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ACCOUNTING OBLIGATIONS : MICRO-ENTITIES: SOME MEMBER STATES HAVE MISGIVINGS.

After the European Parliament named its negotiator, the Council gave the Polish EU Presidency a mandate, on 23 November, to continue formal (second-reading) discussions on the proposal to exempt very small enterprises from the accounting obligations laid down in Directive 78/660/EEC (Fourth Accounting Directive - see Europolitics 4311). "Almost everything is settled," commented an informed source, who added that there are few points of divergence on this subject following the informal agreement obtained at three-way talks, on 10 November. Under this compromise, the thresholds for eligibility for exemption from financial reporting and accounting obligations for micro-entities are raised (an EP request). For the balance sheet, the figure rises from 250,000 to 350,000 and for turnover from 500,000 to 700,000. The objective is to include a larger number of small entities in this definition in order to ease the administrative burden on such firms, considered out of proportion compared with the stakes of the accounting obligations imposed on them. The third threshold - an average of ten employees - remains unchanged.

The scheme introduced by the proposal for revision of the directive is optional: it gives member states the possibility to exempt very small enterprises that meet two of these three criteria from the obligation to keep prepayments and accrued income, or accruals and deferred income accounts for certain headings, thus reducing accounting information to key elements that allow a minimum level of transparency.

ANNEXES

They can also exempt micro-entities from having to draw up annexes to their accounts (the information will be contained in the balance sheet in that case) or calculate general overheads at the end of the year. The states will also have the choice of exempting them from the general obligation of publishing annual accounts, provided the balance sheet information is registered by a competent authority and transmitted to trade registers.

Certain states voiced misgivings at the meeting of the Committee of Permanent Representatives (Coreper). Portugal even said it was not convinced by the compromise and would abstain during the vote.

France and Luxembourg said the text should not set a precedent for further attempts to ease the burden on micro-entities. They will express their reservations formally in a letter to be annexed to the final text. This is a way of saying they will remain vigilant during the revision of the Fourth and Seventh Accounting Directives to consequences on the internal market of any deregulation process and will strive to make sure that social rights, coherence with financial legislation and transparency are guaranteed.

In Parliament, the vote in plenary is set for 13 December. The Council will address the issue as a point A' item, probably on 19 December.

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Publication:European Report
Date:Nov 25, 2011
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