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Guiding start-ups in potential EU's new regulatory landscape

Guiding start-ups in potential EU’s new regulatory landscape

Zipit Law Firm is proud to share that it was part of the team of the Rapporteur Tsvetelina Penkova  that drafted the proposal for the call, providing insights into the Bulgarian legislation and the impact it has on the start-up industry.

In the rapidly evolving business landscape start-ups often face unique challenges as they strive to carve their path to success. For these innovative enterprises, being treated differently from Small and Medium-sized Enterprises (SMEs) can make all the difference. The recent call by Members of the European Parliament (MEPs) to treat start-ups differently has drawn considerable attention to the subject.

The main topics that the MEPs presented to the European Commission in the report were the recognition of start-ups in the EU legislation as different entities than the SMEs and their role for innovation, the establishment of comprehensive start-up and scale-up strategies, the effects of current legislation and the challenges that the start-ups are facing. 

Distinction between start-ups and SMEs
The MEPs emphasized the need for a clear distinction between innovative start-ups and SMEs in current EU legislation. The lack of differentiation poses challenges for start-ups to secure funding and hinders their growth.

Comprehensive start-up and scale-up strategy
MEPs are urging for the creation of a robust strategy for start-ups and scale-ups, supported by a new, specific definition that accounts for the unique challenges these companies face. The existing legislation lumps start-ups with SMEs based on staff numbers and turnover, making it harder for start-ups to access funding and thrive.

Concerns about current legislative impact
A draft report presented to the Parliament’s industry, research, and energy committee highlights concerns that current legislation, including the SME Relief Package, negatively affects start-ups. MEPs call for harmonized definitions that recognize the differences between start-ups and SMEs to address these issues.

Recognition of start-ups as innovation drivers
Rapporteur Tsvetelina Penkova emphasizes the pivotal role of start-ups as the driving force of innovation, valuing them at around €2 trillion in Europe. She stresses the necessity of defining start-ups properly as active contributors to the economy.

Challenges faced by start-ups
While SMEs have been a priority in EU initiatives, start-ups often find themselves as an afterthought. Start-ups continue to encounter challenges, including limited funding access, regulatory burdens, talent acquisition difficulties, and market entry obstacles.

Proposed solutions for a receptive environment
The report proposes enhanced funding mechanisms, including the exploration of a dedicated European start-up and scale-up fund. Additionally, there is a call for entrepreneur-friendly tax regimes, simplified administrative procedures, and measures promoting collaboration and digital skills.

Fiscal incentives for green and digital transitions
MEPs recommend larger fiscal incentives for start-ups and scale-ups involved in the green and digital transitions. The adoption of technology by start-ups is highlighted as part of the SME relief package.

Upcoming vote and future outlook
The report is slated for a vote in the European Parliament’s Committee on Industry, Research and Energy (ITRE) on November 28, potentially leading to a plenary vote by the year-end. Communication with the Commission has been positive, indicating a potential forward momentum. 

The report has brought crucial issues to the forefront, paving the way for future consideration by the Commission and we are proud to be part of this complex and crucial process.

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Zipit Law Firm specializes in IP, IT & Data Protection, Corporate and M&A Law, Commercial & International Trade Law, Construction & Real Estate Law, Media & Entertainment Law, and Employment Law. Zipit Law Firm works primarily within the technology, innovation, FMCG and creative industries. 


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