The Commission has unveiled a plan to reduce bureaucratic and other challenges faced by small and medium-sized businesses, pointing to their vital role in the EU economy.
The "Small Business Act" is a “crucial milestone”, commission president José Manuel Barroso said. It will mean “less red tape and more red carpet” for entrepreneurs.
The EU is home to some 23 million small and medium-sized enterprises (SMEs), companies with no more than 250 employees. They provide the majority of jobs in the EU, especially in key industries like textiles, construction and furniture-making, and are considered crucial to economic success.
But these firms often encounter huge administrative hurdles and difficulties securing financing. Entrepreneurship in Europe is also hampered by a lack of understanding of the importance of small businesses.
The plan is part of the EU’s growth & jobs strategy which aims to reduce the administrative burden by 25% by 2012. It calls for policies to stimulate interest in entrepreneurship, especially among young people, and to make starting and running a business easier and more appealing. These latter include limiting the time needed to start a new company and to obtain licenses and permits.
Businesses should also have easier access to financing and be given a second chance if they fail. In line with this, the European Investment Bank plans to diversify the range of its instruments to support small firms.
The commission also proposes a new form of European company, to help small firms move beyond national borders. These new "European private company" rules would create a common start-up procedure throughout the EU and make it easier for companies to set up subsidiaries in other EU countries.
Although small firms account for more than 99% of companies in the EU (and 70% of jobs), they remain mostly within national borders, unlike large companies.
Other proposals would increase access to government support, e.g. for training and research and development, and ensure smaller companies are paid promptly. Countries would also have the option of reducing VAT rates for services supplied by local business