The European Parliament has voted this week (Wednesday 10 March) by an overwhelming margin to exempt very small firms, known as micro-entities, from EU law on accounting standards, reducing the burden of red tape and helping them beat the recession.
Welsh Labour MEP, DEREK VAUGHAN, said:
"As small firms in all parts of Wales struggle to overcome the economic downturn I am 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.
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."
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 law will amend the 4th company law directive, dealing with accounting standards, to exempt micro-entities, 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 5 million firms across Europe fall into this definition, and the European Commission estimates that savings for each firm will be around £1,000.