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Reducing legal and administrative burden in the EU: Commission’s initiative

Eugene Eteris, , BC's Scandinavian Office, Copenhagen, 23.02.2012.Print version
The Chairman of the High Level Group of Independent Stakeholders on Administrative Burdens, Dr. Edmund Stoiber handed over to the Commission’s President Barroso in Brussels on 21 February 2012 the Group's report "Europe can do more" on best practice in member states to implement EU legislation and reduce red-tape.

Initial steps

The target to reduce administrative burdens for businesses in the EU by 25 % by 2012 and the corresponding Action Programme were proposed by the Commission in January 2007, and endorsed by the European Council in March 2007. The improvement of the business environment by cutting red tape is a joint objective which can only be attained on the basis of a shared responsibility of the European Institutions and the Member States. The European Commission has made good progress in implementing the Action Programme. The Commission has already proposed measures that reduce administrative burdens by up to 33 % or more than € 40 bn. However, the Council and Parliament have so far adopted measures amounting to a reduction of 22 %.

 

With the recent agreement on measures reducing accounting red tape for more than 5 million small companies the total reduction figure received a further boost towards achieving the target of reducing administrative burdens by 25 % by 2012.

 

The High Level Group on Administrative Burdens, chaired by Dr. Edmund Stoiber, advises and assists the Commission on the implementation of the Action Programme for Reducing Administrative Burdens in the EU since 2008; the Report was finilised in November 2011.

 

The President of the European Commission, José Manuel Barroso welcomes best practice report on administrative burden reduction and calls on member states to learn from best experience. He said: "I congratulate the Group under the chairmanship of Dr. Edmund Stoiber for this excellent report. It shows impressive examples how member states implement EU law in an intelligent way so that its positive effects can unfold and are not hampered by unnecessary administrative burden at national level. I call on member states to look at these examples and learn from them. Through mutual inspiration on smart regulation we can further improve the business environment and support growth and jobs in Europe."

Reference: IP/12/146, 21 February 2012 and Memo/12/116.  

 

The Commission requested the EU advisory bodies and agencies the best practice report in August 2010. The report provided by the High Level Group of Independent Stakeholders on Administrative Burdens, lists 74 best practice examples, including initiatives on e-government, on intelligent solutions in particular for small businesses, direct stakeholder involvement, good guidance and cross-border initiatives.

 

The Commission acknowledged that there was an ample scope for improving the implementation of EU legislation. Since almost a third of the administrative burdens on businesses deriving from EU legislation stem from inefficient national implementation of EU requirements, reducing such burdensome implementation is vital to improving the life of businesses and to boosting the EU's economy and its competitiveness (the report also includes a checklist with recommendations and comments).

 

For more information:

Where does the EU stand on administrative burden reduction? See: MEMO/12/116

The full report:

http://ec.europa.eu/dgs/secretariat_general/admin_burden/best_practice_report/best_practice_report_en.htm

Commission’s website on smart regulations:

http://ec.europa.eu/governance/better_regulation/index_en.htm

High Level Group website:

http://ec.europa.eu/dgs/secretariat_general/admin_burden/ind_stakeholders/ind_stakeholders_en.htm


Smart regulations

The Commission's efforts to reduce regulatory burden, including administrative burden, are part of its smart regulation agenda. Smart regulation should ensure that European laws benefit people and businesses. It is essential if the EU is to deliver the ambitious objectives for smart, sustainable and inclusive growth set out by the EU-2020 Strategy. The Commission therefore evaluates the impact of legislation during the whole policy cycle: when a policy is designed, when it is in place, and when it is revised. As smart regulation is a shared responsibility of all those involved in EU policy-making, the Commission works with the European Parliament, Council and the member states to encourage them to apply smart regulation in their work.

 

The Commission presented in February 2012 an overview of achievements and examples in administrative burden reduction.

 

Commission’s aim to reduce legislative burden. The EU's growth strategy EU-2020 highlights the importance of improving the business environment, including so-called smart regulation and the reduction of regulatory burdens, in order to make European enterprises more competitive at the global scale. The Commission has been recently involved in initiatives for minimising regulatory burden specifically for SMEs and adapting EU regulation to the needs of micro-enterprises, since SMEs play a key role in economic growth accounting for 99% of enterprises and providing more than two thirds of private sector employment. Unleashing their growth potential will be of particular benefit to the European economy.

