The audit exemption is changing —but timely filing still counts

Dee Moran outlines recent changes to the audit exemption regime for Ireland’s small and micro-sized companies

It is that time of year again; peak filing season is here, and many companies are working hard to prepare and submit their annual returns.

Filing returns late is a costly experience. According to the Companies Registration Office (CRO) Annual Report for 2024, more than 16,000 companies incurred late filing fees, with the average late filing fee amounting to €603.

But the real financial impact of late filing is the requirement to have audits performed for the following two years—an expensive process. Applying to the District Court for an order extending the time to file annual returns is another expensive process.

This is why the recent move to introduce changes to the audit exemption regime was a welcome development—one the Institute has long advocated for.

Changes to audit exemption regime

Until 16 July this year, under Section 363 of the Companies Act 2014, companies that filed their annual return late lost their audit exemption and were required to prepare and file audited financial statements for the two subsequent years following the late filing.

The only other option open to these companies was to apply to the District Court for an order extending the time to file their annual return.

In July, Minister Burke announced the commencement of Section 22 of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024.

This provision relates to a change to the current audit exemption regime, whereby small and micro-sized companies will not, in future, automatically lose the privilege of audit exemption on a first occasion, in a five-year period, of late filing of an annual return with the Companies Registration Office.

Section 22 amends Section 363 and introduces a graduated regime: companies will now only lose their audit exemption if they file late more than once within a five-year period. Companies will still be liable to pay late filing fees to the CRO for filing an annual return late.

It should be noted that these changes do not apply to companies that are part of a group. If any company within a group is late filing its annual return, the group must apply to the District Court to retain the audit exemption. Otherwise, none of the companies in the group will be entitled to claim audit exemption for the following two financial years.

Importantly, any late filings made before 16 July 2025—or a company’s first annual return—will not count as a “previous failure” under the new rules.

Implications for current filing

If your company filed annual returns late up to 15 July 2025, the previous rules still apply and preparation and filing of audited financial statements will be necessary for the subsequent two years after the late filing. However, for filings on or after 16 July 2025, a single late submission will no longer result in the automatic loss of audit exemption. Only a second late filing within five years will trigger the loss.

This change provides a valuable safety net for companies (and their accountants) that miss a deadline due to genuine circumstances.

It is still important not to have to rely on this buffer, however—timely filing remains the best way to protect your company from losing its audit exemption and we encourage members to file on time.

Please see the Institute’s pointers and tips article to assist with filing annual returns.