Business – Photo by Scott Graham on Unsplash
(BRUSSELS) – The European Commission presented Tuesday a series of initiatives to ease current pressures on smaller businesses (SMEs), to cut paperwork, simplify taxes and ensure they are paid in due time.
SMEs, which represent 99% of Europe’s businesses, continue to face unpredictability and volatility as a result of a number of crises in recent years. The ‘SME Relief Communication’ proposes new measures that will provide short-term relief, boost SMEs’ long-term competitiveness, and strengthen fairness in the business environment across the Single Market.
As part of the measures, the Commission is also publishing new proposals for a Regulation on late payments in commercial transactions and a Directive establishing a Head Office Tax System for SMEs. Additional initiatives aim at further boosting SMEs’ access to finance, improving the business environment and supporting SMEs’ growth into mid-caps to unleash their full economic potential.
In particular, the new Regulation on combatting late payments in commercial transactions tackles payment delays, an unfair practice that compromises the cash flow of SMEs and hampers the competitiveness and resilience of supply chains. The new rules will repeal the 2011 Directive on late payments and will replace it with a Regulation. The proposal introduces a stricter maximum payment limit of 30 days, eliminates ambiguities and addresses the legal gaps in the current Directive. The proposed text also ensures an automatic payment of accrued interest and compensation fees and introduces new enforcement and redress measures to protect companies against bad payers.
The Head Office Tax System for SMEs will give SMEs operating cross-border through permanent establishments the option to interact with only one tax administration that of the Head Office instead of having to comply with multiple tax systems. The Commission says this proposal will increase tax certainty and fairness, reduce compliance costs and distortions in the market that influence business decisions, while minimising the risk of double and over taxation and tax disputes. The expected decrease in compliance costs should, in particular, foster investment and cross-border expansion in the EU. SMEs operating in different Member States will be able to fully maximise the freedom of establishment and the free movement of capital without being hindered by unnecessary tax related obstacles.
The SME Relief Communication also proposes several non-legislative measures to support SMEs.
Questions and Answers on SME relief package
Factsheet on SME relief package
Questions and Answers on late payments regulation
Factsheet on late payments regulation
Questions and Answers on the Head Office Tax System for SMEs
Factsheet on the Head Office Tax System for SMEs
Communication on SME relief measures
