Small and medium-sized enterprises (SMEs) often encounter unfair competition while conducting business in Europe. To rectify this issue, the European Commission (EC) has introduced new measures through SME Relief Communication. These measures offer immediate relief, enhance long-term competitiveness, and promote equity within the European Single Market’s business landscape.
This initiative is designed to cater to the requirements of SMEs in the current economic climate.
The non-legislative proposals outlined in the SME Relief Communication include:
Enhancing the existing regulatory framework for SMEs by building on the successful application of the ‘one in one out principle,’ which resulted in €7.3 billion in net cost savings. Additionally, the Commission plans to improve the implementation of the SME Test and encourage the use of regulatory sandboxes to foster innovation and experimentation among SMEs.
Streamlining administrative procedures and reporting requirements for SMEs by introducing the Once-Only Technical System, set to launch by the end of 2023. This system will enable SMEs to complete administrative tasks across the Single Market without redundant document submissions. Furthermore, the Commission will continue its efforts to reduce reporting obligations by 25 percent, as announced in March 2023.
Increasing investment opportunities for SMEs, including ensuring that a portion of the proposed €7.5 billion EU guarantee within the new Strategic Technologies for Europe Platform (STEP) window of InvestEU is accessible to SMEs. A standardized methodology will assist SMEs in reporting sustainability data, simplifying access to sustainable financing.
Supporting employee training through initiatives like the Large Skills Partnerships under the European Pact for Skills to align workforce skills with the needs of European SMEs.
Promoting SME growth by reevaluating the current SME definition thresholds, developing a uniform definition, and potentially adjusting specific obligations for small mid-cap companies to unlock their full economic potential.
Introducing a Head Office Tax System directive for SMEs allows cross-border SMEs with permanent establishments to interact solely with the Head Office tax administration instead of dealing with multiple tax systems. This directive aims to enhance tax certainty, fairness, and cost-effectiveness while reducing the risk of double taxation and tax disputes. The anticipated reduction in compliance costs will facilitate investment and cross-border expansion within the EU, enabling these companies to fully leverage the freedom of establishment and the free movement of capital without undue tax-related hindrances.
Addressing late payments in commercial transactions by proposing new regulations to replace the 2011 Directive. The new rules include a stricter maximum payment limit of 30 days, eliminating ambiguities and addressing legal gaps in the existing directive.
In summary, these new measures will ensure timely payments to small businesses, simplify paperwork, and streamline taxation processes. Additionally, they will enhance SME access to talent and financing, facilitating their transition to digital and environmentally sustainable practices, as highlighted by Věra Jourová, European Commission Vice-President for Values.