The General Chart of Accounts for SMEs is voluntary. It is always possible to opt for the general version. However, companies that decide to apply it must meet at least two of the following requirements for at least two continuous financial years:

• Total assets must not exceed 4,000,000 euros.
• The net turnover must be less than 8,000,000 euros.
• The number of employees in the financial year does not exceed 50.

Therefore, as soon as the SME ceases to meet two of these mandatory conditions, it will have to keep its accounts based on the General Accounting Plan.

However, the following SMEs will be excluded from the possibility of applying the Spanish General Chart of Accounts for SMEs:

• Those with securities admitted to trading in a member state of the European Union (EU).
• Companies that operate in a currency other than the euro.
• They are part of a group of companies whose accounting is regulated by means of consolidated annual accounts.
• They are financial companies with specific accounting criteria.

The specific criteria for micro-companies may be applied by companies that, having opted for the PGC for SMEs, have met at least two of the following circumstances for two consecutive financial years and at the closing date of each of them:

• Total assets do not exceed 1,000,000 euros.
• The net amount of its annual turnover does not exceed 2,000,000 euros.
• The average number of workers employed during the financial year does not exceed 10.

The criteria foreseen for micro-companies are as follows:

• Rules for accounting for financial leasing operations and others of a similar nature.
• Rules for accounting for income tax expense.

The structure of the General Chart of Accounts for SMEs is the same as the General Chart of Accounts.

It consists of five parts that begin with an introduction where the characteristics and differences with the PGC are explained.

Some of the variations with respect to the PGC are:

The first part, which contains the Conceptual Framework of Accounting, has not undergone any modification, although given the size of the companies that will apply this Chart of Accounts, the Cash Flow Statement is contemplated as a voluntary document.

In the second part, Recording and Measurement Standards, the standards relating to certain transactions that have been considered to be of little use to SMEs have been eliminated. In particular, the following standards have been eliminated:

• Goodwill
• Compound financial instruments
• Derivatives underlying investments in unquoted equity instruments whose fair value cannot be reliably determined.
• Financial guarantee contracts
• Collateral given and received
• Accounting hedges
• Long-term employee benefits liabilities
• Transactions involving payments based on equity instruments
• Business combinations

Mergers, spin-offs and non-monetary contributions of a business between group companies.

In addition, some of the recording and measurement criteria contained in the PGC relating to financial instruments have been simplified.

The third part contains, in addition to the preparation rules, the models of the annual accounts for small and medium-sized companies, which are the same as the abridged models contained in the third part of the PGC, although without the sub-groupings, headings, items and sections of information in the notes on transactions not included in the Spanish General Chart of Accounts for SMEs.

Companies that choose to apply the Chart of Accounts for SMEs and carry out transactions not included in it, in addition to applying the recording and valuation rules of the PGC, will have to include the corresponding items in the documents that make up the annual accounts of these companies. In addition, they will have to provide in the notes to the annual accounts the information expressly required in the abridged or normal annual report model.

Special mention should be made of the elimination of the Statement of Recognised Income and Expenses, given the absence of transactions that in the PGC involve the allocation of income and expenses directly to Equity. It will consist solely of a document that contemplates all the changes in equity, made with shareholders or third parties.

The fourth and fifth parts include the groups, subgroups and accounts necessary for the accounting reflection of the transactions contained in the second part of this Plan, as well as the definitions, accounting relationships and the movements that will give rise to the reasons for debit and credit.

Groups 8 and 9, which reflect expenses and income recorded directly in equity, have been eliminated.

The movement established for subsidies, donations and legacies received from third parties that constitute income charged directly to Equity, reflects both the obtaining and the transfer to the profit and loss account and the tax effect associated with these subsidies, donations and legacies.

As regards the accounting treatment of finance leases and others of a similar nature, when the purchase option is exercised, the asset is recorded at the amount paid, applying the purchase price valuation criterion. This information must also be included in the notes to the annual accounts.

However, finance leases of land, plots of land or other non-depreciable assets must be treated in accordance with the accounting and valuation standard of the PGC for SMEs.

The amount resulting from the tax settlements for the current year will be considered as the income tax expense i.e., the income tax expense is equivalent to the current tax expense.