EFAA's Position on Strengthening the Single Market for Services
EFAA urges the European Parliament to recognise the role small- and medium-sized practices plays for the society and the imporatnce of regulated professions.
Brussels, 29 May 2020 - EFAA reads with interest the Report Strengthening the Single Market: the future of free movement of services (INI 2020/2020). While we concur with much of the content, which aligns with our position statement, we wish to make a few points that you might wish to consider as you finalize the report:
- EFAA urges the European Parliament both to acknowledge the indispensability of the services provided by qualified accountancy practices generally and to recognise the unique and essential role and value of small and medium-sized accountancy practices (SMPs). The physical proximity of SMPs to their SME clients, and their close working relationship with them, make them particularly attuned to the needs of SMEs.
In the context of the current crisis, this role is even more essential. As IFAC research demonstrates SMPs are the best placed to help identify the needs of, and any early signs of distress from, SMEs, and thus to enable prompt and appropriate remedial action.
- EFAA questions the merits of combining in one report strategic long-term steps needed to strengthen the single market for service in a sustainable manner with the necessary and urgent short-term support for enterprises, particularly SMEs, offering services in the internal market (e.g., paragraph 1). We are concerned that rash deregulatory actions by member states could have the opposite effect to that intended. In particular, we fear that SMEs’ service providers might lack the financial or human resources to make the investments necessary to compete with large service providers, who could profit from the crisis by building and reinforcing market-dominating positions. We must avoid tilting the playing field in favour of larger service providers, which would enhance the risk of market concentration
- EFAA stresses that the notion of a level playing field, if it is designed solely to enable competition and to let the market self-regulate, can become disadvantageous insofar as it may diminish the provision of locally-based services to SMEs, which are the true backbone of the European economy. The survival of locally-based services is particularly important in the European context, where national, regional and local markets retain peculiarities linked to language or to national or regional fiscal/legal regimes. It is also an essential component in the search for sustainable and circular economies.
- EFAA is also concerned that further deregulation of professional services in the member states could lead to a significant decrease of the quality of services, especially for liberal professions with a high-quality qualification standard in the member states. The public interest is best served by the public having access to a choice of affordable high-quality services. In the case of tax and accountancy, the financial health of individuals and SMEs is at stake. While we recognise that one cannot guarantee the availability of affordable high-quality services, we do believe that quality is best assured by having a high standard of qualification.
- EFAA believes the report is unbalanced (e.g., paragraphs 5 and 13) and, accordingly, proposes that a clear distinction be made between unjustified protective regulation of professional services, on the one hand, and justified regulation that safeguards the public interest, on the other hand. Moreover, EFAA requests that the report expressly reaffirms justified regulation designed to protect the public interest and recognises them as important market regulation instruments for an internal market that promises high-quality services and a high level of consumer and client protection.