Category Archives: Business Environment

The process of starting up and developing a business is not just an adventure, but also a real challenge. In order to help entrepreneurs with this, it is essential to create a favourable business environment.
Ensuring easier access to funding, making legislation clearer and more effective and developing an entrepreneurial culture and support networks for businesses are all instrumental as far as the setting up and growth of businesses are concerned.
However, creating a favourable business environment does not mean simply improving the growth potential of businesses. It also means turning Europe into a place in which it is advantageous to invest and work. In this way, the promotion of corporate social responsibility is contributing to making business in Europe more attractive.
Small and medium-sized enterprises (SMEs) make up 99% of European businesses. Their small size makes them very sensitive to changes in the industry and environment in which they operate. It is therefore vital for their well-being to be a focus of political attention.

Action plan for entrepreneurship

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Action plan for entrepreneurship

Outline of the Community (European Union) legislation about Action plan for entrepreneurship

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Enterprise > Business environment

Action plan for entrepreneurship

Document or Iniciative

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions of 11 February 2004 entitled “Action Plan: The European agenda for Entrepreneurship” [COM(2004) 70 final – Not published in the Official Journal].

Summary

Taking account of the reactions provoked by the publication of the Green Paper on Entrepreneurship, this action plan proposes a set of measures to promote entrepreneurship in order to help entrepreneurs fully realise their ambitions and provide them with a business climate conducive to entrepreneurship.

The Action Plan sets out the key objectives to be achieved by the European Union (EU) and Member States’ policy-makers in the following five strategic areas:

Fuelling entrepreneurial mindsets

In order to inform as many people as possible about entrepreneurship, the Commission intends to foster entrepreneurial mindsets among young people through educational activities (such as presenting role models) in schools. The Commission calls upon the Member States to integrate entrepreneurship education into all schools’ curricula, arrange awareness campaigns, offer training material, organise training modules for teachers and, together with business organisations, involve entrepreneurs in teaching programmes.

Encouraging more people to become entrepreneurs

According to the Eurobarometer, although 47% of Europeans say they prefer self-employment, only 17% actually realise their ambitions. Encouraging more people to become entrepreneurs means:

  • Reducing the stigma of failure. A better understanding of business failure, including distinguishing between honest and dishonest bankruptcies, is needed in order to tackle the stigma of failure. The Commission will gather practical information on early warning signs of financial difficulties, reasons for failure, barriers to starting afresh and portraits of failed and restarted entrepreneurs. This information should be used in promotional campaigns or teaching courses and should help reduce the stigma suffered by failed entrepreneurs. The Commission is planning to prepare, together with an expert group, self-evaluation tests for entrepreneurs to assess their financial condition, including information on existing support and procedures aimed at rescue from failure;
  • Facilitating business transfers. Given that it is possible to become an entrepreneur with a reduced risk of failure by taking over an established firm rather than building an enterprise from scratch, the EU should ensure that such enterprises do not close because of obstacles in the tax and legal environment or the lack of a successor. The Commission will foster implementation of the Recommendation on Business Transfers;
  • Reviewing social security schemes for entrepreneurs. In order to determine more precisely the influence of social security on the attractiveness of entrepreneurship, the Commission is planning to present an overview of social security schemes for the self-employed and business owners, including their spouses and other dependants, and the effects of transition from one status to another. Based on this, the Commission will ask the Member States to define the areas in which they intend to take action and will then organise an exchange of experience involving external experts about how best to make progress.

Taking account of demographic ageing and the fact that the age group that is most active in setting up businesses (25-34 years) will be less visible in the future, the action plan calls on the Member States to react quickly.

Gearing entrepreneurs for growth and competitiveness

The EU has taken a whole range of initiatives to enable small and medium-sized enterprises (SMEs) to make the most of the opportunities offered by the knowledge-based economy. It has, for example, reserved 15% of the budget for the 6th Framework Programme for RTD for SMEs. It has also extended the scope of the Block Exemption Regulation to R&D aid granted to SMEs. Focusing more specifically on entrepreneurship, this Communication proposes:

  • Providing tailor-made support for women and ethnic minorities. The Commission intends to promote access to top-class support and management training for entrepreneurs from all backgrounds, including groups with specific needs, such as women and entrepreneurs from ethnic minorities. In this context, the Commission plans to assist the national and regional authorities to address those areas where the needs of female entrepreneurs are still insufficiently met, notably access to finance and entrepreneurial networks, and to identify and evaluate policy measures with a view to identifying good practices to assist ethnic minority entrepreneurs;
  • Supporting businesses in developing inter-enterprise relations. The Commission will reinforce the role of the European support networks ‘Euro Info Centres (EICs)’ and the ‘Innovation Relay Centres (IRCs)’ by involving them in promoting business cooperation and ensuring streamlined delivery of all EU-wide support services, not only by these networks, but also by the Business Innovation Centres (BICs).

As noted in the Green Paper on Entrepreneurship, too few fast-growing enterprises, or “gazelles”, which are the key drivers of innovation and entrepreneurial dynamism, emerge in Europe. Entrepreneurial growth rarely happens by chance: entrepreneurs primarily seek inspiration from successful role models. The Commission will therefore seek good policy practices for disseminating as role models and providing suitable support to potential gazelles.

Improving the flow of finance

The Commission helps to improve the financial environment for enterprises, especially SMEs, through its financial instruments and by bringing together SMEs and financial players to allow the exchange of good practice and make for a better mutual understanding among SMEs and the financial community.

This Communication proposes creating more equity and stronger balance sheets in firms. The Commission intends to use its financial instruments for SMEs to facilitate entrepreneurial growth by stimulating the supply of both debt and equity finance. It also plans to intensify its actions to improve the availability of venture capital, “business angel” finance, and investments by private individuals (“micro-angels”).

The Commission also plans to analyse the impact of State aid and remedy possible market failures in the provision of funding for SMEs, particularly young and growth-oriented ones.

