At present, micro-entities, meaning very small companies with less than 10 employees, are required to draw up elaborate annual accounts and have them audited. In addition to diverting valuable manpower from these small companies with an average of 3 or 4 staff, the requirements denote annual costs of 1200 Euro's per micro-entity on average, and up to 6.2 billion Euros per year EU wide. Advised by the High Level Group of Independent Stakeholders on Administrative Burdens, the Commission concluded that the generally locally operating micro-entities have no real use for elaborate annual accounts and should be exempted from these rules.
In line with the EU’s Better Regulation Program and the European Economic Recovery Plan, the Commission therefore tabled a proposal amending Directive 78/660/EEC on the annual accounts of certain types of companies. The proposed Directive would enable Member States to exclude micro-enterprises from the scope of the burdensome EU accounting Directives and to align the reporting requirements of micro-entities to the real needs of users and preparers of the accounts, implying significant savings for the EU economy.
A negative first vote on the proposal in the European Parliament’s Committee on Economic and Monetary Affairs in October 2009, severely threatened the credibility of the EU’s promises to reduce administrative burdens and to create a healthier regulatory environment for SMEs. However, aided by ESBA’s efforts, the responsible Legal Affairs Committee managed to secure an almost unanimously positive vote, reflecting the importance of the EU’s Administrative Burden Reduction Plan for small businesses and the EU economy as a whole.
To ensure that MEPs from all political groups were informed as thoroughly as possible on the Commission’s proposal, ESBA has made an effort to meet face to face with more than 100 MEPs during the Strasbourg plenary sessions in January and February of 2010. ESBA welcomed the European Parliament's final decision to vote in favor of the proposal.
The proposal now lies with the Council of Ministers, where ESBA continues its efforts to support the Commission proposal and reduce administrative burdens for the smallest and most vulnerable European companies.