Economic Policy Review ISSN 1313 - 0544

Reducing the Administrative Burden in EU – It Is Possible!

Author: Alina Bratanova / 08.02.2010
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Administrative burden - the part of the administrative expenses of a business caused only by legal obligation.

The initiative for reducing the administrative burden started back in 2007 after the suggestion of Commissioner Gunter Verheugen (European Commission - Enterprise and Industry). At the same time the European Commission identified the current superfluous legal regulations and in January 2007 suggested an ambitious program for reducing the unnecessary administrative burden on the business in the EU. In march 2007 the European Council approved a decision that the burden originating from the European legislation, including the national acts aiming at its implementation or transposition, should be reduced by 25% by 2012. The Council urged the member-states to simplify their national legislation aiming "relatively similar goals".

In October 2009, the Commission presented "Sector Reduction Plan" for each of the 13 areas covered by the program. The undertaken measures could lead to savings of around 7.6 billion euro per year until the program ends in 2012. The participation of the national and regional authorities is crucial for the success of the initiative. The Commission also encourages the member-states to take maximum advantage of the opportunities the European legislation offers at the moment for liberation and simplification of the procedures for some kinds of companies mainly the small and middle enterprises.

The 13 priority areas are: Agriculture and agricultural subsidies, Company law, Pharmaceutical legislation, Working environment/employment relations, Tax law/VAT, Statistics, Food safety, Transport, Fisheries, Financial services, Environment, Cohesion policy, Public procurement.

Here are some examples of expected savings in chosen sectors, included in the program, along with the predicted results. They should serve as an example to the Bulgarian administration which often overacts in the unification of Bulgarian legislation with the European, which bitters the life of hundreds of firms and citizens.

  • 1. Annual bills and Company law - reduction in documentation

Since 2006 the member-states can reduce the requirements for accounting and audit for small and middle enterprises (determined by the number of personnel, annual turnover and balance). The measure affects 340 000 firms. Predicted savings for the whole EU are 862 million euro.

In Bulgaria there is a small change - since 2010 the practice of individuals liable to present an annual report for their activity in front of National Revenue Agency (NRA) and National Statistical Institute was suspended but there are a number of measures which could be introduced to relieve the business to a greater extend.

  • 2. Tax law and VAT

The electronic invoices have an enormous potential for the business. Switching to e-invoice will save time, money and resources of 22 million legal entities. Predicted savings (EU): 25.2 billion euro.

The electronic invoices are already a fact in Bulgaria. They are at least acknowledged by the NRA. The problem that still exists is the electronic signature which is not used often enough by the administration and the firms.

  • 3. Transport

Following an EU decision, truck- and bus-drivers will upgrade from analog to digital
tachographs. The change will reduce the administrative burden of every driver by 37 euro per year. Predicted savings for the EU: 286 million euro.

  • 4. Agriculture and agricultural subsidies

Since January 2009, farmers who benefit from single land payments will not submit details for land that they are not using. This eliminates the need of 12 million applications and saves 250 million euro.

The administrative burden reduction is a leading principle especially in times of economic crisis. The current program is focused mainly on small- and middle-sized enterprises that are most affected from the extensive bureaucratic burden.

Online consultations: The business can express its opinion and give recommendations for reduction in administrative burden and for more effective legislation on the following address:

http://ec.europa.eu/admin-burdensreduction/online_consultation

  

Source: Action programme for reducing administrative burden in EU