Creating a more SME-friendly regulatory and administrative framework

The Internal Market has made the life of businesses, particularly SMEs, much easier. However, its completion remains a priority, as there are still a number of obstacles that need to be removed. The Commission is continuing to promote the involvement of SMEs in standardisation. It also wants more effective consultation of SMEs to allow them to give their opinions on new initiatives at an early stage of the decision-making process and about the adequacy of existing regulations and practices.

This Communication also proposes reducing the complexity of complying with tax laws. An enterprise operating in an intra-European environment has to comply with different national tax laws and regulations, which can become an obstacle to cross-border activities, particularly for SMEs. To simplify and reduce tax compliance procedures related to direct taxation, the Commission intends to launch a pilot scheme whereby SMEs can apply ‘Home State Taxation’. This should lead to considerable savings and efficiency gains for qualifying SMEs.

For several categories of business-to-consumer transactions, application of VAT at the place of consumption means traders have to be identified and make returns and payments in every Member State where they carry out taxable transactions. This is burdensome for traders within the Internal Market. The Commission intends to propose a ‘one-stop-shop’ system to enable firms to deal with one single tax authority, in their own language, and to benefit from a single set of compliance obligations.

REPORT ON THE IMPLEMENTATION OF THE ACTION PLAN

In September 2006 the report prepared by the Commission (PDF ) concluded that most of the initiatives presented in the action plan had in the meantime been implemented.

As an example, Community funding for measures to help businesses has increased, and access to funding has been made easier. Progress has also been made in the field of entrepreneurship education by offering people from a very young age a real chance to acquire basic commercial expertise and develop their personal qualities and general skills such as creativity, sense of initiative, self-confidence and sense of responsibility.

The action plan has thus proved to be a valuable tool in achieving the aim of promoting entrepreneurship. The initiatives to which it has given rise are now continuing under the Community SME policy.

Support to businesses

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Support to businesses

Outline of the Community (European Union) legislation about Support to businesses

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Enterprise > Business environment

Support to businesses

Enterprise Europe network

The Enterprise Europe Network offers information and tailored services to businesses, thus making a tangible contribution to promoting entrepreneurship and the growth of businesses in Europe.

The network, which is the widest in Europe in terms of its geographical coverage and the range of services offered, provides a ‘one-stop-shop’ for all the information which may be of use to European businesses. It is based on the proximity principle and the ‘no wrong door’ concept: in other words, businesses can contact any partner in the network, which will often be the nearest one, and be individually guided to the most appropriate service.

While the network is mainly targeted at small and medium-sized enterprises (SMEs), larger companies may also receive assistance.

The services of the Enterprise Europe Network include:

  • facilitating access to funding by making businesses aware of the available opportunities;
  • providing information on the EU policies, programmes and legislation which are relevant to a particular business’s activities;
  • settling problems linked to Community standards and intellectual property rights;
  • helping businesses to identify trustworthy commercial partners;
  • encouraging businesses to become more innovative and helping them to participate in research programmes and form technological partnerships;
  • exchanging best practice;
  • visiting businesses to assess their needs;
  • promotional and information material.

The network operates as a ‘two-way street’, and the Commission uses the feedback regularly received to adapt its policies and initiatives to the needs of European businesses, particularly SMEs, without creating additional red tape.

The Enterprise Europe Network provides a local service throughout the EU and outside its borders thanks to the presence of more than 500 contact points.

The Enterprise Europe Network is a key element of the Competitiveness and Innovation Framework Programme (CIP) and brings together the expertise of the former Euro Info Centres (EICs) and Innovation Relay Centres (IRCs).

Your Europe – Business

The ‘Your Europe – Business’ website offers European businesses more direct access to information of relevance to them, particularly by providing details on the provisions in force not only in the European Union but also in each of its Member States.

European portal for SMEs

The European portal for SMEs provides information on all the policies, legislation, programmes and initiatives of relevance to SMEs.

Solvit

SOLVIT is an on-line problem-solving network. Problems linked to the misapplication by the public authorities of EU internal market rules are solved in a pragmatic manner within ten weeks. Both businesses and European citizens can submit problems to the SOLVIT centres.

EURES – European employment services

EURES services are coordinated by the Commission and facilitate the free movement of workers within the European Economic Area (EEA). The network partners include public employment services, trade unions and employers’ organisations. The aims pursued by the EURES are:

  • to inform and advise potentially mobile workers on employment opportunities and living and working conditions in the EEA;
  • to help employers who wish to recruit workers from other countries;
  • to provide specific advice and vocational guidance to workers and employers in cross-border regions.

In addition to its mobility and employment website, EURES has more than 700 advisers throughout the EEA.

Environment and SMEs

The Environment & SMEs website provides information on the main environmental legislation, best practice, training opportunities, advice and toolkits to help SMEs to respect the environment and put in place sustainable activities. While large businesses have an obvious effect on the environment, the activities of SMEs also have a considerable impact.

The organizations for the promotion of energy technologies network (OPET)

The objective of OPET, a network created by the European Commission, is to promote the potential of new energy technologies and raise awareness of this issue among the public and, in particular, the business community. The network disseminates information on the latest developments, participates in knowledge-sharing and supports the marketing of new technologies. The network thus covers the building sector, renewable energy sources, co?generation, heating and cooling, hydrocarbons and placing on the market.

Intellectual property rights helpdesk

The Intellectual property rights helpdesk provides general information on these rights, how to protect one’s rights and the usefulness of so doing, and offers assistance on the problems which entrepreneurs can encounter in this area. The helpdesk is particularly aimed at entrepreneurs who participate, or wish to participate, in research and technological development projects.

European consumer centres network

The European consumer centres network is intended to assist European consumers in relation to questions or difficulties which may arise when they purchase goods or services in another Member State.

