Brussels, 29 September 2008
McCreevy announces major initiatives on
accounting rules for small businesses
Charlie McCreevy, Commissioner for the Internal
Market and Services has announced today, a Member State option to exempt micro
entities and a review of the Accounting Directives for small businesses. Mr.
- "This is a difficult period. All the talk in the press is about the banks,
the big financial institutions, the mortgage lenders. We are all affected by
what is happening. What we must not forget is that for small businesses, life
goes on. They remain the backbone of the European economy. Over the past few
months, I have thought long and hard about what more we can do to ease the
burden for SMEs.
- The Commission and Member States are committed to reducing the
administrative burden on SME's by 25%. This is no easy task and translating it
into action has not been easy. There are no quick fix solutions and it is not
just about figures.
- In the area of company law, for which I am responsible, we have already
adopted measures aimed at reducing the administrative burden on SMEs. These
measures were fast tracked in 2007 and April 2008. Each of these measures, in
one way or another, eases the reporting requirements on SMEs. The Commission
adopted a further package which would reduce the reporting requirements of
companies in the case of mergers and divisions. The total savings potential of
the measures proposed, so far, in the area of company law is now 1 billion
€/year. All of the measures that have so far been adopted were first
floated in the 2007 Commission Communication on a simplified business
environment for companies.
- Another proposal put forward in the 2007 Communication was the idea to allow
Member States to exempt very small companies or so called "micro entities" from
the EU's Accounting
Directives. When we
consulted on this proposal, 59% of replies were in favour. These were mainly
companies and public authorities. Those against included parts of the
accountancy profession, and some Member States.
- In July 2008, the High Level Group of Independent Stakeholders on
Administrative Burdens, headed by Edmund Stoiber, delivered its final opinion on
burden reduction for companies. The Group had before it a Report prepared by
outside consultants. That Report found that there could be an immediate saving
of €5.7billion, if micro entities were exempted from the accounting
framework and no longer had to prepare annual accounts.
the Stoiber Group was not united on this issue. Discussions that had taken place
in May of this year showed up sharp divisions within the Group on the question
of whether to exempt micro entities from the Accounting Directives. After long
deliberation, a "compromise" proposal of allowing Member States to decide for
themselves whether to exempt micro entities emerged. It was decided that this
should be put to the vote as no consensus could be reached. In July, the Stoiber
Group voted in favour of this compromise proposal. There were 9 in favour of
this compromise, 3 were against and there were 3 abstentions. The Group called
on the Commission to bring forward a proposal to allow Member States to exempt
micro entities from the accounting Directives
- I have since had the opportunity to meet Edmund Stoiber and discuss the
findings of the Report with him. I listened to him carefully as he put his case
as to why it would be a good thing for micro entities, if we were to follow the
opinion of the majority of his Group. Herr Stoiber firmly believes that now is
the right time to do this for European business.
- I should add that on 21 May of this year, in a report adopted by the
European Parliament on a simplified business environment for companies, German
MEP Klaus-Heiner Lehne also welcomed an exemption for micro entities from the
- The Accounting Directives have been around for 25-30 years and to date there
has been no real attempt to update them. The Accounting Directives were designed
as general rules with all businesses in mind –large or small. Furthermore,
they already allow Member States to exempt certain types of companies from the
requirements. With the move to IFRS for listed companies, the Accounting
Directives have become less relevant. Many companies are now outside their scope
- As the deliberations of the Stoiber Group have shown, there are many sides
to this debate and there is no easy solution to this. I am told that on
average, micro entities would save as much as €1200 per year. In the
current climate, that is no mean saving.
Therefore, I have decided
to propose to the Commission, the following:
- I consider that, on balance, there is merit in the Stoiber Group's proposal
that Member States should be allowed the option to exempt micro entities
from the accounting requirements.
- I believe the time has now come to overhaul the Accounting Directives
–indeed to modernise them. Of course, we can continue to make piecemeal
changes- simplify the requirements for publication, disclosures and even the
layout of the balance sheet. But there is no point in simply tinkering with the
legislation. In this review, we will be guided by the "think small first"
 Fourth Council
Directive 78/660/EC and the Seventh Council Directive 89/349.