The Federal Ministry for Economic Affairs and Climate Action is committed to improving and supplementing the methodology used in its regulatory impact assessment in order to consider and reduce bureaucracy costs from the outset. In addition to this, it has also established projects to simplify these costs and has introduced targeted legislative measures to reduce the bureaucratic burden on a permanent basis.
Further development of the regulatory impact assessment
The ‘brake on bureaucracy’
A 'brake on bureaucracy' (PDF, 145 KB), a rule that the Federal Government has imposed on itself in a political commitment to limit the regulatory burden on businesses in an effective way, has been in force since 1 January 2015. Under this rule, any additional regulatory burden imposed on companies must be fully offset within a year, meaning that the burden on business must be eased elsewhere. The aim of this ‘one in, one out’ rule is to permanently limit the increase in burdens without hindering any measures that the government desires to implement.
Exceptions are only provided for projects that
- directly implement EU requirements, international treaties, case law of the Federal Constitutional Court (Bundesvefassungsgericht – BVerfG) and the European Court of Justice (ECJ), or
- serve to avert considerable dangers, or
- are temporary (maximum of 1 year).
The 2018 Annual Report on Better Regulation (in German) shows that the ‘brake on bureaucracy’ is working. In the years 2015 to 2018, the compliance burden for the economy was reduced by around 2 billion euros. New burdens imposed in 2018 amounted to €76 million, compared with relief totalling €205 billion.
Guidelines for the SME Test
The Federal Government’s Guidelines for the SME Test serve to standardise the so-called SME Test and to ensure that it is systematic. They support the federal ministries responsible for setting legislation by helping them to examine possible regulatory alternatives at an early stage in the legislative process and to map out the consequences of a legislative project for SMEs. This helps the ministries to sharpen their understanding of the specific costs that a particular piece of legislation would generate for small and medium-sized enterprises. The aim is to prevent bureaucratic burdens from being imposed on SMEs wherever possible. The guidelines are partly based on the results of a study commissioned by the Federal Ministry for Economic Affairs and Climate Action entitled ‘Berücksichtigung von KMU-Belangen in der Gesetzesfolgenabschätzung’ (Considering the interests of SME in regulatory impact assessments). The application of the Guidelines for the SME Test (German version (PDF, 74 KB)), (English version (PDF, 74 KB)) has been mandatory since 1 January 2016.
Simplifying business start-ups
In order to investigate how business start-ups can be simplified, a project entitled ‘Compliance costs for new business start-ups – from the business idea to initial turnover’ was undertaken. The project focused on looking at the typical administrative burden along the start-up process, from the business idea to initial turnover. It showed that start-up entrepreneurs want more transparency and better access to support services. In addition, it was also identified that the compliance burden can be significantly reduced by installing points of single contact, bundling administrative process steps and using digital communication, especially by reducing travel and waiting times. The project report can be found here.
Key component of business-friendly administration: network of points of single contact
The points of single contact (PSCs) were set up as part of the EU Services Directive to support companies doing business in the EU internal market and at home. In addition to personal contact persons, e-government portals in particular provide a central access point to information on administrative requirements and the relevant administrative procedures in the destination country. When fully developed, they enable businesses to complete all of the formalities required electronically. As procedures are bundled together, it will be possible to pre-complete forms with standing data and to use documents multiple times. For companies, this means that the effort and costs involved in procuring information will be lower, and that the administrative authorities will be relieved of having to provide routine information. Find out more here (PDF, 359 KB).
Further development of electronic invoicing for business: e-invoicing ordinance and ZUGFeRD 2.0
On 6 September 2017, the Federal Government adopted the Ordinance on electronic invoicing in federal public procurement (E-Rechnungs-Verordnung – E-Rech-VO) (PDF, 4 MB). The ordinance implements EU Directive 2014/55 EU on electronic invoicing in public procurement.
Under the e-invoicing ordinance, companies that have been awarded a public contract or concession submit invoices electronically. Public contracting authorities of the supreme federal authorities were thus obliged to accept and process electronically submitted invoices that comply with the new EU standard as of 27 November 2018. Since 27 November 2019, all other federal authorities have been obliged to accept and process electronic invoices. From this date, all businesses are provided with the assurance that their electronic invoices will be accepted by federal authorities, as long as they comply with the EU standard. Up to 26 November 2020, businesses remained free to choose whether they sent their invoices in electronic or in paper form. Following this date, they can only submit their invoices electronically, with a few exceptions.
In this context, it is important to note that according to the requirements of the e-invoicing ordinance, data exchange standards that are already established in the economy, such as ZUGFeRD, are also able to be used as an equal alternative to the XInvoice data exchange standard if they are – like ZUGFeRD 2.0 – CEN-compliant. Find out more (in German).