Less administrative burden for business
A recent progress report shows that the European Union is on track to meet its ambitious target of cutting red tape by a quarter by 2012, while preserving the effectiveness of European legislation in achieving its goals, such as protecting the public and ensuring fair competition.
Based on a Commission recommendation, the European Union has set itself the ambitious goal of reducing red tape associated with EU legislation by a quarter by 2012. In order to make these savings a reality, the European Commission has already proposed several measures and is preparing a number of others. In total, this would enable businesses to save around €40.4 billion out of a total of €123.8 billion (i.e. a third) spent on complying with the 72 EU texts covered by the 'Action Programme for reducing administrative burdens in the EU'.
At the end of October 2009, the European Commission released its assessment of progress to date in 13 priority areas, and found that the Union was well on the way to meeting its 2012 deadline. European Commission President José Manuel Barroso said: "The Commission is fully on track to deliver on its goals to reduce red tape for businesses. Businesses are already set to save €7.6 billion a year. That will become about €40 billion if Member States and the European Parliament back our proposals in full. But better regulation is a job that never ends. It is not just about changing bad rules, but making good rules work better, using new technologies and new innovation. Further streamlining European and national regulation - without compromising on protecting the public - will be a key to the next Commission's drive to promote sustainable economic recovery."
Whilst measures already in place or adopted could bring a reduction of €7.6 billion, measures proposed by the Commission and pending adoption would add €30.7 billion to that amount. Other efforts in the pipeline could lead to the presentation of additional measures worth at least €2.1 billion in savings. At the beginning of 2009, the European Commission unveiled two major proposals, one in the field of VAT aimed at facilitating e-invoicing (worth €18 billion), the other in the field of company law, exempting micro-entities from accounting obligations (worth €7 billion).
Further action
Now it is in the hands of the EU co-legislators to ensure that businesses can fully benefit from these measures. At the presentation of the progress report 
[73 KB] , Vice-President Verheugen urged action: "The Commission has done everything in its power to achieve the 25% target by 2012. I invite the European Parliament and Member States to adopt all of our remaining proposals to make them fully effective for the European economy as soon as possible. It does not cost anything but would mean a boost of around €30.7 billion for our enterprises, and especially for SMEs."
This progress report confirms the choice made by the European Commission to concentrate on the selected priority areas. It also confirms the vulnerability of SMEs to excessive red tape. Stakeholder involvement was instrumental in evaluating the feasibility and in identifying further reduction measures, which may be part of new initiatives for reducing administrative burdens during the next Commission.
But it is not just about existing legislation. The European Commission is committed to ensuring, through its impact assessment system, that the requirements imposed on businesses by new legislation are kept to an absolute minimum. The Action Programme for Reducing Administrative Burdens in the EU is an essential part of the Commission's overall Better Regulation Agenda which aims to promote competitiveness, growth and jobs. Slashing red tape is also in line with the Small Business Act and its 'think small first' principle. Moreover, it is one of the key action areas in the European Economic Recovery Plan.
Already delivered
Some examples of adopted measures:
- The 'VAT package' includes a mini one-stop shop for telecom, broadcasting and e-commerce services and a new procedure for claiming value-added tax refunds for businesses not established in the Member State in which the VAT was incurred.
- Member States have been allowed to apply less burdensome accounting and auditing rules to 340 000 SMEs since 2006.
- To save fruit and vegetable producers some of the estimated two hours they spend on labelling and grading every tonne of produce, a new Regulation (1221/2008) replaces 26 marketing standards with a single General Marketing Standard. Labels will indicate origin but no longer class, size or variety - which is set to save European producers up to €970 million.
- Standard procurement procedures require all candidates to submit documents - costing €100 on average - to prove their eligibility. The European Commission has formally recommended that only the winner of a public tender needs to present these documents, saving the other applicants this cost.
Gauging progress
Some example of proposed measures awaiting approval by the European Parliament and the Council:
- A whopping 18 billion VAT invoices are generated in the EU annually, so the switch to a fully electronic invoicing system would save time and money for more than 22 million taxable enterprises. The Commission has proposed the removal of obstacles to electronic billing, such as the additional requirements imposed by some Member States to make invoices VAT compliant. The maximum reduction potential in the medium term is estimated at €18.4 billion (that is, if all businesses send all their invoices electronically).
- A Commission proposal of February 2009 recommends that micro entities (with a maximum of 10 employees) should no longer need to present annual accounts in line with EU regulations. Instead, each Member State should define the appropriate rules within its own borders. This proposal would suppress around €1 170 a year of administrative burdens of EU origin imposed on each of the 5.4 million micro-enterprises in Europe.
The way ahead
Some examples of measures under preparation:
- By the end of 2010, the Commission might propose that EU accounting and auditing rules for SMEs should include a simplified balance sheet, profit and loss account, and notes to the accounts.
- By the end of 2009, the Commission could recommend that recognition as "a regular shipping service" should be eased for enterprises shipping goods between two ports in the EU. A new database would simplify initial registration procedures and subsequent assignment of vessels to the service.
- In early 2010, the Commission might propose the simplification of statistical reporting for small hotels by exempting establishments with fewer than 10 beds (20 beds in many Member States) from statistical reporting obligations. Instead, appropriate statistical estimation techniques will be used.
The text only of the articles can be republished as long as the source of the article is quoted: Enterprise & Industry magazine (http://ec.europa.eu/enterprise/magazine/index_en.htm), © European Union, 2008 - 2012
