Some EU Member States consider that the proposed Commission Directive on VAT simplification for SMEs is not ready for adoption.
This became apparent at two meetings of EU Finance Ministers (ECOFIN) in May and June. There were hopes that the file could be adopted before the summer break, but it now falls on the Finnish Presidency of the Council to try to conclude the file in the second half of 2019.
The main outstanding issue is the level for a European threshold for VAT exemption. The Commission’s proposed threshold is EUR 85,000: if in a calendar year, the threshold would be exceeded by a maximum of 10%, the exemption would cease to apply.
The Commission’s proposal also proposes to exempt SMEs from VAT in a Member States other than the one in which it is established under other threshold’s conditions.
However, the unanimity rule makes a consensus hard to find among the 28 EU countries, as some of them think the proposed threshold is too high, others too low.
Member States also ask for more time to adopt the proposal, until 2025 or 2026, while the Commission wanted an implementation from 1 July 2022. Another outstanding point of disagreement is the frequency of reporting by taxable persons to tax authorities. See here for the original Commission proposal.
Small companies should have greater access to data to compete with big tech giants, declared Competition Commissioner Margrethe Vestager.
According to the Commissioner, innovation and knowledge are small advantages if companies lack access to data that allow them to be able to offer good services. While market leaders seem to support smaller companies with processing payment transactions and supply chains, they also have access to their customers’ data which gives them an advantage that is difficult for smaller operators to catch up on.
The Commissioner therefore suggests a reform of access to data to level the playing field in this area. Read more
The European Commission has published new non-binding guidelines on climate-related disclosures.
The guidelines propose that when assessing materiality of climate-related information, companies should consider their whole value-chain, both upstream and downstream. This would directly affect SMEs that are part of supply-chains.
The guidelines therefore encourage companies to support SMEs that are part of their supply chains to provide the required information. Read more
In a joint declaration, an alliance of European SMEs, trade unions, businesses and regions call on the next European Commission to have SMEs as a high priority on its agenda.
The declaration calls on the Commission to boost entrepreneurship and to allow SMEs to flourish notably through education policies, improvevd access to finance and digitalisation. Moreover, it highlights that SMEs need a facilitating environment ensuring the right level of skills development, financial support, capacity building, future-proof infrastructure and standardisation. SMEs also need an equal access to data, investments in cyber security and involvement in steering AI.
And finally, the declaration calls for new financial instruments and tools from the EU’s multiannual financial framework, as well as a timely implementation of EU legislation across all Member States whilst avoiding gold plating. Read more
The OECD has published an overview of business conditions and policy frameworks for SMEs, in order to give policymakers valuable insights and examples to help them frame national SME policies.
As SMEs are dependent on the business ecosystem and the policy environment, trade barriers remain large and trade tensions may hamper SMEs’ ability to benefit from globalisation.
SMEs also struggle with access to strategic resources such as skills, finance and knowledge, the report maintains. Digitalisation is also a big challenge; the smaller the firm, the less likely they are to adopt digital-enhanced practices.
Finally, the report argues for more efficient governance and more coherent arrangements across national and subnational levels. Read more
The European Central Bank (ECB) has published a survey on the access to finance of companies in the euro area.
According to the survey results, from October 2018 to March 2019, the percentage of SMEs reporting higher turnover declined from 25% to 21%.
Moreover, availability of skilled labour remains the dominant concern (25%) for SMEs, followed by the difficulty of finding customers (23%). However, SMEs’ financing conditions are improving. SMEs attribute these positives changes to the willingness of banks to provide credit. Read more
The Financial Stability Board (FSB) is conducting an evaluation of the G20 regulatory reforms on financial intermediation, to examine the effect of the post-crisis legislative changes on the financing of SMEs.
The analysis does not identify material and persistent negative effects on SME financing in general, apart from some different aspects depending on the national implementations. Access to external finance for SMEs appears to have improved, particularly in advanced economies.
The public consultation is open until 7 August 2019, and the FSB will publish the final report in November. Read more
The World Economic Forum (WEF) underlines in its new report how dangerous cyberattacks can be for the survival of a firm. The report calls on SMEs to be prepared.
For this purpose, WEF highlights a new toolkit for small entities by the Global Cyber Alliance that aims to help them strengthen their cyber defences.
This toolkit provides advices on how to ensure that accounts are protected, to protect the company brand and how to implement policies and recommendations for training employees. Implemented in full, the suggested measures can have a significant impact on reducing cybercrime, WEF argues. Read more
The Institute of Chartered Accountants in England and Wales (ICAEW) has published a new practical guide for audit committees on improving financial reporting, focusing on smaller quoted companies. ICAEW provides questions to consider when planning the reporting cycle.
Having an adequate approach with small entities is crucial to improve reporting practices. The report gives practical advice on timing and what to take into account when auditing smaller quoted companies.
Acknowledging that SMEs face specific challenges such as time and resources, auditors can lead the way towards changes. Read moreThis curated content was brought to you by Johan Barros, Accountancy Europe policy manager since 2015. You can send him tips by email, follow him on Twitter and connect with him on LinkedIn.