The European Commission proposes to reduce administrative costs for companies by €400 million annually, adding to the €8 billion already achieved through previous simplification efforts. Introducing a new category of small mid-caps, the measures will ease compliance obligations and free resources for growth and investment in the Single Market. The measures encourage SMEs to scale up, digitize regulatory processes, cut red tape, and support the Commissions goal to reduce administrative costs by 25% overall and by 35% for SMEs by the end of this mandate.

Targeted support for small mid-caps

When SMEs exceed 250 employees, they become large enterprises under current rules and face a sharp rise in compliance obligations. This cliff-edge can hinder growth and limit competitiveness. The European Commission is identifying a new category of companies, small mid-caps (SMCs), i.e., companies with fewer than 750 employees and either up to €150 million in turnover or up to €129 million in total assets.  

These small mid-caps - nearly 38,000 in the EU - will gain access for the first time to certain existing SME benefits, such as specific exemptions under the General Data Protection Regulation (GDPR) or simplified rules like prospectus rules making listing of SMCs on the stock market simpler and less costly.

Exemption from fluorinated greenhouse gas registration

Around 10,000 companies in 2026 will no longer need to register in the EU F-gas Portal under proposed changes.

Currently, all importers and exporters of products containing fluorinated gases (F-gases) must register. Around 2,000 new companies request registration each month, many being small car dealers importing or exporting a few second-hand cars with an F-gas in the air-conditioning system. The proposed change will reduce compliance burden for smaller firms with limited trade volumes while maintaining the climate objectives of the Regulation.

Risk-based record-keeping

Todays proposal simplifies the record-keeping obligation in the GDPR, considering the specific needs and challenges of small and medium-sized companies and organizations while ensuring that individuals rights are protected. The proposal exempts SMCs and organizations with fewer than 750 employees, in addition to SMEs.

SMEs, SMCs, and organizations with fewer than 750 employees will only need to maintain records when personal data processing is high risk under the GDPR. By focusing record-keeping requirements on high-risk activities, organizations can allocate resources to areas where data protection is most critical, while maintaining high standards of data protection.

From paper to digital

The proposal will accelerate the digital transition by eliminating cumbersome paper-based requirements in product legislation. Current EU rules still require companies to provide paper-based declarations of conformity, instructions for use, and others. By digitizing these requirements, companies can submit and distribute information more easily, and national authorities can verify compliance more efficiently.

Legal certainty through common specifications

Companies, including SMEs and SMCs, will have a clear path to demonstrate that their products meet EU requirements, even when EU-wide harmonized standards are not available. This will offer them more legal certainty, reduce costs, and increase competitiveness.

Smoother phase-in of due diligence obligations for batteries

To help the battery industry navigate the challenges of sourcing raw materials in uncertain times, the Commission is giving companies more time to prepare for new due diligence rules.

The deadline for complying with these rules will be extended by two years, from 2025 to 2027. This also provides more time for the setup of third-party verification bodies.

Additionally, due diligence guidelines will be published one year before the obligations take effect. This will provide timely guidance to businesses and help ensure a smoother implementation of the new rules.

Background

This proposal is the fourth Simplification Omnibus package presented by the European Commission under this mandate, in a determined effort across the entire institution to reduce unnecessary bureaucracy and create a regulatory environment that fosters innovation, growth, quality jobs, and investment.

Omnibus I and II streamlined rules on sustainability reporting and due diligence rules and EU investments, delivering around €6.3 billion in annual administrative relief. Omnibus III, presented last week, focused on simplifying the Common Agricultural Policy, saving up to €1.58 billion annually for farmers and €210 million for national administrations.

The next Omnibus package, tentatively scheduled for June 2025, will focus on defense, aiming to achieve the investment goals set out in the White Paper, and allow innovative companies to flourish.

This will be followed by an Omnibus for the Chemical Industry and a Digital package.

This change in regulatory and corporate culture involves the whole European Commission. Every Commission service and Member of the College is tasked with delivering on this rationalization effort, reducing administrative burdens and aligning rules with realities on the ground.

More information is available in our Q&A and our factsheet.