Internal Market and Services Commissioner Charlie McCreevy said: "In a time of economic uncertainty, this micro entities proposal can relieve the burden on the smallest companies in the European Union on a large scale. The Commission has delivered this proposal in a short time period; it is now up to the Member States and the European Parliament to give full and rapid backing to it. This is a real opportunity to make life easier for the EU's smallest companies. We intend to do whatever we can to encourage maximum take up of this exemption by our Member States. Micro entities could save as much as 1200 EUR each year, if Member States follow our lead on this one. As I said last year, when I announced my intention to bring forward this proposal, in the current climate, that is no mean saving. We will follow this up with more simplification efforts in the field of financial reporting by the end of 2009. This represents the Commission's continued commitment to simplification and burden reduction. "
The purpose of the proposed amendment to the Fourth Council Directive (78/660/EEC on the annual accounts of certain types of companies) is to allow Member States to relieve the EU's smallest companies (commonly referred to as "micro-entities") from the requirements of this Directive. Rough estimates show that if Member States implement this exemption, the savings potential for micro entities could amount to as much as EUR 1200 per year on average.
Micro entities would be defined as those companies that on their balance sheet dates do not exceed the limits of two of the three following criteria: balance sheet total of EUR 500.000, net turnover of EUR 1.000.000 and an average number of employees during the financial year of 10.
Micro-entities are mostly engaged in business at local or regional level with no or limited cross-border activity. At the same time, micro entities are often subject to the same reporting rules as larger companies. This creates a disproportionate burden on these companies. They have a key role in creating new jobs and economic activities but they also have limited resources to comply with demanding regulatory requirements.
Now that this proposal has been adopted, the Commission will also launch a stakeholder consultation on what is left of the accounting rules in a drive to identify further areas which are ripe for simplification. Contributors will be asked to provide input for the review of the Fourth and Seventh Council Directives (83/349/EEC on consolidated accounts).
