EC proposes measures to cut companies’ administrative costs ‘by further 400M euro a year’

The European Commission (EC) said on May 21 that it proposes to cut 400 million euro in annual administrative cost for companies, adding to the eight billion euro already targeted through earlier simplification efforts.

The EC said that with a new category of small-mid caps, the measures will ease compliance obligations and thus free resources for growth and investment across the Single Market.

“The measures boost incentives for SMEs to scale up, digitise regulatory processes, reduce red tape, and support the Commission’s goal to cut administrative costs by 25 per cent overall and by 35 per cent for SMEs by the end of this mandate,” the EC said.

When SMEs grow beyond 250 employees, they become large enterprises under the current rules — and face a sharp increase in compliance obligations. This “cliff-edge” can discourage growth and limit competitiveness.

The EC said that it is therefore identifying a new category of companies, small mid-caps (SMCs), that is, companies with fewer than 750 employees; and either up to 150 million euro in turnover or up to 129 million euro in total assets.  

The Commission said that these small mid-caps – nearly 38 000 companies in the EU – will access for the first time certain existing SME benefits, such as specific derogations under the  General Data Protection Regulation (GDPR) or simplified rules, such as prospectus rules  making listing of SMCs on the stock market  simpler and less costly.

About 10 000 companies, in 2026 alone, will no longer need to register in the EU F-gas Portal under proposed changes, the EC said.

Currently, all importers and exporters of products containing Fluorinated gas (F-gases) must register.

About 2000 new companies request registration each month, many of them small car dealers importing or exporting a few second-hand cars with an F-gas in the air-conditioning system.

The proposed change will reduce compliance burden for smaller firms handling limited trade volumes while maintaining the climate objectives of the Regulation.

The EC said that the May 21 proposal simplifies the record-keeping obligation in the GDPR, taking into account the specific needs and challenges of small and medium-sized companies and organisations, while ensuring that the rights of individuals are protected. The proposal exempts SMCs and organisations with fewer than 750 employees, in addition to SMEs.

SMEs, SMCs and organisations with fewer than 750 employees will only be required to maintain records when the processing of personal data is “high risk” under the GDPR.

By focusing record-keeping requirements on high-risk activities, organisations can devote their resources to areas where data protection is most critical, while maintaining high standards of data protection.

“The proposal will accelerate the digital transition, eliminating cumbersome paper-based requirements in product legislation,” the EC said.

Current EU rules still require companies to provide paper-based declarations of conformity, instructions for use, and others. By digitising these requirements, companies can submit and distribute information more easily and national authorities can verify compliance more efficiently.

Companies, including SMEs and SMCs, will have a clear path to demonstrate that their products meet EU requirements, even when EU-wide harmonised standards are not available. This will offer them more legal certainty, reduce costs, and increase competitiveness.

To help the battery industry navigate the challenges of sourcing raw materials in uncertain times, the Commission is giving companies more time to prepare for new due diligence rules.

The deadline for complying with these rules will be pushed back by two years, from 2025 to 2027. This also offers more time for the setting up of third-party verification bodies.

In addition, the due diligence guidelines will be published one year before the obligations take effect. This will give timely guidance to businesses and help ensure a smoother implementation of the new rules, the EC said.

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