Companies in 2026: New thresholds for micro, small and medium-sized enterprises

From 2026 onwards, new thresholds enter into force for the classification of companies in Portugal, applicable to financial years starting on or after 1 January 2026. The core logic remains the same: the category (micro, small, medium-sized or large) continues to depend on three criteria: balance sheet total, net turnover and the average number of employees, and a company falls within a category when it does not exceed two of those three limits. What changes is the “size” allowed in each category: the balance sheet and turnover thresholds increase for micro, small and medium-sized enterprises. The expected effect is to reduce automatic reclassifications driven by inflation or normal growth, reduce accounting complexity where applicable, and make classification better aligned with economic reality.

What category classification is and why it matters

Category classification is not a bureaucratic detail. It directly or indirectly influences:

• the type of financial statements required and their level of complexity;

• the level of reporting requirements and accounting organisation;

• the need for audit, or the degree of accounting scrutiny in certain contexts;

• administrative costs, compliance burden and internal management time.

In practical terms, the category works as a “framework” for obligations and requirements. A company can grow in a legitimate and healthy way and still see costs and complexity rise if it changes category. That is why changing thresholds affects day-to-day operations.

What changes for companies in 2026

The thresholds were updated at all levels, increasing the balance sheet total and net turnover allowed for micro, small and medium-sized companies. The average number of employees remains at the same levels.

The practical intent of this update is clear:

• avoid companies moving category “by drag” (inflation, revaluation, normal growth);

• simplify management and reduce administrative costs;

• align Portuguese legislation with the relevant European directive and make classification more proportional.

How a company’s category is determined

The rule remains:

• there are three criteria: balance sheet total, net turnover and average number of employees;

• a company is assigned to a category if it does not exceed two of the three limits for that category.

This means classification does not depend on a single indicator. For internal decision-making, it is important to monitor all three, because small variations can change the overall outcome when they repeat over time.

Comparative table of thresholds (2025 vs 2026)

Below is a practical table with the thresholds that change in 2026.

Quick reading: the “jump” is not in employee thresholds; it is in the financial thresholds. This reduces the likelihood of reclassification based only on price effects and organic growth.

Corporate groups: a new intermediate category

For corporate groups, new thresholds were also defined and an intermediate category called “medium-sized groups” was introduced. The objective is to differentiate small, medium and large groups more clearly, avoiding an overly binary classification and enabling requirements that are more proportional to the group’s real size.

In practical terms, this can affect how certain groups structure internal reporting and how they prepare consolidated documentation and financial statements.

Category change rules: why this is crucial

One of the most relevant rules is how a change of category becomes consolidated:

• the change does not occur automatically when thresholds are exceeded in a single financial year;

• for the new classification to be consolidated, the company must exceed two of the three criteria for two consecutive financial years.

This rule creates stability and avoids artificial “oscillations.” In practice:

• an exceptional year (temporary growth, a one-off event, market effect) should not, by itself, force an immediate structural change;

• the company gains time to adjust processes and governance before stricter requirements apply.

The most likely practical impacts for companies in 2026

Changes to thresholds have very concrete implications for day-to-day business.

Fewer automatic reclassifications

By increasing balance sheet and turnover thresholds, the likelihood of a company moving up a category for reasons that do not reflect a real increase in operational complexity, such as inflation or normal growth, is reduced.

Lower administrative costs for companies that remain in (or move down to) a category

Companies that remain in lower categories may benefit from less complex financial statement models and simpler reporting routines, reducing internal time and external costs.

Stricter requirements for companies that move up a category

On the other hand, companies that move up a category tend to face more demanding accounting and audit requirements. In practical terms, this means:

• greater need for internal controls;

• more robust closing processes;

• stronger documentary discipline and accounting justifications;

• greater predictability in financial organisation.

Better alignment with economic reality and the European directive

The update seeks to make classification more proportional and coherent with the economic context, reducing unnecessary bureaucratic “jumps.”

How to prepare the company for 2026

Even without changing operations, it is worth treating 2026 as an internal checkpoint.

Monitor the three criteria

• track balance sheet, turnover and employees monthly (or quarterly);

• identify trends that could lead to exceeding two criteria repeatedly.

Plan reporting and closing

• if there is a risk of moving up a category, anticipate the need to strengthen accounting and control processes;

• reinforce documentary consistency and audit readiness where applicable.

Make growth decisions with compliance awareness

Growth is positive, but part of growth can imply “invisible” compliance costs. What changes in 2026 does not eliminate this; it makes it more proportional. Still, it is useful to map:

• when category change consolidation is likely;

• what process reinforcements it implies;

• what additional costs may arise.

Frequently asked questions

When do the new thresholds apply?
They apply to financial years starting on or after 1 January 2026.

Does a company change category in the first year it exceeds the thresholds?
Not necessarily. A category change is consolidated when the company exceeds two of the three criteria for two consecutive financial years.

What happens if a company is “at the limit” of a category?
When a company is near the limit, managing all three criteria becomes especially relevant. Temporary growth does not trigger an automatic change, but two consecutive years exceeding two criteria tend to consolidate reclassification.

Do employee thresholds change in 2026?
No. Employee thresholds remain the same. The main update is in the financial thresholds (balance sheet and turnover).

Why does this reduce administrative costs?
Because it avoids automatic reclassifications caused by inflation or normal growth. By staying in the same category, many companies avoid additional requirements and more complex reporting models, reducing compliance time and costs.

What does the introduction of “medium-sized groups” mean?
It introduces more granular classification for corporate groups, allowing sizes to be differentiated more clearly and requirements to be applied more proportionally.

This article is informational and summarises trends and measures referenced for 2026. Practical application depends on each company’s accounting and operational reality, as well as the interpretation and accounting practice applicable to its specific framework. For more information, contact us.