Spanish General Accounting Plan (PGC)

The Spanish General Accounting Plan (PGC)

Spain’s General Accounting Plan (PGC) sets out the rules under which all Spanish companies must keep their accounts and prepare their annual financial statements (cuentas anuales). Introduced by Royal Decree 1514/2007 — replacing the previous 1990 plan — the PGC aligned Spanish accounting with EU-adopted IFRS while retaining national characteristics suited to the structure of the Spanish economy.

The PGC is structured in five parts:

1. Conceptual framework — accounting principles and recognition and measurement criteria (mandatory).
2. Recording and valuation rules — specific guidance for each type of asset, liability, income and expense (mandatory).
3. Annual accounts — formats for the balance sheet, profit and loss account, statement of changes in equity, cash flow statement and notes (mandatory).
4. Chart of accounts — standardised account codes (indicative only).
5. Definitions and accounting relationships — guidance on account content and interrelationships (indicative only).

Key Accounting Principles

The PGC’s conceptual framework rests on six core principles. The going concern principle presumes the company will continue indefinitely. The accruals basis requires revenue and expenses to be recognised when they occur, not when cash is received or paid. Consistency demands that accounting policies are applied uniformly across periods. Prudence requires that only realised gains are recognised while losses are recognised as soon as they are probable. The no-netting rule prohibits offsetting assets against liabilities or income against expenses. Finally, materiality allows departures from strict compliance when the effect is not significant.

SME Version: the PGCE

The PGCE (Real Decreto 1515/2007) is a simplified version of the PGC available to companies that meet the size thresholds. It reduces the number of mandatory valuation rules, simplifies the annual accounts formats, and eliminates the obligation to prepare a cash flow statement. It cannot be used by listed companies, consolidated groups, or entities in regulated financial sectors.

Relationship with IFRS

Listed Spanish groups must prepare their consolidated accounts under IFRS as adopted by the EU. Individual (standalone) accounts — even of subsidiaries in IFRS groups — are filed under PGC. The two frameworks differ most significantly in: treatment of financial instruments, lease accounting (IFRS 16 vs PGC simplified equivalent), recognition of internally generated intangibles, and deferred tax methodology. Reconciling PGC individual accounts to IFRS group figures is a recurring task in due diligence and cross-border transactions involving Spanish entities.