More on the issue see:  IP/11/1386.

 

In addition, the Commission identified key proposals with substantial growth potential in the context of the Annual Growth Survey finalized in November 2011. These include measures to get more out of what has already been agreed at EU level such as the full implementation of the Services directive, accelerating adoption of measures pending before the Council and the European Parliament and fast-tracking future Commission proposals such as the proposal providing a common legal base for mutual recognition of e-authentication and electronic signature across borders or the recently adopted proposal revising the public procurement framework to provide simpler rules and more efficient procedures. The December 2010 European Council had stressed the need to adopt measures with the most potentials to boost growth and jobs while supporting the principle of a fast-track programme.

 

Efficiency of the Action Programme for reducing administrative burden. The program has been targeted at reduction of about € 124 bn through the EU efforts. The measurement of administrative burdens covered 72 EU legal acts in 13 economy/administrative sectors, which were assumed to impose 80 % of administrative burdens stemming from EU law. These sectors include: agriculture, agricultural subsidies and fisheries; annual accounts/company law, cohesion policy, environment, financial services, food safety, pharmaceutical legislation, public procurement, statistics, taxation / customs, transport, working environment and employment relations.

 

The following table provides a general overview of the burden reduction impact of measures already adopted by the legislators (Council and European Parliament) or proposed by the Commission and pending adoption by the legislators.


Table. General overview: burden reduction impact (February 2012)

 

Adopted

Pending adoption by co-legislator

Total

Reduction potential (in mln €)

- 27 100.1

- 13 752.0

- 40 852.1

Reduction potential (in %)

- 21.9 %

- 11.1 %

- 33.0%


Examples: measures adopted by the Council and EP, based on a Commission proposal

With billions of VAT invoices annually in Europe, the switch to a fully electronic VAT invoicing system will save much time and money for more than 22 million taxable enterprises. This measure will remove obstacles to company’s electronic billing, in particular additional requirements in the Member States to make invoices VAT compliant. The maximum mid-term reduction potential is estimated at 18,4 billion if all businesses send all their invoices electronically.  

 

For the more general savings potential of e-invoicing see: IP/10/1645.

 

The European Parliament and the Council recently agreed on a compromise concerning the Commission's proposal (February 2009) allowing member states to exempt micro-entities (max. 10 employees) from EU accounting obligations which are more fitted to the situation of bigger companies. The agreed measures will allow more than 5 million small businesses in Europe to benefit from a simple system of financial reporting. Although the compromise falls short of achieving the estimated annual savings of about € 6,3 billion of the Commission's original proposal, substantial savings worth several billion euro remain.

 

Fruit and vegetable producers spend about two hours in labelling and grading a ton of produce. Regulation 1221/2008 replaces 26 marketing standards with a General Marketing Standard. Labels will indicate origin but no longer class, size or variety. This measure can save up to € 970 million.


Examples of measures that have been proposed by the Commission and are waiting for approval by the Member States and the European Parliament

Digital tachographs record driving time and rest periods of professional drivers and vehicles involved in carrying goods or passengers in order to reduce accumulated fatigue and accidents and to ensure fair competition. New rules proposed by the Commission in July 2011 will allow road hauliers and bus operators to save more than € 0.5 billion per year, for example by reducing the number of manual recordings, by avoiding unnecessary roadside checks or by issuing a single document replacing the current driver card and driving license.

 

In October 2011 the Commission proposed to amend the Accounting Directives (78/660/EEC, 83/349/EEC) in order to also simplify accounting rules for small and medium companies. This proposal complements the initiative for micro-entities with additional potential cost savings up to € 1,7 bn. per year for SMEs.

 

According to a Commission proposal on public procurement from December 2011 – COM(2011)896 – the increased use of self-certification in a procurement procedure could result in savings of about €169 m., since only the winning enterprise will need to submit the detailed documents evidencing suitability as a tender participant, not all bidders.

 

The role of the High Level Group (HLG). The HLG chaired by Dr. Edmund Stoiber was set up in late 2007 to advise the Commission with regard to the Action Programme for Reducing Administrative Burdens (for businesses) in the EU. Its main task has been to provide advice on administrative burden reduction measures suggested in the context of the Action Programme.

