Regulatory Exemptions for Small and Medium-sized Enterprises

"The study shows that only 18 pieces of EU legislation contain regulatory exemptions for SMEs. Eleven of these legal acts concern SMEs in specific sectors. There are only seven regulatory exemptions that provide for a cross-sectoral exemption for SMEs from a regulatory obligation," says cep economist Matthias Kullas.

All in all, according to Kullas, SMEs are hardly exempt from regulatory obligations at EU level. "This means that EU law only provides a small general incentive for SMEs to remain below the threshold of 250 employees in order to avoid regulatory obligations. If EU law provides a greater incentive, then at best in individual sectors, although mechanical engineering is not affected by this," explains the cep expert.

These results are consistent with the interviews conducted with experts. In these interviews, two mechanical engineering companies were asked about the costs associated with crossing the SME threshold. Both companies stated that the costs were indeed noticeable. However, they would not provide any major incentive to forego growth.

The study comes to the conclusion that bureaucracy places a disproportionate burden on SMEs. And if there are regulatory exemptions, these often do not apply, for example in the case of the GDPR or the recently adopted Supply Chain Directive," says Kullas.