27. 11. 89 Official Journal of the European Communities No C 298/53 
Opinion on the Council Recommendation relating to the implementation of a policy of 
administrative simplification in favour of small and medium-sized enterprises in Member 
States (*) 
(89/C 298/14) 
On 12 June 1989 the Council decided, in accordance with Article 198 of the Treaty establishing 
the European Economic Community, to consult the Economic and Social Committee on the 
abovementioned Recommendation. 
The Section for Industry, Commerce, Crafts and Services was instructed to prepare the work 
on this topic and adopted its Opinion on 6 September 1989. Rapporteur: Mr Hancock. 
The Economic and Social Committee, at its 269th plenary session, meeting on 28 September 
1989, adopted the following Opinion by 80 votes to 30 and 13 abstentions. 
1. Introduction 
1.1. This Council Recommendation follows on from 
previous Resolutions and Recommendations relating 
to small and medium-sized enterprises (SME). More 
specifically, the Commission issued, in July 1988, a 
communication entitled 'administrative burdens in the 
Community'—COM(88) 404 final, which briefly 
referred to administrative burdens that can have the 
effect of hindering enterprise and the growth of the 
smaller enterprise. This has now been dealt with more 
comprehensively in a report 'on measures taken by the 
Member States on behalf of enterprises in the Com­
munity with regard to administrative simplification'— 
SEQ89) 726 final, which was issued in June 1989. 
1.2. The latter report maintains that the reduction 
of legislative and administrative burdens on enterprises 
requires concerted and parallel action both at Com­
munity level and at national, regional and local admin­
istrative levels within the Member States. 
At the same time, as there is no legal basis within 
the Treaty covering the harmonization of adoption of 
appropriate measures, each Member State is encour­
aged to take such action as it deems correct in the light 
of its own circumstances. 
1.3. The Committee welcomes this initiative and 
encourages the authorities in the Member States to do 
likewise and to take positive action to provide equality 
of opportunity for SME, (which should be taken to 
include craft industries and small cooperatives when­
ever mentioned hereafter) throughout the Community. 
2. General remarks 
2.1. Studies have clearly proved that legislative 
requirements and administrative burdens bear relatively 
more heavily on the smaller enterprise. This is largely 
because they normally have neither the number of 
(!) OJ No C 189, 26. 7. 1989, p. 17. administrative staff nor those with relevant qualifi­
cations to enable them to keep up with an ever changing 
situation. This places them at a competitive disadvan­
tage vis-a-vis the larger firms which must be of concern 
to governments who need the entrepreneurship, dyna­
mism and employment-creating possibilities which 
characterize the best organizations in this sector. 
2.2. To many SME the greatest benefit government 
can confer upon them is to pursue a policy that is of a 
more stimulatory and less regulatory nature. 
2.3. Whilst governmental authorities, together with 
regional and local authorities, must do all they can to 
ensure that their activities place as small a burden on 
SME as possible, they must always remember their 
primary duty to protect both consumers and workers. 
In particular, existing and future standards of protec­
tion and their enforcement, together with appropriate 
methods of consultation, must be maintained. 
2.4. Considerable efforts have already been made in 
a number of Member States to examine new and exist­
ing legislation in the light of the burdens it may impose 
on the business sector and to involve businessmen in 
an advisory role, but: 
— the effective results differ widely. There is an ever-
present danger of creating another bureaucracy 
which only pays lip service to the principle of admin­
istrative simplification, 
— those consulted must have up to date and practical 
knowledge of the day-to-day operations of SME, 
— there are problems in reconciling the division of 
responsibilities between the various levels of auth­
ority. A situation could easily arise where national 
taxation policies were geared to encourage 
enterprise whilst local taxes were levied in such a 
way as to have a disincentive effect, 
— there is a need to ensure that in cases where govern­
ments decentralize their operations, in order to 
make them more accessible, that this does not lead 
No C 298/54 Official Journal of the European Communities 27. 11. 89 
to a duplication of services because of the existence 
of others established as the result of local initiatives, 
— care must be taken to see that different departments 
do not set up similar assistance schemes, but with 
different qualifying criteria, as this can only create 
confusion amongst those that they are designed to 
assist. 
3. Specific remarks 
The Recommendation is divided into six points. The 
remarks will follow the same form and sequence except 
that no comment will be made on those points where 
the Committee has nothing constructive to add. 
