The annual financial statement (Bilancio d’esercizio) is the document that summarizes a company’s economic, asset, and financial position at the end of a financial year. It is not only a statutory requirement but also an essential tool for assessing the company’s performance and for meeting tax and company law requirements. The information contained in the annual financial statement is also of great importance to shareholders, banks, business partners, and public authorities.
The annual financial statement must be prepared in a clear, truthful, and comprehensible manner and serves, among other things, as the basis for determining taxable income. For companies limited by shares, the provisions of Articles 2423 et seq. of the Italian Civil Code (Codice Civile) apply.
The annual financial statement is prepared in accordance with the so-called Principles of Proper Accounting (OIC). The most important principles include:
These principles are intended to ensure that the annual financial statement provides a reliable picture of the company’s financial position.
The Annual Financial Statement generally consist of the following documents:
Depending on the size of the company, simplifications may be permitted, for example for small or micro-enterprises.
The annual financial statement must generally be approved by the shareholders within 120 days of the end of the financial year. Under certain conditions, this deadline may be extended to 180 days. The annual financial statement must then be filed with the Register of Companies (Registro delle Imprese) within 30 days.
The annual financial statement is not only significant under company law but also forms the central basis for determining taxable profit. Based on the profit or loss under commercial law, the adjustments required for tax purposes are made to determine taxable income.
The annual financial statement thus forms the basis for preparing tax returns and, in particular, for calculating corporate income tax (IRES) and the regional tax on productive activities (IRAP).
The annual financial statement is far more than a legal obligation. It provides transparency regarding a company’s financial performance, serves as the basis for business decisions, and forms the foundation for determining taxable profit and preparing tax returns. Preparing it correctly and on time is therefore of paramount importance for any company operating in Italy.