European Commission proposes additional rationalisation of company reporting requirements in 2024 Commission Work Programme

On 17 October 2023, the European Commission (‘Commission’) has adopted its 2024 Commission Work Programme (‘CWP’) (COM(2023) 638 final). Titled ‘Delivering today and preparing for tomorrow’, the last CWP of the current Commission strives to finalise outstanding key legislative proposals.

Another important focus of the 2024 CWP is to reinforce and expand the Commission’s ongoing efforts to rationalise company reporting requirements. The goal is to reduce the administrative burden for companies resulting from such requirements without undermining the respective policy objectives. Initiated by the Commission’s Communication on the long-term competitiveness of the EU (COM(2023) 168 final), since March 2023 the Commission has adopted 15 proposals that streamline and simplify reporting requirements. The 2024 CWP adds 26 new reporting rationalisation proposals to the list; 21 of which are being adopted alongside the 2024 CWP and five will be adopted afterwards.

Background

The annual CWP is a strategy document that compiles the Commission’s most important initiatives for the upcoming year. The CWP builds on the political priorities as determined by the President of the Commission in their annual State of the European Union address. After adoption, the CWP is presented to the European Parliament (‘Parliament’) and other institutions. It also serves to inform the public about the Commission’s key actions.

The 2024 CWP marks the last of the current Commission. It will be in force until the end of the Commission’s mandate, brought about by the elections for the new Parliament in June 2024. With limited time left and over 90% of the Commission’s 2019 Political Guidelines commitments delivered upon, the 2024 CWP contains only 18 new initiatives (as listed in Annex I to the 2024 CWP). The intention is to enable the Parliament and the Council of the EU (‘Council’) to enact the 154 pending priority proposals (see Annex III to the 2024 CWP) before their mandates end as well.

Ongoing reporting rationalisation efforts since March 2023

The Commission’s long-term competitiveness Communication of March 2023 stresses that the quality of the EU’s regulatory framework is essential for its competitiveness. It acknowledges that while required for monitoring and enforcement of legislation, reporting obligations create costs for companies – especially SMEs. Building on previous efforts, the Commission wants to ‘make a fresh push’ to streamline and simplify reporting requirements. It sets the aim of reducing burdens from such requirements by 25%, provided this does not undermine the policy objectives concerned.

Since March 2023, the Commission has already adopted 15 proposals (listed in Annex II sec. A to the 2024 CWP) to achieve this goal. Important examples are:

• the Union Customs Code Reform, streamlining customs and VAT reporting requirements for traders (see n 13) and saving them costs of ca. EUR 2 billion;
• the proposal for a revised Regulation on European statistics (see n 4), inter alia cutting down the number of surveys and leading to estimated savings of ca. EUR 450 million for companies, including SMEs.

Reinforced reporting rationalisation efforts in the 2024 CWP

The 2024 CWP makes additional rationalisation proposals for less effective reporting requirements. It does this by, inter alia, ‘consolidating overlapping obligations, reducing the number of businesses concerned and increasing digitalisation’ (see p 4).

Additional proposals to further reduce administrative burden

The Commission puts forward 26 new rationalisation proposals (listed in Annex II sec B to the 2024 CWP). Important initiatives include:

• postponing the adoption deadline of the sector-specific European sustainability reporting standards by two years (see n 10);
• adjusting the size thresholds for the application of the Accounting Directive (see n 13);
• reducing the scope of the benchmark Regulation (see n 5);
• facilitating data sharing between financial sector authorities to avoid duplicative reporting (see n 4);
• digitalisation and establishment of a common form of electronic format for posted worker declarations (see n 24);
• marketing standards for fishery products, plant health, transport, agriculture, and spatial infrastructure monitoring (see no. 1, 6, 9, and 16).

Next steps and implementation

The 2024 CWP recognizes that streamlining reporting requirements ‘is a long-term effort that will require focus for the foreseeable future’ (see p 5). Starting 2024, the Commission will report on its advancement towards the 25% goal in the Annual Burden Surveys.

As next steps, the Commission plans to:

• establish a baseline of reporting requirements to be able to measure progress. For this, the Commission has invited stakeholders to give feedback on burdensome reporting requirements in a call for evidence;
• identify particularly difficult issues and areas of prioritization through additional consultations with companies, experts from EU Member States, and other stakeholders;
• appoint an EU SME envoy that will take part in Regulatory Scrutiny Board hearings concerning high impact topics for SMEs;
• address burdensome reporting requirements pinpointed by the Commission’s Directorates-General with targeted rationalisation plans for 2024 and later years.

To support implementation, the Commission wants to develop AI tools to identify reporting requirements in EU legislation and analyse their sector-specific effects. Also, to increase the use of e-platforms for data gathering and sharing purposes. In addition, the Commission intends to carry out further evaluations and fitness checks on opportunities to streamline legislation, especially with view to further rationalize reporting requirements.

Thea C Bauer is a Senior Associate at Dentons Europe (Germany).