15th May 2014
Businesses across Europe will find it easier to recover debts after the introduction of new rules this week. According to policymakers, it will end an environment in which €600 million a year in debt is unnecessarily written off because firms find it too difficult, complex and confusing to take legal action in different countries.
New European Union (EU) rules making it easier for companies to recover claims across borders were adopted by member states. The agreement establishes a European Account Preservation Order, which will be directly applicable in all EU countries except the UK and Denmark, which have an opt-out.
First proposed by the European Commission in 2011, the legislation is a procedure that will help businesses recover millions in cross-border debts, policymakers say. It will allow creditors to preserve the amount owed in a debtor's bank account, effectively blocking debtors from moving their assets to another country while efforts to recover funds are ongoing.
"Every Euro counts,” says EU commissioner Johannes Hahn, who stresses the importance of small and medium-sized enterprises to national economies as they make up 99 per cent of businesses in the EU.
“Around one million of them face problems with cross-border debts. In economically challenging times companies need quick solutions to recover outstanding debts. This is exactly what the European Account Preservation Order is about," he adds. “Thanks to these new rules, small businesses will no longer be forced to pursue expensive and confusing lawsuits in foreign countries."
There will be no change to national systems for preserving funds, with creditors able to choose this European procedure to recover claims abroad in other EU countries. It is also being described as an “interim protection procedure”; to recover any funds the creditor must still obtain a final judgment on the case in accordance with national law. Alternatively they can use one of the simplified European procedures, such as the European Small Claims Procedure.
It comes after EU member states reached agreement on the sharing of tax information related to individuals. Tax transparency changes were confirmed after six years of talks as Luxembourg and Austria finally withdrew their opposition. From 2016, information will be automatically exchanged by tax authorities in the member states in relation to savings accounts.