The European Commission has put forward aimed at lowering regulatory costs for smaller companies.
Internal Market Commissioner Charlie McCreevy said the new rules could relieve the burden on the smallest companies in the EU, and estimated that they could save such firms as much as €1,200 a year.
The proposal will allow member states to scrap financial reporting obligations for small companies, or 'micro-entities'.
It sets out three criteria for defining such companies: a balance sheet total of less than €500,000; net turnover of less than €1m; and an average number of employees of 10 or fewer during the financial year. Companies who fall under two of these three categories will be exempt.
The proposal will now go to the European Parliament and EU ministers for consideration.
