Is there light at the end of the tunnel for small business after all?

28 January 2010
by eub2 -- last modified 28 January 2010

Today, the Legal Affairs Committee of the European Parliament voted in favour of a Commission proposal to exempt micro-entities from certain disproportionately burdensome accounting rules. The vote signals an important step forward for the EU’s overall goal to reduce administrative burden by 25% by 2012.

At present, micro-entities, meaning very small companies with less than 10 employees, are required to draw up elaborate annual accounts and have them audited. In addition to diverting valuable manpower from these small companies with an average of 3 or 4 staff, the requirements denote annual costs of EUR 1200 per micro-entity on average, and up to EUR 6.2 billion per year EU wide. Advised by the High Level Group of Independent Stakeholders on Administrative Burdens, the Commission concluded that the generally locally operating micro-entities have no real use for keeping these accounts and should be exempted from these rules.

In line with the EU's Better Regulation Program and the European Economic Recovery Plan, the Commission therefore tabled a proposal amending Directive 78/660/EEC on the annual accounts of certain types of companies. The proposed Directive would enable Member States to exclude micro-enterprises from the scope of the burdensome EU accounting Directives and to align the reporting requirements of micro-entities to the real needs of users and preparers of the accounts, saving the EU economy EUR 6.3 billion per year.

A negative first vote on the proposal in the European Parliament's Committee on Economic and Monetary affairs in October 2009, severely threatened the credibility of the EU's promises to reduce administrative burdens and to create a healthier regulatory environment for SMEs. However, judging by today's vote in the Legal Affairs Committee, it seems as though the Members of the European Parliament have regained their grasp of the vital importance of the EU's Administrative Burden Reduction Plan for small businesses and the EU economy as a whole.

Tina Sommer said: "The European Small Business Alliance is happy with the results of today's vote, as it indicates a healthy mindset amongst MEPs towards small business. However, this is only a first step in the right direction. The proposal still needs to be voted on in Plenary and will have to find agreement in Council. Therefore, ESBA urges the European Parliament and the Council to keep their eye on the prize and make sure this important Commission proposal reaches its intended beneficiaries".

Founded in 1998 by eight independent national small business associations, The European Small Business Alliance (ESBA) is a non-party political group, which cares for small business entrepreneurs and the self-employed and represents them through targeted EU advocacy and profiling activities. ESBA also works towards the development of strong independent advocacy and benefits groups in European countries. ESBA's new website, which provides an innovative approach to communication amongst business organizations, reflects these three main fields of activity. Today, ESBA is one of the largest organizations based on voluntary membership in Europe. Through its direct membership, associate membership and cooperation agreements, the Alliance now represents almost one million small businesses and covers 36 European countries. Increased support and recognition, internally and externally, however will only be achieved through tangible results. Through implementation of its 'Vision 2020' and the corresponding business plan, this is what ESBA is constantly striving to achieve on behalf of its members and SMEs in Europe.

European Small Business Alliance (ESBA)