Whether a company needs an audit depends on its size, its legal form and, often decisively, the group it belongs to. The UK, Germany, France, Singapore and Saudi Arabia all exempt small companies, but the tests use different figures and several look through to the group: a small Singapore or UK subsidiary of a large group usually still needs an audit. In the UAE the corporate tax rules add an audit duty for larger taxpayers and Qualifying Free Zone Persons.
Size tests: two of three, usually over two years
Most exemptions use two of three criteria. A UK private company can be exempt if it has turnover of no more than £15 million, a balance sheet of no more than £7.5 million or 50 or fewer employees, meeting two of these. A German corporation is small, and outside the audit duty, if it stays within two of EUR 7.5 million total assets, EUR 15 million revenue and 50 employees, with changes taking effect only after two consecutive year ends. Singapore uses S$10 million revenue, S$10 million assets and 50 employees over the past two years, and Saudi Arabia exempts micro and small companies with revenue and assets of no more than SAR 10 million each and up to 49 employees.
France sets the duty the other way round: a statutory auditor must be appointed once two of EUR 5 million balance sheet, EUR 10 million turnover and 50 employees are exceeded.123456
Group membership changes the answer
A UK subsidiary must be audited unless it qualifies for an exemption. The subsidiary exemption in section 479A requires a parent established in the UK, unanimous member agreement, a parent guarantee and inclusion in the parent's consolidated accounts, so a UK subsidiary owned directly by a foreign parent cannot use it. In Singapore a company in a group is exempt only if the entire group, including foreign entities, also passes the small test on consolidated figures.
Minority investors can also force an audit: UK shareholders holding 10% of the shares can require one by notice at least a month before year end.789
Tax-driven audit duties in the Gulf
The UAE corporate tax law lets the Minister require audited financial statements for specified categories. A secondary summary states that an audit by a UAE-licensed auditor is required where revenue exceeds AED 50 million or the taxpayer is a Qualifying Free Zone Person; company law and free zone rules may impose audits independently and were not confirmed. In Saudi Arabia a company exempt from appointing an auditor still needs audited accounts if it wants to carry tax losses forward.101112
| Market | Test | Figures | Group look-through | Source |
|---|---|---|---|---|
| United Kingdom | Two of three | £15m turnover; £7.5m balance sheet; 50 employees | Subsidiaries audited unless exempt; s479A needs a UK parent | GOV.UK; CA 2006 s479A |
| Germany | Small if within two of three on two consecutive year ends | EUR 7.5m assets; EUR 15m revenue; 50 employees | Not part of the size test; § 264(3) exemption needs EU/EEA parent | §§ 267, 316 HGB |
| France | Auditor required above two of three | EUR 5m balance sheet; EUR 10m turnover; 50 employees | Lower thresholds for small groups | Service Public F31440 |
| Singapore | Two of three for past two years | S$10m revenue; S$10m assets; 50 employees | Whole group must also qualify | ACRA |
| Saudi Arabia | All three | SAR 10m revenue; SAR 10m assets; 49 employees | Not stated | Ministry of Commerce |
| UAE (corporate tax) | Revenue or status | Above AED 50m revenue, or Qualifying Free Zone Person | Not stated | PwC summary (secondary) |
| India | Not confirmed | Not confirmed | Not confirmed | See gaps |
Decisions to make
- Is the company part of a group, and where is its immediate parent established?789Group membership can remove a small-company exemption in the UK and Singapore, and the UK subsidiary exemption needs a UK parent.
- Has the company been below the thresholds for two consecutive years?24Germany and Singapore look at two years, so one good or bad year does not change status immediately.
- Will minority shareholders, lenders or the articles require an audit anyway?7UK holders of 10% of the shares can require an audit regardless of size.
- Does tax law require audited accounts even where company law does not?101112UAE corporate tax rules and Saudi loss carry-forward rules depend on audited statements.
Documents usually needed
- Size test workings for the current and previous year, including group consolidated figures
- Group structure chart showing the immediate and ultimate parent
- Member agreement and parent guarantee (form AA06) where the UK subsidiary exemption is used
- Director's statement that no auditor is required, where Saudi law asks for one
- Audit engagement letter where an audit is required
Common mistakes
- Testing only the subsidiary's own figures where the group must also qualify
- Assuming a UK subsidiary of a US parent can use the section 479A exemption
- Changing audit status after a single year above or below the German thresholds
- Relying on company law exemptions while UAE tax rules require audited statements
- Ignoring a minority shareholder's right to demand an audit
Questions businesses ask
Does a small UK subsidiary of a large foreign group need an audit?
Usually yes. Subsidiaries must be audited unless exempt, and the section 479A subsidiary exemption requires a UK parent. Whether a small-company exemption is available depends on the group, which should be checked with an adviser.78
What this guide does not yet confirm
These points need checking with a qualified local professional before you rely on them.
