• European Commission proposes new non-financial reporting framework, most SMEs outside of the scope
  • European Parliament wants certain SMEs to do mandatory supply chain due diligence
  • Accountancy Europe’s survey on audit exemption thresholds in Europe shows increasing number of SMEs exempted from audit

European Commission’s Morana Mavricek explains how CMU is relevant for SMEs

I had the pleasure of interviewing European Commission (EC)’s Morana Mavricek, policy officer at DG FISMA, on the EC’s Capital Markets Union (CMU) project. CMU consists of a number of separate legislative and non-legislative measures aiming to integrate Europe’s capital markets and improve companies’ access to non-bank financing.

In the interview, Ms. Mavricek elaborates on the relevance of CMU for SMEs, and sheds light on upcoming initiatives that would improve SMEs’ access to finance.

Accountancy Europe’s members, most of whom advise SME clients on business planning and access to finance, should take note of the upcoming CMU initiatives and the opportunities that they offer for their SMEs.

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European Commission

DG GROW publishes 2021 management plan

EC’s DG GROW, which oversees the EC’s SME strategy, has elaborated on its SME policy plans for 2021. These include, for example:

  • developing a communication ‘toolkit’ helping SMEs doing business abroad
  • enforcing the Late Payment Directive, in particular facilitating SMEs’ access to alternative dispute resolution
  • as part of the InvestEU programme, developing a single integrated guarantee facility for SMEs
  • promoting SMEs in public procurement
  • promoting the use of intellectual property (IP) by SMEs

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EC plans an initiative on regulation of professional services

The EC published a Roadmap announcing its future intentions to revamp its recommendations on the regulation of professional services on 4 March. Accountants are included in the scope of this initiative.

The initiative will be a legally non-binding Communication, to be published by June 2021. It aims to help EU countries improve the regulation of professional services to make them more competitive, responsive and open to innovation.

According to the Roadmap, the EC will notably look at digitalisation and innovation within the professions covered, and at professional associations’ role.

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EC launches public consultation on SME credit referral scheme

The consultation was opened on 12 March, and stakeholders may provide feedback until 30 April. Its purpose is to inform the EC’s thinking on its future plans to develop a pan-European credit referral scheme for SMEs. Under such a scheme, banks and other finance providers that turn down an SME’s request for funding will have to refer it to alternative finance providers.

This initiative is in line with Accountancy Europe’s 2017 call for such a scheme. Accountancy Europe issued a statement of support to the EC’s initiative on 26 March, and has called on its members, most of whom work with SME clients, to respond to the consultation.

EC formally launches Invest EU programme with funding opportunities for SMEs

The InvestEU Fund, launched on 18 March, aims to mobilise more than EUR 372 billion of public and private investment through an EU budget guarantee of EUR 26.2 billion. The guarantee backs the investment of implementing partners such as the European Investment Bank (EIB) Group and other financial institutions.

InvestEU projects must:

  • address market failures or investment gaps, and be economically viable
  • need EU backing in order to get off the ground
  • achieve a multiplier effect and where possible crowd-in private investment
  • help meet EU policy objectives, including in digital and sustainable transitions, and COVID recovery

Here is a helpful FAQ on the programme, and here its main website.

EC plans for SMEs in Non-Financial Reporting Directive (NFRD) taking shape

Accountancy Europe co-organised together with the European Association of Cooperative Banks (EACB) a webinar on SMEs’ non-financial information (NFI) obligations and expectations on 18 March.

At the webinar, EC’s policy officer Malgorzata Feluch spoke about the 21 April revision of the EU’s NFRD (see article below) and its implications for SMEs. Accountancy Europe also explained its work with EACB to come up with a sustainability checklist for SMEs. This checklist should be published by the end of April or early-May.

Read more (webinar recording)

EC proposes new non-financial reporting framework, most SMEs outside of the scope

The EC published its long-awaited revision to the EU’s sustainability reporting framework on 21 April. The new rules would oblige up to 50,000 companies (11,000 until now) to disclose a set of NFI items to the public.

All unlisted SMEs, and SMEs listed on SME Growth Markets and multilateral trading facilities (MTFs), will be exempted from the mandatory requirements. SMEs listed on ‘full’ European stock exchanges will be subject to the mandatory requirements, but they will get a 3-year grace period, until 1 January 2026, before the requirements apply to them.

These listed SMEs will use a separate “proportionate” disclosure standard, tailored for such companies’ capacities and resources. SMEs not falling under the scope of the mandatory requirement will also be able to use this proportionate standard for their voluntary disclosures if they so choose. The EC must come up with the SME standard by 31 October 2023.

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European Parliament

European Parliament (EP) wants certain SMEs to do mandatory supply chain due diligence

EP adopted a resolution on sustainable corporate governance, prepared by MEP Lara Wolters (S&D/Netherlands) on 10 March. The resolution passed by a margin of 504 votes in favour, 79 votes against and 112 abstentions.

