Most EU SMEs consider taxation matters to be the most burdensome policy area that affects them. The Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs carries out studies and projects in the field of SME taxation to find out how their tax situation could be improved.
While large enterprises can usually call on tax experts for advice on how to optimise their net profits, SMEs have many difficulties regarding tax matters, for example
- indirect taxation (VAT)
- direct taxation (income, capital, double taxation etc.)
- tax compliance costs
- the administrative burden that arises from tax rules
Studies and projects
Study: Tax compliance costs for SMEs (2022)
In 2019, we launched the study in 28 European countries (EU27+UK) among over 3.500 enterprises, focusing on obligations SMEs face when complying with tax requirements. It also highlights the impact that tax systems can have on companies’ decision-making, economic activity and how they cope with these separate systems.
This study updates and complements the 2018 report.
The study suggests potential improvements at national and EU level
- simplification of tax obligations for companies and in particular for SMEs
- adoption of one-stop-shop solutions
- increased digitalisation of national fiscal systems
The study also provides an overview of the COVID-19 relief measures adopted by EU countries in 2020 and 2021 to support businesses.
Study: Tax compliance costs for SMEs (2018)
The study looks into the tax compliance costs of enterprises and SMEs in particular. It analyses how costs differ throughout Europe by company size and sector. How do European SMEs cope with different tax systems? How do these differences affect SMEs' costs and decision making? How could the competitiveness of SMEs be improved with regard to the administrative burden?
SMEs face proportionally higher tax compliance costs than larger enterprises. The study suggests potential improvements at national and EU level. The findings are underpinned by extensive quantitative and qualitative research. This data shows how the major taxes (notably corporate income tax, value-added tax and payroll taxes) impose many obligations. SMEs often struggle limited internal resources and seek more costly outsourcing.
The study, that covers 20 countries, draws attention to the differing national tax requirements which can create hurdles to cross-border activities in the Internal Market. SMEs are least equipped to handle these challenges. In its recommendations, the study looks first at measures at EU level. It then identifies how individual countries can encourage SMEs by making it easier and less costly to manage their tax obligations. The study also highlights good practices in several EU countries.
Study: SME taxation in Europe – An empirical study of applied corporate income taxation for SMEs compared to large enterprises (2015)
This report analyses tax incentives for SMEs in 20 EU countries and five non-EU countries between 2009 and 2013. Its findings and recommendations are based on a comprehensive review of tax codes, modelling of tax burdens using two different models, a descriptive analysis of company financial ratios, and the perceptions of tax advisers and companies in each country.
Contact for more information
Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs
Unit C1 SME Access to Finance
B - 1049 Brussels
Email: GROW-C1ec [dot] europa [dot] eu (GROW-C1[at]ec[dot]europa[dot]eu)