 

The Group's mandate was prolonged and extended by the Commission on 17 August 2010. The Group will continue its work until the end of 2012 to fully exploit the savings potential of the Action Programme. In addition, it advises the Commission on the Simplification rolling programme, assists in ensuring progress in adopting proposals on reducing administrative burden by the European Parliament and the Council, and holds a regular and structured exchange with the Chairperson of the Impact Assessment Board.

 

The most prominent feature of the extended mandate is the report on best practice in member states to implement EU legislation in the least burdensome way ("Europe can do better").

 

The EU “best practice” legislation. The Commission had previously emphasised in its Communication on Smart Regulation of 8 October 2010 – COM(2010)543 – that smart regulation is a shared responsibility of all those involved in EU policy-making (the European Parliament, the Council, the Member States and other stakeholders).

 

The results of the measurement exercise in the context of the Action Programme showed significant differences in the transposition and implementation of EU legislation between the Member States which in turn imposed different levels of administrative burden on businesses. An exchange of good practice in the implementation of EU legislation might boost the reduction of administrative burdens for businesses in some Member States as well as in the EU as a whole.

 

The HLG adopted a report in November 2011, in which the “best practices” refers to practices that consistently show results superior to those achieved with other means. The best practices featured in the report are intended to perform as benchmarks: they should be used as a point of reference for evaluating the performance or level of quality of the implementation of EU legislation.

 

Other examples. More than 300 examples from different sources were collected for an initial overview. National governments transmitted almost 130 examples, the Committee of the Regions provided another 95 examples, and stakeholders such as business organisations from Austria, Denmark, Finland, Germany, Luxemburg, the Netherlands and Spain contributed 20 additional examples. Research on existing sources including information held by Commission services produced further examples. The HLG report contains 74 examples of best practice covering a wide range of areas and all Member States. Cross-cutting approaches on smart regulation, such as a framework for the 'transposition' of the requirements of an EU directive into national law, offering specific guidance on how to implement EU directives effectively, or an SME-monitor providing SMEs with an overview of EU initiatives marked according to their relevance for SMEs, are presented alongside sectoral best practice examples in categories determined according to the characteristics of the measures or their key elements or drivers(e.g. use of e-Government, risk-based approaches, use of options or lighter regimes, cross-border cooperation, enhanced stakeholder involvement and systematic end-user involvement, good guidance, merging processes and permits or non-regulatory initiatives). These sectoral best practices stem from different areas covered by the Action Programme, e.g. agriculture, company law, environment, statistics, working environment, public procurement, cohesion, taxation and transport.

 

Good implementation of EU legislation. On the basis of its work the HLG has produced a checklist for good implementation of EU legislation. The checklist is addressed to (public) authorities responsible for the implementation of EU legislation, and the HLG recommends that they take some time to go through the checklist when working on implementation, in order to avoid burdensome elements to the widest possible extent. The checklist covers issues such as the objective of the legislation, the exchange of best practice implementation, the use of impact assessments and evaluations, the extent of leeway for implementation, the use of derogations or lighter regimes, active and passive gold-plating, risk-based approaches, the end-user focus, digital solutions and re-use of data.

 

The HLG’s achievements. A number of proposals adopted by the Commission benefited from the support of the group. In the case of the two main reduction proposals from the Commission, VAT e-invoicing and exempting micro enterprises from accounting rules (representing respectively € 18,4 billion and € 6,3 billion of savings according to estimates), the members of the Group were of great help in the successful negotiations with the Council and the Parliament.


The Group has held 33 meetings (until February 2012) during which more than 30 opinions, including opinions on administrative burden reduction measures in all 13 priority areas of the Action Programme were adopted. The opinions deal with more than 300 administrative burden reduction suggestions by Commission services and stakeholders such as individual enterprises or business associations, national, regional and local governments or individual citizens.


All opinions of the HLG AB are published on the Group's website – along with presentations, meeting reports and other documents.  

 

Further information:

On administrative burden reduction

- http://ec.europa.eu/dgs/secretariat_general/admin_burden/index_en.htm

On the High Level Group

- http://ec.europa.eu/dgs/secretariat_general/admin_burden/ind_stakeholders/ind_stakeholders_en.htm

On the High Level Group's report on best practice see: IP/12/146, as well as

http://ec.europa.eu/dgs/secretariat_general/admin_burden/best_practice_report/best_practice_report_en.htm

On smart regulation: IP/10/1296






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