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European Commission (EC) President Ursula von der Leyen’s (VDL) second Commission officially started its work on 2 December, and new priorities announced in July are starting to take shape.
Supporting SMEs will feature high on this list, as the new EC is expected to provide a new EU definition of small midcap companies – and presumably apply regulatory alleviation measures on such entities.
In its efforts to enhance Europe’s competitiveness and reduce administrative and reporting burdens, the EC is also expected to issue a so-called ‘omnibus proposal’ in the first half of 2025. This proposal aims to cut down administrative requirements for companies across multiple EU policy areas in one sweep.
VDL also referred to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU taxonomy as a ‘triangle’ where the EC will examine how to align and converge provisions. She emphasised this effort won’t deregulate or reduce Green Deal ambitions, focusing instead on eliminating overlaps, aligning definitions and simplifying reporting requirements.
Another big initiative affecting SMEs is the proposed creation of a so-called 28th regime for companies operating across borders within the EU. This regime aims to provide companies with access to a simpler, harmonised set of rules in certain areas.
Additionally, the EC plans to improve SMEs’ access to finance, with a particular focus on setting up a new Savings and Investments Union (SIU) to create more harmonised and truly pan-European capital and financing markets.
Further details on these initiatives will emerge in the following weeks.
The EC published its 2024 Eurobarometer on SMEs, resource efficiency, and green markets on 18 October. The survey will contribute to the Commission’s efforts to help SMEs become greener and foster their long-term competitiveness.
This survey, for example, reveals that 93% of EU SMEs are implementing at least one resource-efficiency measure such as saving energy, minimising waste, and recycling. Renewable energy use is on the rise, with more than one in ten SMEs (12%) generating renewable energy onsite and 23% of SMEs purchase energy from a renewable energy supplier. SMEs also report facing challenges, with complex administrative or legal procedures (35% of SMEs) and high costs (28% of SMEs) being major barriers to implementing resource-efficiency measures.
From 1 January 2025, the special VAT regime (the SME scheme) will allow small enterprises to sell goods and services without charging VAT to their customers (VAT exemption), thereby alleviating their VAT compliance obligations. Small enterprises opting for VAT exemption will lose the right to deduct VAT on goods and services used to make exempt supplies. The EC has published a new web portal that provides key information for SMEs on what the new rules are and what they will mean for them.
The EC published on 29 November a set of frequently asked questions (FAQs) to support stakeholders, including SMEs, in the implementation of the EU taxonomy, a classification system for sustainable economic activities. The publication, which aims to make the taxonomy easier to use, is part of the EC’s simplification agenda and its effort to reduce the administrative burden on companies applying the EU sustainable finance framework.
With competitiveness and reducing administrative burdens high in the new EC’s agenda (see feature article above), the European Parliament (EP)held a few discussions to discuss these topics this autumn. The latest, on 27 November in the EP Plenary, saw different political groups express their priorities.
The European People’s Party (EPP) underlined that industrial policy must be as significant as the sustainability agenda. They called for reducing red tape and simplifying EU regulations to enhance technological innovation and competitiveness. The EPP stressed the need for long-term investments in technology and called for increased contributions from Member States to the EU budget to fund green and competitive initiatives.
The Socialists and Democrats (S&D) strongly advocated for immediate investments to transition towards a competitive and circular economy. They emphasised the importance of industrial renewal through decarbonisation while ensuring job creation and warned against excessive deregulation.
Renew Europe (RE) highlighted the importance of implementing existing legislation in a just and fair way while adhering to climate goals, whilst the European Conservatives and Reformists (ECR) criticised overregulation and pushed for revisions legislation to reduce red tape and taxation on investments.
The European Council, where head of EU governments sit, adopted on 8 November the so-called Budapest Declaration, outlining Member States’ expectations for a “New European Competitiveness Deal”. The Declaration provides political direction for VDL’s new EC on what to prioritise in the first months of the 2024-2029 term.
The Declaration, for example, calls on the EC to launch a “simplification revolution” in the first half of 2025 to drastically reduce administrative, regulatory and reporting burdens, and makes concrete proposals on reducing reporting requirements by at least 25%.
By June 2025 the Council expects the EC to propose a “new and comprehensive horizontal strategy on the deepening of the Single Market”, and, by 2026, to take “decisive steps” towards establishing a Savings and Investments Union. Member States also call on theEC to build “a genuine Energy Union” through decarbonisation, and supply of clean and affordable energy, plus to deliver a Circular Economy Act.
EU finance ministers (ECOFIN) reached a long-expected agreement on the VAT in the digital age (ViDA) proposal on 5 November. With new rules on electronic invoices and real-time data reporting, as well as business carried out through digital platforms, this legislative package aims to streamline processes for business, fight tax fraud, and promote digitalisation.
The agreement covers three acts – a directive, a regulation and an implementing regulation – which taken together bring about changes to three different aspects of the VAT system. The new rules will:
The Ideas Powered for Business network and the European Union Intellectual Property Office (EUIPO) published six IP essentials leaflets to help SMEs and business advisors understand the value of intellectual property (IP):
Accountancy Europe is a proud partner of the Ideas Powered for Business network and this initiative raises awareness of the benefits of IP and helps SMEs safeguard their competitive edge.