The EP’s resolution is legally non-binding, but the EC will certainly take the EP’s views into account while drafting its legislative proposals on supply chain due diligence, currently expected for June.

The EP’s resolution calls for listed and “high-risk” SMEs to be included in mandatory due diligence rules.

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EP approves Invest EU programme

The EP endorsed a provisional agreement reached with the Council on the new InvestEU programme (see article in EC section) with 496 votes in favour, 57 against and 144 abstentions on 9 March.

As part of the deal, approximately 26% of the EUR 400 million funding that will be mobilised under the programme would be directed at SMEs.

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EP’s draft report on sustainable taxation emphasises need for SME simplifications

MEP Claude Gruffat (Greens-EFA/France) has published his draft report on future sustainable taxation. The report is legally non-binding, but aims to influence the EC’s tax agenda in the months to come.

The report includes several positive proposals for SMEs, including calls for more streamlined compliance and reporting obligations. It also calls on the EC to make it more feasible for SMEs to price carbon into their product chains, as part of anticipated EU proposals such as the carbon border adjustment mechanism (CBAM) expected for June.

A Committee vote on the report is currently scheduled for 27 May, and a final Plenary vote for 23 June.

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Accountancy Europe responds to digital reporting portal consultation

Accountancy Europe published its consultation response to the EC’s planned European Single Access Point (ESAP) initiative on 8 March. Its response stresses that SMEs listed on SME Growth Markets should only be subject to voluntary ESAP disclosures.

We also call for a widest range of data that SMEs can voluntarily submit to ESAP, and on an ongoing basis. Finally, ESAP rules for SMEs should be proportionate but the disclosures should nonetheless fulfil the conditions of traceability, i.e. source of the data, immutability, and quality, i.e. accuracy and completeness.

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European Financial Reporting Advisory Group (EFRAG) submits final report on EU sustainability reporting standards’ development

On SMEs, the report highlights the need to adopt a proportionate approach tailored to EU SMEs by balancing the specific governance, organisation and resources of SMEs. It also highlights the need for sustainability information produced by SMEs to be relevant for their stakeholders, in particular value chain and financial institutions.

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SME United publishes latest SME business climate index report

SME United’s survey, published on 15 March, shows a partial recovery of 5.2% in the SME business climate index up to 59.8% after the negative record of 54.6% registered in autumn 2020. Deconfinement and the temporary return to business-as-usual operations triggered a positive rebound, but the numbers are mitigated by the outbreak of the second wave at the end of 2020.

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EUIPO: accountants are the key for SMEs’ IP

The European Union’s Intellectual Property Office (EUIPO) participated at Accountancy Europe’s podcast on IP for SMEs. EUIPO was represented by Andrea Di Carlo, Deputy Executive Director, and Inge Buffolo, Director of the Customer Department.

According to EUIPO’s data, accountants are the most trusted advisor for SMEs, and can play a critical role in setting SMEs up for success through their IP’s protection. This also offers new opportunities for the accountancy profession to become holistic business advisors to their clients.

EUIPO emphasises in the podcast that their partnership with Accountancy Europe helps them reach even more SMEs, given Accountancy Europe’s vast membership of professional accountants, covering 50 professional member bodies in 35 countries.

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ESMA publishes final report on SME Growth Markets

The European Securities and Markets Authority (ESMA) published its final report on the functioning of the regime for SME Growth Markets (GM) under MiFID/MiFIR on 7 April. It contains recommendations and possible amendments to the MiFID II framework to the SME GM regime which are needed to improve the regime’s attractiveness.

Among the proposed measures the final report includes recommendations to help promote the concentration of liquidity on SME GMs, and to improve standardisation and access to information for investors. It also includes suggestions on how to develop homogeneous admission requirements.

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Accountancy Europe’s survey on audit exemption thresholds in Europe shows increasing number of SMEs exempted from audit

Following the 2013 Accounting Directive, EU companies are no longer required to have a statutory audit. However, the EU legislation allows Member States to impose an audit on their small companies based on their specific circumstances.

Our survey results, published on 9 April, show that 5 European countries lowered their audit exemption thresholds while 4 countries increased them between 2016 and 2021. Overall, there was no clear upward or downward trend in the development of the thresholds in this period.

In the longer-term, however, we noted a clear increase in the thresholds in the majority of European countries. On average, countries’ thresholds for balance sheet and net turnover tripled between 2006 and 2021. We also found diverging national policies and views on auditing smaller entities.

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Accountancy Europe’s survey shows main digitalisation opportunities and obstacles for SMEs and SMPs

Accountancy Europe published a survey of 39 of its members and experts active in the field of supporting SMEs for their views on main digitalisation obstacles for small businesses. The survey, published on 8 April, also inquired on the main digitalisation obstacles for small accountancy practices (SMPs), most of whom service SME clients. It also identified opportunities that SMPs – and their SME clients – would get from digitalising their practices.

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.