EU to help small firms beat recession with red tape cuts - 2010-03-12

The European Parliament has voted to exempt very small firms from EU bookkeeping laws to reduce the burden of red tape and help companies beat the recession. 

A vote on Wednesday 10 March meant that these types of company, known as micro-entities, will not face the prospect of detailed obligations under the EU accounting standards,

Labour MEP Arlene McCarthy, who is Vice President of the European Parliament's Economic and Monetary Affairs Committee, said: "As our small firms struggle to overcome the crisis we are determined to help them by cutting red tape.

"It is vitally important that EU law does not over-burden very small businesses. This exemption means that very small firms will save around £1,000 in accountancy and audit fees."

This Commission proposal forms part of Europe's response to the financial crisis and is an important element of the European Small Business Act; a set of proposals to reduce burdens on Small and Medium Sized Enterprises (SMEs).

The new law will amend the 4th company law directive, dealing with accounting standards, to exempt the smallest category of SME, defined as firms with, for example, less than 10 employees and a small turnover.  It was backed by the European Parliament by 445 votes to 196.

Over five million firms across Europe fall into this definition, and the European Commission estimates that savings for each firm will be around £1,000.

Arlene added: "We have made a commitment in the EU to reduce burdens on business by 25% by 2012, and this law is an important step towards meeting that goal. Micro-entities are often the first step on the ladder to successful employers of the future, we need to nurture and support these businesses, not place extra burdens on them."

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