EU firms to get new rules from 2005

By Anna McLauchlin

Date: 16/12/04

EUROPE'S companies will face several changes in January as new EU rules come into force.

The most significant is the application of internationally recognized accounting standards - IAS - which the 7,000 companies listed on European stock markets will have to use to detail their accounts from 1 January.

Industry players have already warned that Europe's markets could see more volatility when the first round of accounts are published under the new rules in 2006, as investors and accountants take time to adapt.

From 14 January insurance mediators - including brokers, banks and car dealers - will have to meet stricter EU requirements in order to register nationally and then be able to market their services anywhere in the EU.

The directive sets out minimum standards for the sale of general insurance and life insurance products. It covers issues such as fitness and propriety, training and competence, prudential requirements, complaints handling and the provision of pre-sale information.

Tax-wise, more companies with operations in different member states will be able to avoid double taxation when moving income from their subsidiaries to the parent company, as one of the three EU laws known as the 'tax package' approved in June last year comes into force. Under that law the threshold for one company to be considered a parent of another has been lowered to a 10% shareholding from 25%.

And a new law will save companies the headache of registering for VAT throughout Europe for their gas and electricity supplies by fixing the registration in the country from which it was bought.

Article summarises the pieces of EU legislation in the field of company law which come into force in January 2005. They include: application of internationally recognized accounting standards (IAS); stricter EU requirements concerning the registration of insurance mediators; minimum standards for the sale of general insurance and life insurance products; three EU laws known as the 'tax package'.