A modern policy for SMEs

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A modern policy for SMEs

Outline of the Community (European Union) legislation about A modern policy for SMEs

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These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Enterprise > Business environment

A modern policy for SMEs

Document or Iniciative

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions of 10 November 2005, entitled “Implementing the Community Lisbon programme – Modern SME policy for growth and employment” [COM (2005) 551 final – Not published in thOfficial Journal].

Summary

Small and medium-sized enterprises (SMEs) make a major contribution to growth and job creation in the European Union (EU). This is why the new policy on small and medium-sized enterprises (SMEs) creates a more coherent, pragmatic and horizontal framework for these enterprises. Promoting entrepreneurship and developing an environment favourable to SMEs will allow them to become more competitive.

SMEs are very diverse, and consequently have different needs. Some of them are start-ups, while others are rapidly growing “gazelles”. Some are active in vast markets, others in local or regional markets. If by definition all SMEs have fewer than 250 employees, some are micro-enterprises, others are family SMEs. In order to unlock the growth potential of SMEs as a whole, policies and action to support them need to reflect this diversity.

The success of this new policy will depend on the effective involvement of all SME stakeholders, national, regional and European, public and private.

Specific action is proposed in five key areas:

  • Promoting entrepreneurship and skills. Promoting entrepreneurship, reducing the burden of risk linked to setting up and running a business, eliminating the negative effects linked to business failure, and providing support for the successful transfer of businesses are all elements that contribute to a better exploitation of Europe’s entrepreneurial potential. Special attention will be paid to promoting entrepreneurial skills, reducing the skills gaps and providing support to particular categories of entrepreneurs (women, young people, old people, and people from ethnic minorities).
  • Improving SMEs’ access to markets. Better access to tenders on the public market, greater participation in the standardisation process, increased awareness of intellectual property rights, and support for inter-enterprise cooperation, particularly in border regions, will help SMEs to take full advantage of the opportunities provided by the internal market. SME access to international markets will also be facilitated.
  • Cutting red tape. It is vital to simplify the regulatory and administrative constraints weighing on SMEs. The principle of giving priority to small enterprises (“Think Small First”) will be integrated across all EU policies. The interests of SMEs will systematically be taken into consideration when assessing the impact of Community legislation and when preparing forthcoming legislation. Derogations for SMEs can be developed for this purpose. Special attention will be given to the rules concerning state aid, SME involvement in Community programmes, value-added tax (VAT) and, at national level, direct taxation.
  • Improving SMEs’ growth potential. Improving SMEs’ access to finance, research, innovation and information and communication technologies (ICT) will contribute directly to unlocking their potential for growth. Financial support, initially provided at Community level by the Multiannual Programme for Enterprises and Entrepreneurship (2001-2006), has now been increased by the Competitiveness and Innovation Framework Programme (CIP) (2007-2013). It is also vital to strengthen SMEs’ capacities for research and innovation, as continued innovation is essential for the sustainable development of SMEs. SME involvement in the 7th Research Framework Programme will thus be facilitated.
  • Strengthening dialogue and consultation with SME stakeholders. Enterprises, in particular SMEs, and the European Institutions suffer from a lack of information exchange. More systematic cooperation and consultation with stakeholders is an essential guideline of the new SME policy. When policies are being developed, SMEs will be consulted by the Commission’s SME Envoy or the “SME Panel”, a new quick-and-easy mechanism for consultation via the Enterprise Europe Network. In addition, as from the end of 2005, “European Enterprise Awards” will reward measures that have proved to be effective in promoting entrepreneurship and thus contributed to the exchange of best practices. The Community business support networks will, for their part, continue to play an essential role in spreading information on the EU to businesses, particularly SMEs.

Background

SMEs make up a large part of Europe’s economy and industry. The EU’s 23 million SMEs account for 99 % of all businesses and contribute up to 80 % of employment in some industrial sectors, such as textiles. European SMEs are thus an essential source of growth, employment, entrepreneurial skills, innovation and economic and social cohesion. It is therefore essential to unlock the potential of SMEs and improve the environment they operate in by promoting entrepreneurship.

Open method of coordination: BEST procedure

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Open method of coordination: BEST procedure

Outline of the Community (European Union) legislation about Open method of coordination: BEST procedure

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These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Enterprise > Business environment

Open method of coordination: BEST procedure

Europe is a reservoir of good practice in the field of enterprise policy. However, these examples of good practice are rarely known outside their home Member State. By sharing best practices, the Member States have the potential to enhance their performance and thus to increase the competitiveness of European companies.

The aim of the BEST procedure is to compare these best practices. It is the European Commission’s response to the call from the Lisbon European Council of 23 and 24 March 2000 to create an open method of coordination to improve the environment for enterprises.

Several methods could be used to identify and exchange good practices, including comparing the performances of the Member States, peer assessment, seminars and conferences.

In the context of the BEST procedure, DG Enterprise and Industry has identified specific projects considered essential for the development of enterprises. These projects reflect the priorities laid down by the national governments and the enterprises themselves by way of the Enterprise Policy Group. Each year, the Commission launches a certain number of projects which then lead to the adoption of recommendations.

BEST projects are one of the instruments for implementing the objectives of the European Charter for Small Enterprises.

The BEST procedure has five steps:

  • identification of specific sectors and issues, with the assistance of the Enterprise Policy Group;
  • definition of the project (scale, aim);
  • implementation (limit of 18 months and voluntary participation of the Member States);
  • adoption of conclusions (systematic comparison of performances);
  • follow-up (feedback of Member State information on changes in the environment for enterprises) to ensure real progress.

EXAMPLES OF BEST PROJECTS

“Models to reduce the disproportionate administrative burden on SMEs” (project launched in 2006)

The bureaucratic hurdles facing enterprises, in particular SMEs, considerably curb their growth. This BEST project aims to collect information on the various methods used by the Member States to reduce this administrative burden.

“Measures to support entrepreneurs from ethnic minorities” (project launched in 2004)

Entrepreneurs from ethnic minorities have many problems starting up and developing a business. This BEST project aims to collect information on national measures and support plans to solve these problems.

