Internal Market, Industry, Entrepreneurship and SMEs

Final report: Simplified tax compliance procedures for SMEs

Final report: Simplified tax compliance procedures for SMEs
Published on: 28/07/2015
Compliance with tax rules can be challenging for small businesses. Tax legislation is often complex and drafted in a way that allows their application to businesses of all sizes. A project looked at the various measures that the participating countries have taken to reduce tax compliance costs for SMEs.

The aim of the project was to facilitate an exchange of best practice between countries and to support the distribution of tested methods to improve the business environment for European SMEs.

The report concentrates on income taxes (personal and corporate) and payroll taxes (wage taxes). Value added tax is not included.

The key objectives of the project were:

  • to gather the various measures that countries have taken to reduce compliance costs for SMEs;
  • to identify and exchange good practices between countries in the field of tax compliance procedures in order to support the distribution of tested and workable methods to improve the business environment for European SMEs.

Good practices found were:

  • A stable and predictable regulatory environment is one way to implement the 'think small first' principle in taxation.
  • The integration of registration for tax purposes within general business registration and one-stop shops can help to reduce information and compliance costs.
  • Tailor-made information on taxation can reduce compliance costs for small businesses.
  • Small businesses need information and assistance on changes in tax laws.
  • Binding interpretations of existing tax laws and rulings reduce uncertainty.
  • Simplified methods for tax accounting and for establishing the tax base can reduce compliance costs for small businesses.
  • Tax forms and reporting requirements can be adjusted to the business reality of small enterprises.
  • The electronic filing of tax returns can speed up procedures and reduce compliance costs. Payment reminders and individual tax accounts can speed up payment and refund procedures.
  • Penalty procedures can be avoided or reduced by special information for young enterprises.