- India: the Companies Act 2013 audit requirement (section 139) and related rules could not yet be checked on the MCA site, so India's position is not stated.
- UAE: Ministerial Decision No. 82 of 2023, the Commercial Companies Law auditor requirement and free zone audit rules (for example DMCC, DIFC, ADGM) could not yet be checked; the AED 50 million point rests on a secondary source.
- UK: the exclusions in section 479B and the group test for the small-company exemption (section 479) could not yet be checked.
- Singapore: the dormant company exemption details under section 205B could not yet be checked.
- United States: state-level audit requirements were not researched.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
A private company can claim audit exemption if it meets at least two of: turnover of no more than £15 million, balance sheet total of no more than £7.5 million, and 50 or fewer employees on average. Financial years beginning on or after 6 April 2025 (previously £10.2 million turnover and £5.1 million assets). Not available to public companies (unless dormant), most subsidiaries without the subsidiary exemption, banks, insurers, e-money issuers, MiFID firms or companies with shares on a regulated market; shareholders holding 10% can require an audit.
A German corporation is small, and so outside statutory audit, if it does not exceed two of three limits: EUR 7.5 million total assets, EUR 15 million revenue in the 12 months before the balance sheet date and 50 employees on annual average; the consequences apply only once the limits are exceeded or not exceeded on two consecutive balance sheet dates. Kapitalgesellschaften including GmbH. Medium-sized limits are EUR 25 million assets, EUR 50 million revenue and 250 employees. Capital-market-oriented companies are always treated as large.
The annual financial statements and management report of corporations that are not small must be audited by a statutory auditor. Kapitalgesellschaften (including GmbH) exceeding the small-company limits in § 267 Abs. 1 HGB.
A private company is exempt from statutory audit as a small company if it meets at least two of three criteria for the past two consecutive financial years: revenue of S$10 million or less, total assets of S$10 million or less, and 50 employees or fewer. If the company is part of a group, the group must also qualify as a small group on a consolidated basis. New companies are assessed on the current year.
Micro and small companies with annual revenue and assets of no more than SAR 10 million each and no more than 49 employees are exempt from appointing an auditor. Companies under the Companies Law; the director or chairman must attach a statement to the financial statements.
Thresholds as described by the Ministry of Commerce; confirm whether all criteria must be met in the Companies Law Implementing Regulations. Companies with non-Saudi shareholders filing income tax returns are generally expected to file audited financial statements (PwC, Tax administration).
A company must appoint a statutory auditor (commissaire aux comptes) when it exceeds two of three thresholds: total balance sheet of 5 million euros, turnover excluding VAT of 10 million euros, or 50 employees. Applies to SARL, EURL, SA, SAS, SCA, SNC and SCS. Lower thresholds (2.5 million / 5 million / 25 employees) apply to parent entities of small groups. Mandate lasts six financial years.
A UK private company that is a subsidiary must have its accounts audited unless it qualifies for an exemption, and shareholders holding at least 10% of the shares can require an audit by writing to the registered office at least one month before the year end. UK private companies; the articles of association may also require an audit.
A UK subsidiary can be exempt from audit under section 479A only if its parent is established under the law of a part of the UK, all its members agree, the parent guarantees its liabilities under section 479C, and it is included in the parent's consolidated accounts, with the required documents filed at Companies House by the filing deadline. Parent location wording substituted with effect from 31 December 2020; a subsidiary of a non-UK parent cannot use this exemption. Subject to sections 475(2)-(3) and 476 and the exclusions in section 479B (not read).
A Singapore company that belongs to a group qualifies for audit exemption only if the entire group, including foreign entities, also meets at least two of the three small-company criteria, measured on the holding company's consolidated financial statements. Small group test for the S$10 million revenue, S$10 million assets and 50 employees criteria. Dormant companies are separately exempt under section 205B.
The Minister may require specified categories of taxable persons to prepare and keep audited or certified financial statements. Federal. The categories are set by Ministerial Decision (understood to cover taxable persons with revenue above AED 50 million and Qualifying Free Zone Persons) and were not confirmed here.
For UAE corporate tax, financial statements must be audited by a UAE-licensed auditor where the taxable person's revenue exceeds AED 50 million or where it is a Qualifying Free Zone Person. Federal corporate tax. For a UAE permanent establishment only revenue allocated to it counts towards the AED 50 million threshold. Company law and free zone audit requirements are separate and were not confirmed.
Secondary source used because Ministerial Decision No. 82 of 2023 could not yet be checked on an official site.
In Saudi Arabia tax losses may be carried forward only if they were determined under statutory accounts audited by a certified accountant licensed in the Kingdom. Income tax payers; relevant to foreign-owned companies that are exempt from appointing an auditor under company law.
The ZATCA-hosted Implementing Regulations file is largely in Arabic.
Questions on this topic
10 statements on statutory audit requirements and thresholds