“Business Angels” (project launched in 2001)

Business Angels are private investors, often entrepreneurs, former entrepreneurs or executives with expertise in a particular sector. They provide venture capital to young entrepreneurs and can also provide management advice. This BEST project aims to raise awareness in the Member States about the potential of Business Angels to help alleviate shortcomings in the banking system in the area of business start-ups.

CONTEXT

The BEST procedure was described for the first time in the communication entitled “Challenges for Enterprise Policy in the Knowledge-Driven Economy” [COM(2000) 256 final – Not published in the Official Journal] which accompanied the proposal for a decision of the Council on the Multiannual programme for enterprises and entrepreneurship (2001-2005), extended until 31 December 2006 and now replaced by the Competitiveness and Innovation Framework Programme (CIP) (2007-2013).

Development of micro-credit

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Development of micro-credit

Outline of the Community (European Union) legislation about Development of micro-credit

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These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Enterprise > Business environment

Development of micro-credit

Document or Iniciative

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions of 13 November 2007 – A European initiative for the development of micro-credit in support of growth and employment [COM(2007) 708 final – Not published in the Official Journal].

Summary

In Europe, micro-credit – i.e. loans of less than € 25 000 – is aimed at micro-enterprises (enterprises employing fewer than 10 people) and disadvantaged persons (unemployed or inactive people, those receiving social assistance, immigrants, etc.) who wish to go into self-employment but do not have access to traditional banking services.

Micro-credit can promote the transition from unemployment to self-employment and offers access to finance for persons whose projects the banks refuse to finance because of insufficient collateral. It can thus play a key role in implementing the Lisbon Strategy for Growth and Jobs.

Nevertheless, even if micro-credit has been on the increase for a number of years in the Member States of the European Union (EU), much remains to be done to enable this instrument to develop its full potential.

Therefore, the EU is proposing an initiative aimed at developing the market for micro-credit. The initiative comprises four strands:

  • improving the legal and institutional environment in the Member States;
  • further changing the climate in favour of entrepreneurship;
  • promoting the spread of best practices, particularly in relation to training;
  • providing additional financial capital for micro-credit institutions.

First strand: improving the legal and institutional environment in the Member States

The institutional framework in the Member States does not always allow micro-credit to develop in a positive way. Indeed, the specific nature of micro-credit is not generally taken into account in national or Community legislation. The Commission therefore encourages the Member States to take the measures needed to create a legal, institutional and business environment which is more conducive to the development of micro-credit. With this in mind, the Commission proposes that the Member States:

  • create an environment allowing the development of micro-finance institutions (MFIs) and covering all segments of the clientele. Given the number and diversity of potential clients, MFIs should have easy access to financial resources allowing them to develop micro-credit. MFIs are financed through grants and donations and, where appropriate, bank loans. They are certain to benefit from the creation of a suitable environment in which they are more visible;
  • help micro-credit to become sustainable by relaxing interest caps for micro-credit operations. In the Member States where they exist, interest rates should be fixed at a fairly high level in order that lending institutions can cover their costs, while regularly evaluating the social and economic impact in order not to jeopardise the security of borrowers;
  • reduce operating costs by applying favourable tax schemes. More favourable tax schemes (tax exemptions, tax reductions, grants) are important for the development of micro-credit;
  • adapt national regulation and supervision to the specificity of micro-finance. If they receive deposits, MFIs are subject to Community prudential regulation and are supervised accordingly. In order not to put a brake on the supply of micro-credit and the growth of MFIs not receiving deposits from clients, the new regulations and supervision must take account of their costs and the risks which MFIs pose.

Second strand: further changing the climate in favour of entrepreneurship

In order to encourage Europe’s shift towards an economy based on knowledge, services and new technologies, and to create a climate more conducive to entrepreneurship, the Commission proposes that the Member States:

  • improve the institutional framework for self-employment and micro-enterprises. Equal treatment for the self-employed and wage-earners is essential. Nevertheless, a programme of publicity and awareness-raising should be set up in order that self-employment and micro-enterprises are better recognised. To this end, legal, tax and administrative barriers should be lowered (e.g. exemption from social insurance charges, simplified registration procedures, improved access to more numerous and less expensive outlets);
  • increase the chances of success of new micro-enterprises through training, mentoring and business development services. The micro-enterprise environment is a complex one and demands a supply of business development services because those starting up in business do not always have all the competencies required in order to be successful. Training and mentoring are therefore needed to improve a start-up entrepreneur’s chances of success.

Third strand: promoting the spread of best practices

Promoting the spread of best practices for MFIs is a key element in the initiative to encourage micro-credit. The Commission therefore proposes to set up a new body to provide technical assistance and support the development of non-bank MFIs in the Member States. This new body would have the task of:

  • laying down a code of conduct for MFIs. Such a code would serve to increase confidence in MFIs and spread ethical and customer-friendly best practices among them. The quality of an MFI would thus be assessed on the basis of its social and financial performances and its business practices;
  • introducing a specific “micro-credit” label to create awareness among EU citizens. This label would enable the attention of investment funds dedicated to micro-credit to be focused more on MFIs which perform well, and improve citizens’ confidence in microfinance investment vehicles and steer new resources towards MFIs with the best social and financial performance;
  • providing information on this initiative and handling the publicity;
  • publishing brochures and organising conferences;
  • providing technical manuals, guides and software designed to help MFIs adopt best practices;
  • providing easier access to finance for MFIs by mobilising financial resources.

Fourth strand: providing additional financial capital for new non-bank MFIs

The Commission proposes to set up a support structure within the JEREMIE department of the EIF for the purpose of providing technical and financial support to promising non-bank MFIs. This micro-fund would have the aim of assisting MFIs to become self-sustaining and would help to increase the use of micro-credit in Europe and further develop this sector.

