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The European Commission has proposed changes that would enable member states to exempt the EU's smallest companies from their current financial reporting obligations.

The commission estimates that these could lead to a 6.3bn [euro] (5.5bn [pounds sterling]) reduction in the aggregate administrative burden of "micro-entities". The proposal has been passed on to the European Parliament and the Council of Ministers for consideration.

"At a time of economic uncertainty, this proposal could relieve the burden on the smallest companies in the European Union. It is a real opportunity to make life easier for them," said Charlie McCreevy, internal market and services commissioner. "It is now up to the member states and the European Parliament to give their full and rapid backing. We intend to do whatever we can to encourage maximum take-up of this exemption by our member states."

McCreevy plans to make further attempts to simplify financial reporting by the end of the year as part of the commission's commitment to reducing administrative burdens on business.

Micro-entities are defined as companies that do not exceed two of the three following criteria: a balance sheet total of 500,000 [euro]; a net turnover of 1,000,000...

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