ireland then this is another good reason to choose Ireland.
What You Should Do Now
-
Track and file annual returns on time — ideally electronically to avoid both delays and fees.
-
If you have one missed filing only, don’t panic — audit exemption remains intact, as long as there were no prior failures in the last five years.
-
If you miss another filing, be aware that this triggers loss of audit exemption for two years, meaning you must prepare audited accounts.
-
Record and monitor all filing history in your compliance calendar to ensure any prior missed filings are known.
-
Maintain proof of on-time filings — and file before deadlines to avoid both financial and operational fallout.
This amendment reflects a more considered and SME‑friendly approach to regulatory compliance. At Irish Formations we’re here to support you:
-
Monitoring CRO filings on your behalf,
-
Alerting you timely to upcoming due dates,
-
Ensuring your initial Annual return is met if engaged.
If you’d like assistance reviewing your five-year filing history or confirming whether your company still qualifies as “small” — including how the exemption affects your financial filings — just get in touch. We’ll ensure you’re introduces to a skilled advisor, compliant, protected, and positioned for growth.
Disclaimer: This article provides general guidance and does not constitute legal or audit advice. For professional opinions tailored to your company’s circumstances, consult a qualified advisor.
