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Our paper aims to support AMLA and the EC in drafting RTS under the new AML framework
A new study for the European Commission’s (EC) DG FISMA examines why EU venture and growth capital funds remain too small to meet the financing needs of innovative firms, especially start-ups and scaleups. Venture and growth capital sit at a critical point in the “funding escalator,” supporting commercially viable SMEs that require substantial investment to expand operations, enter new markets, or undertake strategic acquisitions. Yet the study confirms that EU SMEs continue to face a pronounced scale-up financing gap, with growth-stage equity remaining structurally insufficient across Member States.
Several factors exacerbate this gap: limited availability of large EU funds, fragmented national regulations, constrained cross-border fundraising, and underdeveloped exit options, all issues that disproportionately affect SMEs, which rely on accessible, predictable, and sizeable growth capital. SMEs also face barriers in listing on public markets due to cost and complexity, reducing viable exit pathways and limiting investor appetite for scaling-up funds that would otherwise target them.
The study also highlights the disproportionate role of public actors, such as national promotional banks and the European Investment Fund, which step in where institutional investor participation remains low. It concludes that improving fund scalability, reducing regulatory fragmentation, and increasing institutional capital are essential to enabling Europe’s innovative SMEs to grow domestically rather than relying on non-EU financing.
The EC published its 2026 Work Programme, outlining the legislative initiatives it will be publishing next year and their indicative timeline. Several items will be of particular relevance to SMEs:
As always, the annual Work Programme is not necessarily fully comprehensive, meaning that other proposals beyond what is mentioned in the document can be expected.
The EC published a Call for Evidence on 19 November, a sort of mini consultation, on the reform of the EU’s e-invoicing rules for public procurement (B2G). The deadline for stakeholder feedback is 17 December. A full public consultation will follow soon, and both exercises will feed into a proposal expected towards the end of 2026.
The current e-invoicing Directive introduced a voluntary European e-invoicing standard for public procurement, but uptake remains uneven across Member States, with many still relying on national standards. The EC argues that this fragmentation limits interoperability, increases costs for cross-border business, and reduces the potential for automation.
This revision aims to increase harmonisation by establishing uniform e-invoicing rules across the EU. Possible policy options include:
The reform is partially driven by new obligations under the VAT in the Digital Age (ViDA) package, which will make e-invoicing the default for B2B transactions by 2030.
According to the EC, the expected benefits of this reform include improved interoperability, lower administrative burdens, especially for SMEs, and reduced costs due to simplified compliance. Some initial investments by businesses and administrations may be required. The EC will conduct a full impact assessment supported by a study launching in late 2025.
The EC’s 20 November proposal for a digital omnibus package is the latest in the series of omnibus simplification initiatives seen in the course of 2025.
A key element is a set of amendments to the EU AI Act (read our AI factsheet for SME accountants to learn more). The proposal links the application of the high-risk AI rules to the availability of support tools, including the necessary standards. The timeline for applying high-risk rules is adjusted to a maximum of 16 months, and the rules start applying once the EC confirms the needed standards and support tools are available. Other changes include extending certain simplifications that are granted to SMEs and small mid cap companies (SMCs), including simplified technical documentation requirements, broadening compliance measures so more innovators can use regulatory soundboxes, and reinforcing the AI Office’s powers and centralising oversight of AI systems built on general-purpose AI models, reducing governance fragmentation.
The omnibus also proposes a single entry point for cyber and other digital incident reporting obligations, targeted amendments to the General Data Protection Regulation (GDPR) that will harmonise, clarify and simplify certain rules to support compliance by organisations, and introducing targeted exemptions to some of the Data Act’s cloud-switching rules for SMEs and SMCs.
Another big element of this broader digital package is the proposal for a European Business Wallet (EBW). This tool aims to give European companies and public sector bodies with a unified digital environment for activities that still often require in-person processes. Businesses will be able to sign, timestamp and seal documents digitally; create, store and exchange verified documents securely; and communicate with other businesses or public administrations across all 27 Member States safely. The EC hopes that this will make it easier to scale up a business in other Member States, pay taxes and interact with public authorities across borders.
As usual, the EP and the Council will need to approve the proposal before it becomes EU law.
The European Parliament (EP) adopted on 13 November its negotiating position on the sustainability Omnibus proposal with 382 votes in favour, 249 votes against and 13 abstentions. As an immediate next step, the EP started the negotiations with the Council on 18 November, still aiming to reach a final agreement by the end of 2025.
Below is an overview of some of the main adopted amendments in the EP position.
Corporate Sustainability Reporting Directive (CSRD):
Corporate Sustainability Due Diligence Directive (CSDDD):
This vote follows the EP’s October plenary session, where MEPs rejected the Legal Affairs (JURI) Committee mandate to enter trilogues. As a result, MEPs from all political groups were able to table new amendments to the Omnibus proposal by 5 November, which were subsequently voted on during the mini-plenary session on 13 November.
The European Economic and Social Committee (EESC) has published a study analysing how regulatory fragmentation across the EU imposes significant barriers to companies’ cross-border activity. It also proposes some building blocks for the upcoming 28th regime of companies, expected in March 2026 (see above).
According to the study, divergent company law, tax rules, insolvency regimes, labour provisions, and financial-services supervision produce high compliance burdens, especially for SMEs, start-ups and scale-ups, which lack the resources to navigate 27 different national legal systems in the EU Single Market. SMEs often faces set-up costs of EUR 10,000 – 15,000 per Member State, must hire external counsel, and face delays that make cross-border scaling unattractive.
The proposed 28th regime aims to reduce these burdens by offering simplified, proportional, digital-first rules. The study outlines several features designed with SMEs in mind. These include a unified accounting framework with a dedicated SME track that removes references to full IFRS, reduced disclosures, simplified valuation rules, and pre-structured digital reporting templates. The study also proposes an EU-wide customer-due-diligence passport, harmonised recognition of company activities, simplified VAT and withholding-tax procedures, and a single EU-wide registration and compliance pathway.
Past initiatives (e.g., SPE, SUP) illustrate political sensitivities but also demonstrate demand for predictable, low-cost cross-border tools. Overall, the study presents the 28th regime as a practical and scalable way to lower compliance barriers and enhance SME mobility, competitiveness and access to finance across the single market.
