(1)

The European Council of 8 and 9 March 2007 underlined in its conclusions that reducing administrative burden is important for boosting Europe’s economy and that a strong joint effort to reduce administrative burdens within the EU is necessary.

(2)

Accounting has been identified as one of the key areas for reducing administrative burdens for companies within the Union.

(3)

In its Communication on a simplified business environment for companies in the areas of company law, accounting and auditing the Commission identified possible amendments to the Fourth Council Directive 78/660/EEC of 25 July 1978 based on Article 54(3)(g) of the Treaty on the annual accounts of certain types of companies (3), including an option for Member States to exempt micro-entities from the obligation to draw up annual accounts in accordance with that Directive.

(4)

Commission Recommendation 2003/361/EC (4) defines micro, small and medium-sized enterprises. However, consultations with Member States have indicated that the thresholds for micro-enterprises laid down in that Recommendation may be too high for accounting purposes. Therefore, a sub-group of micro-enterprises, so-called micro-entities, should be introduced to cover companies with lower thresholds for balance sheet total and net turnover than the thresholds set up for micro-enterprises.

(5)

Micro-entities are in most cases engaged in business at local or regional level with no, or limited, cross-border activity and have limited resources with which to comply with demanding regulatory requirements. In addition, micro-entities are important for creating new jobs, fostering research and development and creating new economic activities.

(6)

Micro-entities are however often subject to the same reporting rules as larger companies. Those rules place a burden on them which is not in proportion to their size and is therefore disproportionate for the smallest enterprises as compared to larger ones. Therefore, it should be possible to exempt micro-entities from the obligation to draw up annual accounts, even if such accounts provide an input for statistical information. However, micro-entities must still be subject to the obligation to keep records showing the company’s business transactions and financial situation as a minimum standard to which Member States remain free to add further obligations.

(7)

The High Level Group of Independent Stakeholders on Administrative Burdens called in its opinion of 10 July 2008 for rapid enactment of an option enabling Member States to exempt micro-entities from the obligation to draw up annual accounts pursuant to Directive 78/660/EEC.

(8)

In its resolution of 18 December 2008 on accounting requirements as regards small and medium-sized companies, particularly micro-entities (5), the European Parliament called on the Commission to present a legislative proposal that would allow Member States to exempt micro-entities from the scope of Directive 78/660/EEC.

(9)

Given that the threshold values set in this Directive will apply to numbers of businesses which will vary greatly from one Member State to another, and given that the activities of micro-entities have no bearing on cross-border trade or the functioning of the internal market, the Member States should take into account the differing impact of those values when implementing this Directive at national level.

(10)

Whilst it is imperative to ensure transparency also for micro-entities, in order to ensure that they are open and have access to the financial markets, Member States should take into account the specific conditions and needs of their own market when implementing Directive 78/660/EEC.

(11)

Since the objective of this Directive, namely to reduce the administrative burden for micro-entities, cannot be sufficiently achieved by the Member States, and can therefore by reason of its effect be better achieved at Union level, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve that objective.

(12)

Directive 78/660/EEC should therefore be amended accordingly,