SME update

July 2024


  • Corporate Sustainability Due Diligence Directive officially becomes EU law
  • Council adopts its political priorities for 2024-2029
  • View of European Parliament elections results

European Commission

CSDDD published in EU Official Journal

The Corporate Sustainability Due Diligence Directive (CSDDD) became official EU law on 5 July upon its publication in the EU’s Official Journal. Member States have until July 2026 to transpose the CSDDD into national laws. Missing this deadline could result in infringement action by the European Commission (EC).

CSDDD will oblige large European companies – and third country companies with activities in Europe – to conduct a sustainability risk assessment of their “chains of activities”, to minimise identified risks, address adverse impacts on human rights of the environment, and to develop climate transition plans. This will inevitably impact SMEs as well, as they are abundantly present in larger companies’ “chains of activities”.

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Key takeaways from European Commission annual report on SMEs

The EC has published its report on SMEs, evaluating their economic performance in 2022 and 2023, and forecasting their outlook for 2024. The report focuses mainly on three key variables: value added (in current and constant prices), employment and number of firms.

In 2023, real-terms value added declined by 1.6%. Regarding 2024, a further decrease of 1.0% is expected. Employment increased in 2023 by 1.8%, and for 2024, the growth is predicted to slow down a bit, reaching 0.8%.

Over the broader period of the last five years, value added in real terms increased by 9.5% and employment grew by 5.9%. Within the overall SME population, micro-SMEs performed better than small and medium sized SMEs in both categories, value added and employment in 2023. A similar pattern is expected for the following year as well.

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European Parliament

Results of European Parliament elections

EU citizens voted for the new European Parliament (EP) on 6-9 June. Initial results suggest a grand coalition of the EPP (Christian democrats), S&D (social-democrats) and Renew Europe (liberals) will retain a majority with almost 400 MEPs. Ursula Von Der Leyen, the current EC President who was re-appointed by Member States in the Council on 28 June, will need the support of 361 MEPs for her confirmation.

Far-right parties made gains as expected, though not to the extent predicted by pre-election polls. Additionally, it seems unlikely that the divided and fragmented far-right factions will unite into a new super-group.

The implications for the priorities of the next EP and EC, as well as MEP allocations to key committees in the EP such as IMCO, JURI and ECON, remains to be seen. However, competitiveness, administrative simplification and continuing the fight against climate change are among the priorities expected to feature on the EU’s agenda.

Finally, the political situation in France and Germany remains uncertain, with the parties of both countries’ current leaders not performing particularly well. The most immediate impact of the EP elections may be on the dynamics among the Member States within the Council, rather than on the EP itself


MEP questions & replies

European Commission cuts SMEs’ administrative burden on tax: listed measures

  • Question by MEPs Carles Puigdemont i Casamajó and Antoni Comín i Oliveres (both NI/Spain)
  • Reply by Commissioner Gentiloni


Priorities of Hungarian Council Presidency

Hungary assumed the Council’s six-month rotating Presidency on 1 July. Hungarian Presidency’s priorities include enhancing EU competitiveness and cutting administrative burden on companies.

The Presidency emphasises its commitment to strengthening SMEs by enhancing their resilience to crises, increasing their access to finance, reducing their additional burdens, improving the quality of the related regulations, and introducing supporting measures.


Insights from Council Strategic Agenda for 2024-2029

On 28 June, EU Member States’ heads of governments adopted their “Strategic Agenda 2024-2029”, outlining priorities for the next five years that they wish the next EC to prioritise.

They emphasise competitiveness, deepening the Single Market and easing companies’ administrative burdens, along with other priorities such as advancing the green transition, enhancing security and defence, and addressing migration. The Strategic Agenda also makes a strong commitment to improve regulation, including by making the best use of digital government and taking into account the needs of SMEs and start-ups.

While these priorities seem broad and lack concrete measures, the overall political direction is clear.

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This curated content was brought to you by Johan Barros, Accountancy Europe Senior Manager, Head of Advocacy & Policy, since 2015. You can send him tips by email, follow him on X and connect with him on LinkedIn.