The bureaucratic hurdles have now become a barrier to investment, especially for small and medium-sized enterprises, according to the German government. (Photo: © auremar/123RF.com)
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August 30, 2023
The Bureaucracy Reduction and Growth Opportunities Acts are intended to reduce the bureaucracy burden on businesses by €2,3 billion. The skilled trades sector is disappointed by the key provisions adopted. They fall far short of their potential.
The German Federal Cabinet in Meseberg adopted the key points for the fourth Bureaucracy Relief Act (BEG IV). The Federal Government aims to use this law to cut through the " thicket of bureaucracy ," which has become increasingly difficult to navigate. Bureaucratic hurdles have become a barrier to investment , especially for small and medium-sized enterprises (SMEs). "Procedures should be accelerated, bureaucracy reduced, and, if possible, no new bureaucracy created," states the government's ten-point plan for strengthening Germany's economic position.
The BEG IV (Business Improvement Act IV) is part of a plan to maintain the competitiveness of companies. Together with the Growth Opportunities Act, also adopted during the cabinet meeting, the BEG IV is intended to relieve businesses of bureaucratic burdens worth €2,3 billion . Federal Justice Minister Marco Buschmann (FDP) speaks of a turning point: "Away from ever-increasing bureaucracy, towards relief and new freedoms for doing business."
The measures are intended to reduce the bureaucracy cost index to its lowest level since it began being recorded. A draft bill is expected later this year . Buschmann also intends to continue pushing forward with reducing bureaucracy: "Reducing bureaucracy is not a one-off, isolated project, but an ongoing process that requires continuous effort ." The key points of the relief bill were also developed based on a survey of associations , in which 57 associations participated and submitted 442 proposals.
The key issues paper provides for these innovations: Information requirementsThese will be reviewed for relevance, harmonization opportunities, and other approaches to easing the burden on small and medium-sized businesses. The information obligations in energy law, foreign trade law, metrology and calibration, as well as in the context of economic statistics, trade and craft regulations, and industry- and profession-specific regulations will be examined.
Retention periods: The retention periods for accounting documents under commercial and tax law are to be reduced from ten to eight years.
Hotel registration requirement: The hotel registration requirement for German citizens is to be abolished.
Written form requirements: Electronic form is to become the standard form in the German Civil Code (BGB). Therefore, numerous written form requirements are to be abolished as far as possible. Legal transactions are also to be simplified and digitized as much as possible for businesses and citizens.
Employment contracts: The Evidence Act is to create a provision according to which, as is already the case with written employment contracts, the employer's obligation to provide evidence of the essential contractual terms and conditions will no longer apply if and to the extent that an employment contract was concluded in a legally required electronic form that replaces the written form. The same should apply to amendment contracts concluded in electronic form in the event of changes to essential contractual terms and conditions. The economic sectors and industries listed in Section 2a, Paragraph 1 of the Act to Combat Illegal Employment are to be exempted.
Working hours: The regulation on issuing employment references in Section 630 of the German Civil Code (BGB) should also be made electronic. The Working Hours Act and the Youth Employment Protection Act should be amended to ensure that employers fulfill their respective posting obligations even if they make the required information available electronically via the information and communication technology commonly used in the company or office (such as the intranet), provided that all employees have free access to the information.
Food Information Implementing Regulation: The digital format should be made available for the written records required to be kept on allergens contained in bulk products pursuant to Section 4, Paragraph 4 of the Food Information Implementation Regulation (LMIDV). This also applies to mandatory information on food additives and flavorings contained in bulk products, as the relevant requirements refer to the LMIDV regulations for the type and manner of labeling.
Federal Parental Allowance and Parental Leave Act: The written form requirement in the Federal Parental Allowance and Parental Leave Act for applications for a reduction in working hours and their rejection as well as for the assertion of the entitlement to parental leave is to be replaced by text form.
Coastal Shipping Regulations: The Coastal Shipping Ordinance, which requires seagoing vessels from outside the EU to obtain a permit for domestic transport in German coastal waters, is to be abolished. This will relieve the industry and the Directorate-General for Waterways and Shipping of approximately 150 administrative procedures per year. The requirements for issuing the permit have so far been met in over 90 percent of cases.
Acceleration of construction work on rail infrastructure: In order to professionally standardize the assessment of species protection law with regard to selected species that are particularly relevant to the railway sector, authorizations for the issuance of administrative regulations specifying the standards will be created. The scope of protection for the affected species will not be reduced.
Source: Federal Ministry of Justice
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In addition, the cabinet adopted a position paper for an initiative to reduce bureaucracy at the European level . It is intended to serve as a basis for future negotiations with the EU. "The cause of the bureaucratic burnout in our companies is not solely to be found at the national level . It is also fueled at the European level," said Buschmann. Existing instruments for better regulation, and especially impact assessments, should be applied more consistently . Furthermore, the paper proposes conducting an inventory of bureaucratic costs at the EU level.
The focus will be particularly on small and medium-sized enterprises (SMEs ). They are to be relieved of burdens through a range of measures. The German government is seeking close cooperation with the French government on this initiative and intends to coordinate with them. The aim is to agree on a common approach . Buschmann stated: "We need acceleration and relief without compromising necessary protective standards. To this end, we now want to launch a joint initiative at the European level with our French partners to reduce bureaucracy and advocate for a corresponding package of measures from the European Commission ."
The discussion paper proposes conducting an inventory of bureaucratic costs at the EU level. Similar to the German model, a bureaucratic cost index could be established to illustrate cost trends. Furthermore, reporting obligations should be reduced to the necessary minimum, and duplicate reporting requirements should be eliminated. It is also crucial that digitalization is further advanced and consistently considered in legislation. The German government therefore proposes that new EU legislation be subjected to rigorous and effective digital impact assessments to improve the quality of legislation at the EU level.
The skilled trades sector reacted with disappointment to the cabinet's policy paper. While it sends a positive signal to businesses, it is also long overdue after two years of announcements and promises. Despite the long wait, the paper falls far short of what is possible, explains Holger Schwannecke . "Skilled trades businesses rightly expect genuine relief . All ministries are called upon to follow through . The time for hesitation must finally end; what is needed is a demonstrably stronger political will and more determination than before," says the Secretary General of the German Confederation of Skilled Crafts.
The announced initiative to advocate for relief together with France is a step in the right direction . Many burdens originate in Europe and often present insurmountable obstacles for businesses. "A genuine change of thinking is needed here. We urgently require tangible relief that actually benefits businesses in practice," demands Schwannecke. Excessive bureaucracy acts as an additional brake on growth in already challenging economic times.
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