3.1. The first point in the document relates to admin­
istrative simplification. It is suggested that particular 
attention be given to the following points: 
— administrative simplification must not dilute or 
undermine measures of social protection, 
— making it easy to establish a new enterprise, what­
ever its legal form, 
— a wider use of the exemption limits for value added 
tax (VAT) registration provided by the 6th VAT 
Directive whilst not in any way facilitating fraud. 
Not only is the provision of the necessary returns a 
burden on the very small enterprise, the costs of 
collection frequently exceed the revenue obtained, 
— every requirement whereby a business needs a 
licence in order to conduct all or part of its activities 
should be examined to see whether this still remains 
necessary, 
— regulations in respect of employment legislation 
health and safety at work etc, should be drawn 
up with proper regard to their effectiveness and 
enforceability in respect of general worker protec­
tion, especially in small firms. In no way must this 
undermine existing standards of protection; proper 
consultation with interested parties is essential. 
3.2. Point 3 (a) concerns the organization of the 
administrative structures so that they are efficient and 
respond effectively to contacts made by enterprises. 
In this context it is important that procedures are made 
as non-bureaucratic as possible and that the officials 
concerned are given training so that they are enabled 
to appreciate the realities of business life. Otherwise 
this objective will not be realized. 33. Point 3 (b) deals with the reduction in forms 
and returns with which SME have to deal. 
Not only should the number be reduced but, where 
they have to be retained the questions asked should be 
reduced to the absolute minimum and the language 
simplified so that they are readily understood by a 
businessman unversed in legal matters. Also, rather 
than sending them out in vast numbers, sample surveys 
should be used wherever possible. 
In relation to company taxation, efforts should be made 
to make the standard company accounts from the basis 
for the assessment of taxation, rather than requiring 
the completion of additional forms. 
3.4. The Recommendation in point 3 (d) that one-
stop advice centres be established is particularly wel­
come but these are required in all local centres, not just 
in the less-favoured regions. It would also be helpful 
if these centres could be established in premises that 
provided counselling services for SME as one of the 
major problems they face is the inability to discuss their 
problems with an unbiased and experienced third party. 
The advice centres should also be at the disposal of 
SME advisers and cooperate with them. 
3.5. The provision of information regarding legislat­
ive requirements in a 'reader friendly' format 
[point 3 (f)] is most important. Where two government 
departments have overlapping provisions, i.e. in regard 
to tax and social security, it would be helpful if they 
could produce joint publications clearly explaining the 
position. 
Such publications should be concise, clearly written and 
make full use of colour and graphics to re-inforce the 
message. 
3.6. The consolidation of existing legislation and the 
repeal of that which is redundant [points 3 (g) and 
3 (h)] will be helpful to those advising SME. It has to 
be appreciated that many operators have gaps in their 
knowledge of legislation with which they are supposed 
to comply. Hence the importance of first implementing 
point 3 (f). 
3.7. The establishment of Consultative Committees 
(point 4) could be helpful but only if: 
— those involved from the business sector have current 
involvement or recent practical experience in run­
ning SME on a day-to-day basis and that the mem­
bership is regularly reviewed, 
— the Committee is action based, 
— that their Recommendations are heeded. 
27. 11. 89 Official Journal of the European Communities No C 298/55 
3.8. As no Member State is likely to achieve perfec­
tion in this field of policy, there is a clear need for both 
liaison and the passing of information between the 
Member States (point 5). To ensure co-ordination this 
is probably best done through the Commission provid­
ing that this does not inhibit direct contacts. 
Of particular importance is to advise of successful 
initiatives to promote services and assistance to SME 
at the local level. to be attached to all new legislation and the monitoring 
of these by an independent department within govern­
ment provided with sufficient power to submit changes 
to draft legislation if it is considered unnecessarily 
burdensome. Furthermore this process could be used in 
some Member States to overcome the potential difficult­
ies mentioned in the third indent of 2.4. 
4. Conclusion 
3.9. To ensure that new legislation does not impose 
new and unnecessary burdens on business (point 6) is 
essential. To that end it is suggested that all Member 
States consider the introduction of impact statements An action programme of this type is considered essential 
in each Member State. Whilst preserving the principle 
of subsidiarity the Commission is urged to continue to 
do all it can to foster positive action. 
Done at Brussels, 28 September 1989. 
The Chairman 
of the Economic and Social Committee 
Alberto MASPRONE 
APPENDIX 
to the Opinion of the Economic and Social Committee 
The following amendment, based on the Section Opinion and tabled in accordance with the Rules of 
Procedure, was rejected during the debate. 
Point 3.1 
Delete the 4th indent. 
Voting 
For: 53, against: 63, abstentions: 4.