New rules would make setting up a company in the EU easier

EU co-legislators agreed this week on new rules to facilitate establishing businesses electronically and to promote online operations throughout a company’s lifecycle. The new rules aim to save companies time and money, while increasing safeguards against fraud and abusive behaviour through online identity checks.

“Both institutions stayed committed to the common goal: to give European entrepreneurs a modern, safe, and transparent environment to operate,” said Tadeusz Zwiefka, a member of the European Parliament. “However, we need to remember that this is just a first step. It is high time European entrepreneurs benefited from new technologies, especially in their cross-border activities. We must continue to cut red tape for SMEs and dismantle the obstacles that European businesses face in the common market.”

The new rules provide, among other measures, improved online procedures—from setting up companies to registering their branches and filing documents. According to the figures provided by the European Commission, currently 17-member states provide the full set of online registration procedures for businesses, while e-governance services and access to information is patchy across the European Union.

The new rules also provide:

• User-friendly information on registration portals, free of charge and in a language broadly understood by a majority of cross-border users;
• “Once-only principle,” meaning a company needs to submit information only once during its lifecycle; and
• rules on fees, applied in a non-discriminatory manner, without exceeding the costs of providing such services.

Negotiators agreed that while all steps to set up a business can be completed online, it is also possible to request face-to-face interaction on a case-by-case basis. They also insisted on including the possibility to verify if persons applying for director positions are currently disqualified from such a position in another member state.

The provisional agreement still needs to be confirmed by member states’ ambassadors and by the Legal Affairs Committee. The directive will then need to receive a green light from the full House and the Council of the European Union.