Context

This initiative seeks to promote the sustainable development of micro-credit in the EU and forms part of the Lisbon Strategy for Growth and Jobs, and of the policy of encouraging entrepreneurship and economic initiative, the policy of promoting “flexicurity” and the inclusion of disadvantaged persons, and the policy of developing human capital and renewing trust-based social links.

Related Acts

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 27 June 2007 – Towards Common Principles of Flexicurity: More and better jobs through flexibility and security [COM(2007) 359 final – Not published in the Official Journal].

from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions of 29 June 2006 – Implementing the Community Lisbon Programme: Financing SME Growth – Adding European Value [ final – Not published in the Official Journal].

Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast) [Official Journal L 177 of 30.6.2006].

Directive 2006/49/ECof the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions (recast) [Official Journal L 177 of 30.6.2006].


Combating late payment in commercial transactions

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Combating late payment in commercial transactions

Outline of the Community (European Union) legislation about Combating late payment in commercial transactions

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Enterprise > Business environment

Combating late payment in commercial transactions

Document or Iniciative

Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (Text with EEA relevance).

Summary

This Directive aims at combating late payment * in commercial transactions * in order to contribute to the proper functioning of the internal market and to foster the competitiveness of undertakings, particularly small and medium-sized enterprises (SMEs).

The Directive applies to all types of payment made as remuneration for commercial transactions between public authorities and between undertakings. It may exclude:

  • debts that are subject to insolvency proceedings against a debtor;
  • proceedings aimed at debt restructuring;
  • transactions with consumers;
  • interest relating to other payments (for examples payments made under the laws on cheques and bills of exchange, or payments made as compensation for damages including payments from insurance companies).

Transactions between undertakings

In the event of late payment, a creditor is entitled to claim interest on condition that they have fulfilled their contractual and legal obligations and that they have not received the amount due * on the agreed date. The creditor is paid such interest according to the payment period or date laid down in the contract.

With regard to commercial transactions between economic operators, the Directive stipulates, whilst respecting their contractual freedom, that they must pay their invoices within 60 days except where they have expressly agreed otherwise and insofar as other terms are not grossly unfair to the creditor.

Where the contract does not specify any date for payment, the creditor is also entitled to receive interest if 30 calendar days after receipt, by the debtor, of the invoice or an equivalent request for payment, the creditor has not received the amount due.

The creditor may even be entitled to compensation from the debtor for recovery costs.

Transactions between undertakings and public authorities

In the event of late payment, and where the debtor is a public authority, the creditor shall be entitled to claim interest if they have fulfilled their contractual and legal obligations and have not received the amount due on the agreed date.

Where the debtor is a public authority, the date of receipt of the invoice must not be the subject of a contractual agreement. The period of payment for an invoice must not exceed:

  • 30 days following receipt of the invoice;
  • 30 days following the date of receipt of the goods or services where the date of receipt of the invoice is uncertain.

Member States may extend payment periods to a maximum of 60 days under certain conditions.

The statutory rate of interest for late payment shall be increased to at least 8 percentage points above the reference rate applied by the European Central Bank. Public authorities may not set lower interest rates for late payment.

Unfair contractual terms and practice

Contractual terms shall not apply if they cause prejudice or are unfair to the creditor – for example if they exclude the payment of interest for late payment or compensation for recovery costs.

In order to avoid such unfair practice, Member States must ensure transparency with regard to the rights and obligations resulting from this Directive and shall be bound to publish the applicable rate of statutory interest for late payment.

Member States may also encourage the implementation of payment codes setting out payment time limits.

Recovery procedures

Creditors may lodge action or apply to a court provided that the debt is not disputed.

This Directive repeals Directive 2000/35/EC.

Key terms of the Act
  • Late payment: payment not made within the contractual or statutory period of payment.
  • Commercial transactions: transactions between undertakings or between undertakings and public authorities which lead to the delivery of goods or the provision of services for remuneration.
  • Amount due: the principal sum which should have been paid within the contractual or statutory period of payment, including the applicable taxes, duties, levies or charges specified in the invoice or the equivalent request for payment.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Directive 2011/7/EU

15.3.2011

16.3.2013

OJ L 48, 23.2.2011

European Charter for Small Enterprises

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European Charter for Small Enterprises

Outline of the Community (European Union) legislation about European Charter for Small Enterprises

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These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Enterprise > Business environment

European Charter for Small Enterprises

Document or Iniciative

Annex III to the Conclusions of the Presidency of the Santa Maria Da Feira European Council of 19 and 20 June 2000.

Summary

Small enterprises are the driving force for innovation and job creation in Europe. Their small size makes them very sensitive to changes in the industry and environment in which they operate. This is why emphasis was placed on the need to facilitate the development of small enterprises by the Heads of State or Government and the European Commission at the European Council in Feira (Portugal) on 19 and 20 June 2000.

The Heads of State or Government and the European Commission acknowledge the dynamic capacity of small enterprises, particularly when it comes to providing new services, creating jobs and fostering social and regional development. They also stress the importance of entrepreneurship and of not penalising some of the failures. They also agree on the strength of values such as knowledge, commitment and flexibility in the new economy.

In order to stimulate entrepreneurship and improve the business environment for small enterprises, the Heads of State or Government and the European Commission have decided to work on ten routes of action, i.e.:

  • Education and training for entrepreneurship

Business principles will have to be taught from an early age if an ‘entrepreneurial spirit’ is to be encouraged; this applies particularly to secondary and university levels, in encouraging entrepreneurial initiatives by young people and developing training programmes for small enterprises.

  • Cheaper and faster start-up

Company start-ups will become cheaper and faster, particularly through the use of online registration.

  • Better legislation and regulation

There will be a reduction in the negative impact of national bankruptcy laws and new regulations on small enterprises. It will be made easier for small enterprises to use administrative documents and they will not have to enforce certain regulative obligations.

  • Availability of skills

Training institutions will impart skills adapted to the needs of small enterprises and provide lifelong training and consultancy services.

  • Improving online access

Public administrations will be urged to develop online services for their dealings with enterprises.

