Europe's 24 million SMEs are the backbone of its economy, representing 99% of all businesses and accounting for two-thirds of private sector jobs in the EU. They have been disproportionately affected by a series of crises, including the COVID pandemic, Russia's war against Ukraine, the energy crisis, and rising inflation. The recent SME performance report indicates that the value added for SMEs in 2023 is still forecasted to remain 3.6% below its 2019 level.
A new regulation has been proposed to combat late payments in commercial transactions. This move is essential as delayed payments can severely impact the cash flow of SMEs, thereby undermining the competitiveness and resilience of supply chains. The new rules will repeal the 2011 Directive on late payments, introducing a stricter maximum payment limit of 30 days. The proposal also ensures automatic payment of accrued interest and compensation fees, along with introducing new enforcement and redress measures to shield companies against defaulters.
SMEs operating cross-border through permanent establishments will now have the option to liaise with a single tax administration – that of the Head Office. This will eliminate the need to navigate multiple tax systems, thereby increasing tax certainty and fairness, reducing compliance costs, and minimizing the risk of double taxation and tax disputes.
Additionally, the Commission’s SME Relief Communication proposes non-legislative measures to support SMEs:
- Over €200 billion is allocated for SMEs from EU funding programs until 2027. The Commission plans to expand the SME window of InvestEU and earmark a portion of the €7.5 billion EU guarantee under the new STEP window of InvestEU for SMEs. A new standardized methodology will also aid SMEs in sustainability reporting.
- The Commission aims to refine SME regulations, drawing from the 'one in one out principle' success, which saved €7.3 billion in its first year. An EU SME Envoy will soon be appointed to guide on SME matters and promote their interests. Additionally, the Commission is eyeing regulatory sandboxes to spur SME innovation.
- By 2023, the Commission will introduce the Once-Only Technical System, streamlining administrative tasks across the Single Market. They're also working on reducing reporting obligations by 25% and digitizing specific procedures for efficiency.
- Training initiatives from the Large Skills Partnerships under the European Pact for Skills will continue, ensuring the European workforce meets SME needs.
- By 2023, the Commission will review the SME definition thresholds, aiming for a unified definition to help small mid-cap companies maximize their potential.
The European Commission's new initiatives underscore its commitment to ensuring that SMEs remain at the forefront of Europe's economic resurgence. As experts in the field of EU grants, Tiko Pro recognizes the importance of these measures in creating a more conducive environment for SMEs to thrive. We remain dedicated to assisting businesses in navigating these changes and leveraging the opportunities they present.
Ready to harness the power of EU grants for your SME? Contact Tiko Pro today!
Source: European Commission Press Release