Ireland’s SME Test What is a SME Test? The SME (Small and Medium Enterprises) Test is an integral part of the European Commission’s Better Regulation guidelines since 2009. It asks each Member State to include an assessment of the burden on SME’s for relevant regulations and legislation. What is its purpose? The purpose of the SME test is to request policymakers to think about the negative impact of any new legislation or regulation which may create a burden on SME’s. The main thrust of the Test is to propose possible exemptions or less stringent requirements for smaller companies. Note: A distinction has to be made between the regulatory burden and the fiscal burden; therefore taxes are not considered in this test. Why? SMEs are defined as enterprises with less than 250 persons engaged. SMEs are further split into micro enterprises with less than 10 persons engaged, other small enterprises with between 10 and 49 persons engaged and medium sized enterprises with between 50 and 249 persons engaged. SMEs often have lack of information, time, or expertise to deal with administrative rules. As a result, regulation has a disproportionate effect in terms of compliance cost and administrative burden on SMEs. On average, where a big company spends one euro per employee to comply with a regulatory duty a medium-sized enterprise might have to spend around four euros and a small business up to ten euros. Usually explanations are offered for the disproportionate regulatory burden on smaller businesses:
Ireland’s SME Test What is a SME Test? The SME (Small and Medium Enterprises) Test is an integral part of the European Commission’s Better Regulation guidelines since 2009. It asks each Member State to include an assessment of the burden on SME’s for relevant regulations and legislation. What is its purpose? The purpose of the SME test is to request policymakers to think about the negative impact of any new legislation or regulation which may create a burden on SME’s. The main thrust of the Test is to propose possible exemptions or less stringent requirements for smaller companies. Note: A distinction has to be made between the regulatory burden and the fiscal burden; therefore taxes are not considered in this test. Why? SMEs are defined as enterprises with less than 250 persons engaged. SMEs are further split into micro enterprises with less than 10 persons engaged, other small enterprises with between 10 and 49 persons engaged and medium sized enterprises with between 50 and 249 persons engaged. SMEs often have lack of information, time, or expertise to deal with administrative rules. As a result, regulation has a disproportionate effect in terms of compliance cost and administrative burden on SMEs. On average, where a big company spends one euro per employee to comply with a regulatory duty a medium-sized enterprise might have to spend around four euros and a small business up to ten euros. Usually explanations are offered for the disproportionate regulatory burden on smaller businesses:
Draft-SME-test.docx