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These changes establish clearer requirements regarding the indication of the field of activity and audit procedures when preparing annual reports.

Mandatory indication of the field of activity

Previously, organizations could indicate their field(s) of activity voluntarily. However, according to the Law on Associations and Foundations, since July 1, 2024, it has become mandatory to indicate the purpose of activity. Accordingly, the new regulation requires that, starting from the 2024 reporting year, organizations must indicate their field of activity when submitting the annual report via the State Revenue Service's Electronic Declaration System (EDS).

This requirement applies to all associations and foundations registered in the Register of Associations and Foundations by June 30, 2024.

New requirements for report auditing

Changes also apply to report verification and auditing:

• If an organization's income from economic activities exceeds EUR 1,000,000 during the reporting year, the annual report must be audited by a sworn auditor or audit company, and an auditor's opinion must be submitted according to the Law on Audit Services.
• If the income exceeds EUR 1,200 but does not exceed EUR 1,000,000, a summary report prepared by the organization's audit institution must be attached in free form.
• For organizations with income not exceeding EUR 1,200, attaching such a report is no longer mandatory.

Additional requirements for audit institution members

To facilitate organizational operations, it is now required that at least one member of the audit institution has basic knowledge of accounting or auditing. This requirement aims to ensure report quality and a responsible approach to evaluating financial information.

Comment from an LP Consulting professional:

These changes will significantly impact the annual reporting process for associations and foundations. Therefore, we recommend becoming familiar with the new requirements in a timely manner and adjusting internal procedures to ensure smooth report preparation. As accounting professionals, we advise reviewing your annual report preparation plan now, especially if your organization's income is approaching the EUR 1 million threshold.

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