  • Getting more out of the single market

The Member States and the European Commission will complete the single market so that enterprises can derive the maximum benefit from it. At the same time, national and Community competition rules will have to be strictly applied.

  • Taxation and financial matters

Tax systems will need to make life easier for enterprises. Access to finance (risk capital, structural funds) will also need to be improved.

  • Strengthening the technological capacity of small enterprises

Efforts will be made to promote new technologies, implement the Community patent and facilitate access to research programmes which are more focused on commercial applications. Inter-firm cooperation and cooperation with higher education institutions and research centres will be encouraged.

  • Successful e-business models and top-class small business support

Enterprises will be encouraged to adopt best practices. Business support services will be developed.

  • Develop stronger, more effective representation of SMEs’ interests at Union and national level

Solutions aimed at representing small enterprises within the Member States and the European Union will be reviewed. National and Community policies will be better coordinated and evaluations will be carried out with a view to improving the performance of small enterprises. An annual report on the implementation of the Charter will appear in the spring of each year.

For the EU Member States, the implementation process was launched in the spring of 2000. The acceding and candidate countries were involved in the process from the spring of 2002. Following the adoption of the Charter by the acceding and candidate countries in Maribor (Slovenia) on 23 April 2002, the process was also launched in other areas. The Western Balkan countries (Albania, Bosnia-Herzegovina, Croatia, the Former Yugoslav Republic of Macedonia, Serbia and Montenegro) adopted the Charter in Thessaloniki (Greece) in June 2003. In 2004, these countries embarked upon the first stage of the implementation process, with Moldova joining in that same year.

Related Acts

At the Euro-Mediterranean Conference of Ministers for Industry held in Caserta on 4 October 2004, Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the Palestinian National Authority, Syria and Tunisia approved the Euro-Mediterranean Charter for Enterprise.

The main objective of this Charter is to prepare for the creation of the Euromed free trade area, strengthen Euro-Mediterranean partnerships and create an environment favourable to businesses in the region. It is based largely on the model of the European Charter for Small Enterprises.

Definition of micro, small and medium-sized enterprises

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Definition of micro, small and medium-sized enterprises

Outline of the Community (European Union) legislation about Definition of micro, small and medium-sized enterprises

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Enterprise > Business environment

Definition of micro, small and medium-sized enterprises

Document or Iniciative

Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises [Official Journal L 124 of 20.05.2003].

Summary

The definition of micro, small and medium-sized enterprises is updated to take account of economic developments since 1996 (inflation and productivity growth) and the practical lessons learnt.

The new definition thus qualifies small and medium-sized enterprises (SMEs) and the concept of the microenterprise. It strengthens the efficiency of the Community programmes and policies designed for these businesses. The aim is to ensure that enterprises whose economic power exceeds that of an SME do not benefit from the support mechanisms specifically intended for SMEs.

Micro, small and medium-sized enterprises

Micro, small and medium-sized enterprises are defined according to their staff headcount and turnover or annual balance-sheet total.

A medium-sized enterprise is defined as an enterprise which employs fewer than 250 persons and whose annual turnover does not exceed EUR 50 million or whose annual balance-sheet total does not exceed EUR 43 million.

A small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 10 million.

A microenterprise is defined as an enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million.

Autonomous, partner, linked enterprises

The new definition of an SME clarifies the typology of enterprises. It distinguishes between three types of enterprise on the basis of the type of relations they have with other enterprises in terms of percentage interest in capital, voting rights or the right to exercise a dominant influence:

  • autonomous enterprises;
  • partner enterprises;
  • linked enterprises.

Autonomous enterprises are by far the most common. These include all enterprises which are not one of the other two types (partner or linked). An enterprise is autonomous if it:

  • does not have a holding of 25 % or more in another enterprise;
  • is not owned 25 % or more by an enterprise or public body or jointly by several linked enterprises or public bodies, with a few exceptions;
  • does not draw up consolidated accounts and is not included in the accounts of an enterprise which draws up consolidated accounts and is thus not a linked enterprise.

An enterprise may continue to be considered autonomous, even if this 25 % ceiling is reached or exceeded, if there are certain categories of investor who play a positive role in business financing and creation, such as “business angels”.

Partner enterprises: This type represents the situation of enterprises which establish major financial partnerships with other enterprises, without the one exercising effective direct or indirect control over the other. Partners are enterprises which are neither autonomous nor linked to one another. An enterprise is a partner of another enterprise if:

  • it has a holding of 25 % to less than 50 % in the other enterprise;
  • the other enterprise has a holding of 25 % to less than 50 % in the applicant enterprise;
  • the applicant enterprise does not draw up consolidated accounts which include the other enterprise, and is not included by consolidation in the accounts of the other enterprise or of an enterprise linked to it.

Linked enterprises correspond to the economic situation of enterprises which form a group through the direct or indirect control of the majority of the capital or voting rights (including through agreements or, in certain cases, through individual shareholders), or through the ability to exercise a dominant influence on an enterprise. Such cases are thus less common and very different from the two preceding types. To avoid difficulties of interpretation for enterprises, the European Commission has defined this type of enterprise by adopting – wherever they are suitable for the purposes of the definition – the conditions set out in Article 1 of Council Directive 83/349/EEC on consolidated accounts, which has been in application for several years. An enterprise will thus generally know immediately that it is linked, since it is already required under that Directive to draw up consolidated accounts or is included by consolidation in the accounts of an enterprise which is required to draw up such consolidated accounts.

Staff headcount relevant to the definition of micro, small and medium-sized enterprises

The staff headcount is measured in annual work units (AWU), i.e. the number of persons who worked full-time within the enterprise in question or on its behalf during the entire reference year under consideration. The work of persons who have not worked the full year or have worked part-time is counted as fractions of AWU. Apprentices or students engaged in vocational training under an apprenticeship or vocational training and maternity or parental leave are not counted.

