The European Union's drive to streamline and speed up company registration in order to promote entrepreneurship is paying dividends. European entrepreneurs can now start up a limited company in an impressive eight days on average, down from 22 days in 2001. But it does not end there: most Member States have now operational one-stop shops which have vastly streamlined the registration process.

As Europe's main employers, small to medium-sized enterprises can and will play a vital role in fuelling - against the backdrop of the global economic crisis and rising unemployment - the EU's economic recovery by creating more jobs and growth.

Harnessing the full potential of SMEs requires a more enterprise-friendly environment - something the EU has been striving to do in recent years.

As any entrepreneur knows, excessive bureaucracy hinders entrepreneurship - and that is why the European Commission's Better Regulation (page 3) project seeks to cut all the red tape related to EU legislation. In addition, the Commission also encourages Member States to streamline their own regulations and procedures.

Progress and good practice

One major hurdle holding back would-be entrepreneurs is the time, complexity and cost of setting up a business. For more than a decade now, it has been EU policy to ease these entrepreneurial birth pangs by streamlining registration procedures. Three areas have been established to assess results in this domain: time, cost and one-stop-shops for start-up founders.

And progress has been healthy. The latest Commission report on the matter has found that, on average, setting up a private limited company in the EU took eight days and cost €417 in 2009. This is down from nine days and €463 in 2008, and 12 days and €485 in 2007.

In 2009, numerous successes were scored at the national level. For instance, Germany launched what it calls the UG company which is like the GmbH form of limited company but without any initial minimum capital requirement. The entrepreneur will "replenish" the capital to the GmbH level (minimum €25,000) with the profits from subsequent years.

Bulgaria decided to make life easier for entrepreneurs by merging the nine procedures required to set up a company into just one. This comes hot on the heels of Bulgaria's 2008 streamlining efforts which led to a reduction in the time it takes to set up a company from ten to 20 days to just three to seven days.

A very good example to be highlighted is Slovenia: the country was already fully compliant in all three areas by the end of 2007 (one-stop-shop, time and cost). Yet in 2008, it went one step further and reduced fees from € 250 to €0. Now it is free to start up a company in Slovenia, the second country in the EU after Denmark.

Despite these successes, EU Member States do not plan to rest on their laurels. In December 2008, ministers meeting at the Competitiveness Council agreed to decrease the start-up time for a business to three working days, down from the previous benchmark of five working days.

Sound foundations

These successes are built on years of sound policy coordinated by the European Commission. In 1997, the Commission recommended measures to simplify and speed up the establishment of a business. In 2000, the landmark European Charter for Small Enterprises identified streamlining start-up procedures as one of its ten action lines.

Based on a 2002 EU study which found that starting a business took on average 22 days and cost €827, the 2006 European Spring Council called on Member States to take concrete action to reduce these figures through the implementation of a one-stop shop, or similar measures, for setting up enterprises. Today, most Member States have operational one-stop shops which have vastly streamlined the registration process.

In order to monitor progress, the Commission asked all Member States to appoint a national start-up coordinator [42 kB] and developed guidelines [164 kB] on how compliance would be measured.

Building on the momentum gained by this initiative, the Small Business Act (2008) also included reducing times to start up a company as one of its recommendations to Member States and, in 2008, the December Competitiveness Council asked Member States to cut down start-up times to three days or less.

In addition to slashing registration times and costs, the European Commission is working with national authorities to streamline other related issues, such as acquiring licences, permits and authorisations.