In sharpening its priorities to help small and medium-sized businesses (SMEs), the Commission committed itself to 29 recommendations to focus the impact of the two-year-old act.
"The whole thrust is simplification. That's something close to the heart of SMEs," said Antonio Tajani, EU commissioner in charge of enterprise and industry.
Small and medium-sized enterprises (SMEs) – those with 250 or fewer employees – have been hammered by the recession and the credit crunch, and their recovery is pivotal for Europe. These SMEs employ more than two thirds of the labour force in Europe and are the prime growth engine for the economy.
The Small Business Act has 10 guiding principles, including improving access to finance, drawing up bankruptcy rules to give entrepreneurs a second chance and upgrading skills.
The review was originally scheduled to be released in December, but was postponed and redrafted repeatedly as the political jockeying played out. And what was cut out was as interesting as what was left in.
Tajani highlighted a few recommendations, including speeding the time and reducing the cost to start a business to a maximum of three days and €100. He also said the EU would strengthen its loan guarantee scheme, and increase SME access to government contracts.
SME groups urge action
Small business advocates seemed generally pleased with the final version, but stressed that talk is still cheap. "It's really a step forward, but it must be balanced by an increase in funds, because if not they are just words," said Andrea Benassi, secretary-general of the European Association of Craft, Small and Medium-Sized Enterprises (UEAPME).
He said the EU has dedicated about €500 million to programmes for SMEs, but "[whether] these funds reach SMEs, that's another question". His organisation has asked for double that amount in the next budget cycle to meet increased demands.
The European Small Business Alliance applauded the Commission's emphasis on testing the impact of new proposals on SMEs while taking into account differences in the size of enterprises.
"We are very happy about their commitment this time to the SME test, so we can hold them to it if they don't do it," said Patrick Gibbels, the organisation's Brussels representative.
Common corporate tax base and VAT
One of the more controversial measures is a plan to present a legislative proposal for an EU-wide corporate tax base and a new strategy for the value-added tax (VAT). The Commission said it would reduce tax obstacles for SMEs.
However, such a proposal, floated recently by Germany and France, will surely run into its own obstacles.
"It may push up compliance costs for larger businesses, and that it could be the first nail in the coffin of tax competition across the EU," wrote UK Conservative MEP Malcolm Harbour, who chairs the European Parliament's internal market committee.
Some of the most recent additions to the draft in January were later deleted, including plans to strengthen the role of SME envoy Daniel Calleja Crespo in monitoring the application of the SME test in impact assessments. Also cut was a recommendation to reduce the time for a bankrupt company's debts to be discharged to a maximum of three years by 2013.
New initiatives in the final report included:
- Adopting a social business initiative focusing on enterprises pursuing social objectives by the end of the year.
- Proposing an instrument of European Contract Law for SMEs that want to enter new markets.
- Setting up a uniform procedure to facilitate cross-border debt recovery.
"A lot has been done by the Commission, but a lot still needs to be done if we want to get out of the crisis today," Tajani said.