Legal value of the definition

The definition of micro, small and medium-sized enterprises is binding only for certain matters, such as State aid, implementation of the Structural Funds or Community programmes, particularly the Framework Programme on Research and Technological Development.

The European Commission nevertheless urges the Member States, the European Investment Bank and the European Investment Fund to use it as a reference. The measures taken in support of SMEs will then be more consistent and effective.

Timetable

To allow a smooth transition at Community and national level, the new definition has been used since 1 January 2005.

On the basis of a review of the application of the definition of 6 May 2003, and taking account of any amendments to Article 1 of Directive 83/349/EEC on the definition of linked enterprises within the meaning of that Directive, the Commission will if necessary amend this definition, particularly the ceilings for turnover and for the balance-sheet total, in order to take account of experience and economic developments in the European Union.

Background

The Commission adopts a new definition of micro, small and medium-sized enterprises to replace, from 1 January 2005, the definition laid down in Recommendation 96/280/EC.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Recommendation 2003/361/EC 1.1.2005 – OJ L 124 of 20.5.2003

Corporate social responsibility: a business contribution to sustainable development.

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Corporate social responsibility: a business contribution to sustainable development.

Outline of the Community (European Union) legislation about Corporate social responsibility: a business contribution to sustainable development.

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Employment and social policy > Employment rights and work organisation

Corporate social responsibility: a business contribution to sustainable development.

Document or Iniciative

Communication from the European Commission of 2 July 2002 concerning Corporate Social Responsibility: A business contribution to Sustainable Development [COM (2002) 347 final – Not published in the Official Journal].

Summary

The Commission presents a European strategy to promote corporate social responsibility (CSR). CSR involves companies integrating social and environmental objectives in their business operations and in their interaction with the actors concerned.

The Commission emphasises that the CSR programmes contribute to the sustainable development of the European Union (EU). In addition, they have a positive impact on the management and competitiveness of enterprises, considering in particular:

  • the globalisation of trade, which means that enterprises have activities and responsibilities abroad, including in developing countries;
  • consumer awareness regarding the image and reputation of enterprises;
  • financial institutions and investors taking into account the CSR activities of enterprises in order to evaluate the success and risk factors inherent in a company;
  • the possibility of using CSR activities to develop the skills of employees.

Principles of the European strategy

The strategy to promote CSR proposed by the Commission is based on a series of principles:

  • the voluntary, transparent and credible nature of CSR activities;
  • the identification of areas where European action will add value;
  • a balance between the actions taken in the economic, social and environmental spheres and in relation to consumers’ interests;
  • attention to the specific needs of Small and Medium-sized Enterprises (SMEs);
  • compatibility with existing international agreements and instruments (particularly those of the International Labour Organisation (ILO) and the Organisation for Economic Cooperation and Development (OECD)).

Key actions of the European strategy

Firstly, the Commission encourages developing knowledge on the impact of CSR on the economic performance of enterprises. It therefore proposes to launch studies into activities to raise awareness and disseminate information.

The exchange of good practice between businesses and between Member States must also be encouraged through the networking and coordination of actors.

The skills in enterprises must be supported, in particular by using European funding to train employees. In addition, the principles of CSR must be integrated into management training programmes in enterprises.

SME’s capacity for action must be strengthened by taking into account their specific characteristics and their limited resources. The Commission therefore encourages the exchange and dissemination of good practice, SME associations, cooperation between large companies and SMEs, and awareness-raising campaigns.

The transparency of CSR practices and tools must be guaranteed. The Commission therefore encourages the adoption of:

  • codes of conduct (concerning workers’ rights, human rights, protection of the environment, etc.);
  • management standards (in order to integrate social and environmental aspects into the day-to-day activities of enterprises);
  • instruments for measuring performance (such as internal evaluation reports);
  • labels on products;
  • standards for Socially Responsible Investment (SRI), in order to direct investors towards enterprises in the light of their CSR results.

The creation of a European forum could be of benefit to all the parties involved in CSR activities. It should be a place for exchanging experiences, cooperation and identifying areas where European action is required. In the first instance, the Commission invites the forum to look at:

  • the link between CSR and the competitiveness of enterprises;
  • the contribution of CSR to sustainable development, including in third countries;
  • issues specific to SMEs;
  • the effectiveness of existing codes of conduct;
  • guidelines and common criteria for evaluating CSR activities;
  • labelling programmes;
  • the dissemination of information on Socially Responsible Investment policies.

Lastly, the Commission proposes to integrate the objectives of CSR into all European policies. In accordance with its strategy to promote sustainable development, the EU has undertaken to integrate economic, social and environmental considerations into its policies. In addition, the CSR principles are particularly relevant in the following European policies:

  • employment and social affairs policy, particularly in the fields of education, training, equal opportunities and the integration of people with disabilities, the anticipation of industrial change and the restructuring of enterprises;
  • environmental policy, through evaluating environmental results, ecotechnology, and the environmental effectiveness of products (i.e. the link between the quantity of products and their impact on the environment);
  • consumer policy, in particular with regard to raising consumer awareness of social and environmental standards;
  • public procurement policy, in order to include social and environmental criteria in public procurement procedures;
  • external trade, external relations, and development policies, including with respect to multi-national enterprises;
  • public administration policy, given that the European institutions are also committed to implementing the CSR principles.

Context

This Communication follows on from the Green Paper on CSR published in 2001.

Another Normative about Corporate social responsibility: a business contribution to sustainable development.

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic

Enterprise > Business environment

Corporate social responsibility: a business contribution to sustainable development.

Document or Iniciative

Communication from the European Commission of 2 July 2002 concerning Corporate Social Responsibility: A business contribution to Sustainable Development [COM (2002) 347 final – Not published in the Official Journal].

Summary

The Commission presents a European strategy to promote corporate social responsibility (CSR). CSR involves companies integrating social and environmental objectives in their business operations and in their interaction with the actors concerned.

