EU red tape reduction: the Omnibus has arrived!

Authors: Johannes Hartlieb, Cornelia Lanser, Alexander Gimona

Omnibus gets rolling

The time has finally come: Yesterday, the EU Commission presented the highly anticipated legislative proposal for simplifications and bureaucracy reduction (“Omnibus” package). The European Union’s Commissioner for Trade, Valdis Dombrovskis, played a leading role in this.

EU Commission introduces Omnibus package

Reducing bureaucracy is the order of the day to maintain the European Union’s competitiveness. Many companies find the current requirements too complex and have called for more practical regulations. To this end, the Omnibus package makes it easier for companies to fulfill their obligations. Existing reporting and documentation obligations for companies are to be reduced and consolidated. This is expected to cut administrative burdens and at the same time strengthen the competitiveness of European businesses.

“Simplification promised, simplification delivered! … EU companies will benefit from streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy. This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonization goals.”

Ursula von der Leyen, President of the European Commission

The initiative aims to reduce regulatory requirements and the associated bureaucratic burden on European businesses. The proposed changes will affect key directives and a regulation under the European Green Deal, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Carbon Border Adjustment Mechanism Regulation (CBAM).

Background of the initiative

The Omnibus initiative is part of a broader strategy to strengthen the competitiveness of European companies. In the “Budapest Declaration” of November 2024, the European Council announced a reduction in reporting obligations of at least 25%. The “EU Competitive Compass,” which was presented in mid-January, substantiated these plans and emphasized the need for administrative relief.

The most important changes resulting from the Omnibus package

Narrowing the scope of the CSRD

Going forward, only companies with more than 1,000 employees and an annual net turnover of at least €50 million or a balance sheet total of at least €25 million will be subject to the reporting obligation. This means approximately 80% of the originally affected companies will no longer be included in the scope of application.

Postponement of the CSRD reporting obligations

The EU Commission has presented a “stop-the-clock” proposal to postpone the CSRD reporting requirement by two years. Companies that would be required to report from the 2025 financial year will now only have to report for the first time from mid-2028. Large listed companies are exempt from the postponement.

Restriction of due diligence obligations and removal of civil liability

The analysis of sustainability risks will primarily focus on direct business partners (tier 1 suppliers). Companies are still obliged to monitor sustainability risks along the supply chain, but only if there are specific indications of irregularities. In addition, EU-wide civil liability under the CSDDD no longer applies.

Adjustments to the application of the EU Taxonomy Regulation

Companies with fewer than 1,000 employees and a turnover below €450 million will be exempt from EU taxonomy reporting requirements. For larger companies, the taxonomy reporting obligations will remain in place, but with simplified templates and a materiality threshold.

Simplification of the Carbon Border Adjustment Mechanism (CBAM)

Small importers, in particular SMEs and private individuals, will be exempt from CBAM obligations. Furthermore, the regulations for affected companies are to be simplified, while at the same time measures to prevent circumvention and abuse are to be tightened.

Unlocking investment opportunities

Furthermore, the Commission is planning several changes to simplify and improve the efficiency of various investment programs, such as InvestEU, EFSI (European Fund for Strategic Investments) and other older programs. By using past returns and available funds, around €50 billion in additional investments are to be mobilized, in particular for the Clean Industrial Deal and the Competitiveness Compass.

Impacts and outlook

Many companies have already started preparing for the implementation of the existing obligations under the three legal acts, meaning that there is currently legal uncertainty.

The Commission emphasizes that the Omnibus initiative does not signal a departure from sustainability goals, but instead seeks a more practical implementation of these obligations. Climate targets must still be met, but the implementation of the Omnibus package should make it easier to achieve them.

Following yesterday’s presentation of the draft, the parliamentary debate and further revisions remain to be seen. Much is still open, but the course has been set. In any case, we will keep you updated!

Disclaimer

This article is for general information only and does not replace legal advice. Haslinger / Nagele Rechtsanwälte GmbH assumes no liability for the content and correctness of this article.

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27. February 2025

 

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