Small Business Act is unveiled

Commission President José Manuel Barroso: Towards a Europe of entrepreneurs.

Commission President José Manuel Barroso said the SBA, “Is a step towards a Europe of entrepreneurs, with less red tape and more red carpet for Europe’s 23 million SMEs. It aims to help small businesses to thrive and to give the best ones a launch pad to grow into world beaters.”

Barroso added that the act is crucial milestone in the implementation of the Lisbon Strategy for Growth and Jobs. “It will mean more responsive public administrations, less late payment of invoices, access to more help with finance, innovation and training, lower VAT for services supplied locally and better access to public procurement contracts. The package will also give SMEs access to a European Private Company Statute to cut bureaucracy and increase clarity.”

The SBA proposal goes hand in hand with the recently announced plans of the European Investment Bank Group to simplify, modernise and diversify the range of its instruments to support SMEs.

At the heart of the SBA is the conviction that achieving the best possible framework conditions for SMEs depends first and foremost on society’s recognition of entrepreneurs, including crafts, micro-enterprises, family owned or social economy enterprises, and making it attractive to starting a business.

The Act sets out 10 principles to make life easier for small businesses. After consulting with businesses and their representatives, the European Commission has also resolved to propose new legislation in four areas that particularly affect SMEs:

First, a new General Block Exemption Regulation on state aid will simplify procedures and reduce costs, making it easier for SMEs to benefit from aid for training, research and development, environmental protection and other types of aid.

Secondly, a new statute for a European Private Company will allow a “Société privée européenne” (SPE) to be created and operate according to the same uniform principles in all Member States. It has been designed to address the current onerous obligations on SMEs operating across borders, which need to set up subsidiaries in different company forms in every Member State in which they want to do business.

In practical terms, the SPE would mean that SMEs can set up their company in the same form, no matter if they do business in their own Member State or in another. Opting for the SPE will save entrepreneurs time and money on legal advice, management and administration

Thirdly, a new proposal on VAT will offer Member States the option to apply reduced VAT rates for locally supplied services, including labour intensive services, which are mainly provided by small and medium enterprises.

Lastly, an amendment to the directive on late payments is foreseen in 2009 to help to ensure that SMEs are paid within the 30 day limit stipulated.

In addition to the standing commitment to cut administrative burden by 25 per cent by 2012, the time needed to start a new company should be no more than one week, the maximum time to obtain business licences and permits should not surpass one month and one-stop-shops should assist to facilitate start-ups and recruitment procedures.

The SBA includes measures to allow SMEs to fully benefit from the Single Market and expand into international markets. They will also make it easier for them to participate in the standard-setting process, win public procurement contracts and turn environmental challenges into business opportunities.

Finally, the SBA seeks new ways to stimulate interest in entrepreneurship and cultivate a more entrepreneurial mindset, especially among young people.