EU proposes single legal status for small firms

News Article - Wednesday, July 02, 2008

filed under: Regulatory

The European Commission has unveiled new plans to create a single European Union (EU) legal status for small and medium-sized enterprises (SMEs).

Under the proposals, smaller firms would be able to register under the new European Private Company or SPE (Societas Privata Europaea) system.

Designed to make it simpler for small businesses to trade across international borders, the EU plans should save firms both time and money, the commission claims. Large publicly-traded EU companies can already apply for single legal status, known as the Societas Europaea.

Charlie McCreevy, EU internal market commissioner, stated: "Setting up and running subsidiaries, for example, as an SARL in France, a Limited company in the UK and a GmbH in Germany requires knowledge of three different legal systems. This is time-consuming. It is also very expensive."

SMEs granted SPE status would remain subject to the varying laws on tax, labour, insolvency and accounting of individual member states.

The European Commission estimates that small businesses could save between €2,000 and €10,000 in company set-up fees and between €750 and €8,000 in day-to-day operating costs as a result of the proposed changes, which must be approved by the European Parliament.

Small firms attempting to manage their finances and ensure that they meet management reporting standards can benefit from accounts software packages.

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