We're back in business and ready to deliver the latest news and insights on audit, sustainability, tax and SME.
Our new factsheet highlights CSDDD's key provisions, mandatory due diligence for large companies, and its impact on SMEs and accountants.
Ursula Von Der Leyen (VDL) was re-elected as the European Commission (EC) President for 2024-2029, in a European Parliament (EP) plenary vote on 18 July. She received 401 votes in favour (out of 361 minimum needed), 284 against, 15 abstentions and 7 void votes. This is a greater majority than the margin of only nine votes that she obtained in 2019.
Prior to the vote, VDL delivered a speech to the EP plenary in Strasbourg, outlining her priorities, which are also detailed in a document that the EC published on 18 July. As expected, her term will focus heavily on boosting competitiveness while advancing the sustainability agenda. This includes a new Clean Industrial Deal, implementing green legislation and channeling private and public funding to green investments.
SMEs will play a key role in her agenda. VDL announced that she will instruct the next EC to work on a new EU definition of small midcap companies – and presumably to then apply certain regulatory alleviation measures on such entities. She also tasked all Commissioner nominees – appointed by EU Member States – with progressing the 25% reporting burden reduction agenda, aiming to increase this to 35% in the for SMEs.
On 17 September, President VDL announced the portfolio assignments for the new European Commission nominees (see the full list and their ‘mission letters’ here). Several of these assignments are particularly relevant to SMEs:
Other nominees are also relevant to SMEs, though the full list is extensive. The key takeaway is that SMEs are a priority for VDL’s Commission.
The next step is the European Parliament’s approval process, expected to run from October to early November. The EP will vote to approve (or reject) the new College of Commissioners as a whole. It is possible that during this process, some of the Commissioner nominees will be dropped and replaced by new ones, or the portfolio allocations may change.
On 30 July, the EC announced the launch of a new tool, called ‘DMAT’ (Digital Maturity Assessment Tool’), to support SMEs make the transition to digital technology.
Available online free of charge in 32 languages, this tool is managed by the European Digital Innovation Hubs (EDIHs) and allow businesses to assess their digital maturity according to six key criteria: corporate digital strategy, digital readiness, improving digital skills, data management, automation and artificial intelligence (AI) and green digital transformation.
Article published on Agence Europe [Read more]
Over the summer, the EC published Frequently Asked Questions (FAQs) on both the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). These FAQs aim to provide further guidance to affected stakeholders and businesses, including SMEs.
While the FAQs do not provide legally binding interpretations, they serve as helpful tools for navigating the often complex provisions of the directives.
The AI Act was published in the EU Official Journal on 12 July, making it officially part of EU law. As a Regulation, the AI Act is directly applicable across the EU from the designated application dates, and does not need to be separately transposed into national law by Member States.
The Act was proposed in April 2021 with the purpose of regulating artificial intelligence (AI) in the EU. Its main goal is to ensure the safe and ethical development and use of AI technologies across the EU while fostering innovation and trust in AI systems.
The scope is broad, applying to all entities or companies that are “providers placing on the market or putting into service AI systems or placing on the market general-purpose AI models in the Union, irrespective of whether those providers are established or located within the Union or in a third country”. This means that it will affect such companies irrespective of their size – including SMEs .
Entities within its scope must conduct a risk assessment of their AI systems, categorised into minimal/none, limited, high, or unacceptable risks. Depending on the risk category, the entity then needs to undertake specific follow-up steps.
The Act also includes measures and provision designed to support SMEs, recognising the unique challenges smaller business may face in meeting compliance requirements.
On 9 September, Mario Draghi, former Italian Prime Minister and President of the European Central Bank (ECB), published his report proposing ways to enhance the EU’s global competitiveness. While the recommendations are not legally binding, they are expected to shape major policy change in the new EU term.
The report calls for up to EUR 800 billion annual investments in key sectors such as green energy, sustainable transition, defense industry, technology, and productivity improvements. This funding should come from both public and private sectors, including common EU debt issuance. Draghi also emphasises the need for reducing administrative burdens and simplifying legislation to foster growth.
A major focus of the report is on unifying the EU single market, which Draghi argues is currently too fragmented, restricting capital flows and hindering innovation.
Particular attention is given to SMEs, which face disproportionately higher burdens than larger companies. Draghi advocates for cutting reporting burdens by 50% for SMEs, also through the use of AI-powered software and machine-processed data to lower compliance and administrative costs, and delaying legislation “with a disproportionate impact on SMEs”.