The Commission emphasises that the CSR programmes contribute to the sustainable development of the European Union (EU). In addition, they have a positive impact on the management and competitiveness of enterprises, considering in particular:

  • the globalisation of trade, which means that enterprises have activities and responsibilities abroad, including in developing countries;
  • consumer awareness regarding the image and reputation of enterprises;
  • financial institutions and investors taking into account the CSR activities of enterprises in order to evaluate the success and risk factors inherent in a company;
  • the possibility of using CSR activities to develop the skills of employees.

Principles of the European strategy

The strategy to promote CSR proposed by the Commission is based on a series of principles:

  • the voluntary, transparent and credible nature of CSR activities;
  • the identification of areas where European action will add value;
  • a balance between the actions taken in the economic, social and environmental spheres and in relation to consumers’ interests;
  • attention to the specific needs of Small and Medium-sized Enterprises (SMEs);
  • compatibility with existing international agreements and instruments (particularly those of the International Labour Organisation (ILO) and the Organisation for Economic Cooperation and Development (OECD)).

Key actions of the European strategy

Firstly, the Commission encourages developing knowledge on the impact of CSR on the economic performance of enterprises. It therefore proposes to launch studies into activities to raise awareness and disseminate information.

The exchange of good practice between businesses and between Member States must also be encouraged through the networking and coordination of actors.

The skills in enterprises must be supported, in particular by using European funding to train employees. In addition, the principles of CSR must be integrated into management training programmes in enterprises.

SME’s capacity for action must be strengthened by taking into account their specific characteristics and their limited resources. The Commission therefore encourages the exchange and dissemination of good practice, SME associations, cooperation between large companies and SMEs, and awareness-raising campaigns.

The transparency of CSR practices and tools must be guaranteed. The Commission therefore encourages the adoption of:

  • codes of conduct (concerning workers’ rights, human rights, protection of the environment, etc.);
  • management standards (in order to integrate social and environmental aspects into the day-to-day activities of enterprises);
  • instruments for measuring performance (such as internal evaluation reports);
  • labels on products;
  • standards for Socially Responsible Investment (SRI), in order to direct investors towards enterprises in the light of their CSR results.

The creation of a European forum could be of benefit to all the parties involved in CSR activities. It should be a place for exchanging experiences, cooperation and identifying areas where European action is required. In the first instance, the Commission invites the forum to look at:

  • the link between CSR and the competitiveness of enterprises;
  • the contribution of CSR to sustainable development, including in third countries;
  • issues specific to SMEs;
  • the effectiveness of existing codes of conduct;
  • guidelines and common criteria for evaluating CSR activities;
  • labelling programmes;
  • the dissemination of information on Socially Responsible Investment policies.

Lastly, the Commission proposes to integrate the objectives of CSR into all European policies. In accordance with its strategy to promote sustainable development, the EU has undertaken to integrate economic, social and environmental considerations into its policies. In addition, the CSR principles are particularly relevant in the following European policies:

  • employment and social affairs policy, particularly in the fields of education, training, equal opportunities and the integration of people with disabilities, the anticipation of industrial change and the restructuring of enterprises;
  • environmental policy, through evaluating environmental results, ecotechnology, and the environmental effectiveness of products (i.e. the link between the quantity of products and their impact on the environment);
  • consumer policy, in particular with regard to raising consumer awareness of social and environmental standards;
  • public procurement policy, in order to include social and environmental criteria in public procurement procedures;
  • external trade, external relations, and development policies, including with respect to multi-national enterprises;
  • public administration policy, given that the European institutions are also committed to implementing the CSR principles.

Context

This Communication follows on from the Green Paper on CSR published in 2001.

The SME Envoy

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The SME Envoy

Outline of the Community (European Union) legislation about The SME Envoy

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Enterprise > Business environment

The SME Envoy

The competitiveness of the European Union (EU) is fundamentally dependent on the wellbeing of its small and medium-sized enterprises (SMEs). The EU’s 23 million SMEs make up 99 % of all EU companies and account for the majority of new jobs created. SMEs are thus an essential source of growth, increased employment and better jobs in the European economy, which are key aims of the Lisbon strategy.

Although they are affected by many EU policies, it is difficult for SMEs to make their opinions heard.

In order to give them an opportunity to express themselves, and so as to implement in practice the “Think Small First” principle set out in the European Charter for Small Enterprises adopted by the Santa Maria de Feira European Council in June 2000, the European Commission decided to appoint an SME Envoy.

The SME Envoy acts as the interface between European SMEs and the Commission. She plays a dual role, simultaneously acting within the Commission and interacting with the outside world.

Internally, the Envoy’s role is to improve the Commission’s awareness of the problems facing SMEs. She examines EU polices that could have an impact on SMEs and ensures that their interests and specific needs are taken into account during policy-making.

The Envoy’s task is part of the impact assessment system intended to ensure that the Commission’s proposals are subject to prior evaluation of their economic, environmental and social effects. The key contribution of the SME Envoy is that she argues SMEs’ case at an early stage of the law-making process and thus anticipates the effects of new laws.

In this way, the Envoy’s work increases coordination within the Commission on issues concerning SMEs.

Externally, the Envoy gives the Commission a human face in its dealings with SMEs. She is a visible contact person who is recognised by the SME community. Her role is to listen, by means of direct contact, both regular and informal, with SMEs and their representative organisations. Besides gathering information, the Envoy keeps SMEs informed on EU programmes and funding and can answer their questions directly. By establishing dialogue between the EU and European business, the Envoy contributes to improving governance in Europe.

The first SME Envoy, Mr Timo Summa, then a Director of the Enterprise DG, was nominated in 2001 at the initiative of Erkki Liikanen, the then Commissioner for Enterprise and the Information Society.

The current SME Envoy is Mr Calleja Crespo, Director-General of the Enterprise and Industry DG.

Related Acts

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions – “Think Small First” – A “Small Business Act” for Europe [COM (2008) 394 final – Not published in the Official Journal].