The past decade has seen an explosion of European regulation across key sectors, and while many of these laws aim to create a more unified internal market, they’ve often come with a heavy administrative burden, especially for small and medium-sized enterprises (SMEs) with limited capacity to interpret, implement, or contest compliance rules.
Recognising this, the European Commission has initiated a broad regulatory review effort. Since February 2025, it has so far rolled out 6 omnibus packages across a range of domains, all with a goal of simplification and setting bold targets of a 25% cut in reporting burdens for companies and 35% for SMEs.
These packages matter. They signal a shift not just in rules, but in regulatory culture. For SMEs navigating complexity in Europe, this could be the beginning of a more responsive, more realistic legal framework.
What are the omnibus simplification packages?
The term "omnibus" here refers to packages of amendments bundled together to streamline existing EU laws. Rather than rewriting legislation from the beginning, the Commission is refining what is already in place, by removing duplications, clarifying wording, and reducing administrative costs.
What is unique is the horizontal approach: several thematic areas are being addressed at once, through different packages, all aligned with the goal of making EU law more accessible. The approach is partly legal clean-up, partly policy recalibration.
The goal? To cut down on red tape, align overlapping obligations, and make compliance more accessible, especially for SMEs. All with the ultimate goal of boosting Europe’s competitive advantage.
Examining the packages
Sustainability
This package proposes changes to the EU Taxonomy, the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Carbon Border Adjustment Mechanism (CBAM).
At a glance, some of the proposed changes include raising the employee threshold for mandatory sustainability reporting under CSRD from 250 to 1000 employees, and delaying compliance deadlines for both CSRD and CSDDD based on company size.
The proposals signal a recognition that one-size-fits-all rules do not serve all market actors equally. While some companies may consider delaying their efforts in anticipation of regulatory changes, several factors suggest that maintaining current reporting practices remains essential. Companies should continue to invest in sustainability for business benefit and in transparency, as these remain key factors for investors, business partners and consumers.
Investment
The second package proposes to increase the guarantee available under the InvestEU Regulation by €2.5 billion and combining it with other ‘legacy’ programmes to boost private and public investment, such as the European Fund for Strategic Investments (EFSI). Amendments also make it easier for Member States to contribute to the programme, support their own businesses and mobilise private investments. The proposals simplify administrative requirements for the EU’s implementing partners, financial intermediaries and final recipients, notably SMEs.
Agriculture
This package of amendments to the Common Agricultural Policy (CAP) Strategic Plans’ basic legislation focuses on additional simplification of on-farm requirements, and better recognition of diverse farming practices, especially organic farming.
In terms of certain specific provisions, these include increasing the maximum possible lump-sum payment for participating farmers to €2500, and enhancing crisis management tools for farmers affected by natural disasters.
For agricultural SMEs, who often face disproportionate administrative obligations to access CAP funding, simplification here centres on usability, thereby reducing documentation demands and adapting audit processes.
Digitalisation and SME Access
The fourth omnibus package aims to streamline EU business regulations, simplify market access for products, and accelerate the shift towards a truly data-driven Single Market. Ultimately, it also seeks to address one of the most persistent friction points for SMEs: interacting with public administrations and complying with digital market rules.
The proposed amendments, which range from GDPR rules to supply chain due diligence, will extend supportive measures for small mid-cap companies (SMCs). Companies with fewer than 750 employees and either up to €150 million in turnover or up to €129 million in total assets will qualify as SMCs. This new designation will be entitled to avail of some of the benefits and derogations currently accorded to SMEs.
This is a particularly strategic area for SMEs looking to scale or become international. By embedding proportionality more systematically across key legislative acts, this should enable companies, particularly those classified as SMCs, to benefit from greater legal certainty, administrative relief, and digital efficiencies.
Defence Procurement
This package aims to ensure that increased EU defence spending leads to increased EU autonomy and reduces its reliance on third-country suppliers. Another key objective is to simplify rules impacting the defence industry with the aim of moving towards a single EU defence market.
It includes a proposal for an emergency €150 billion loan facility to support the European defence industry through joint defence procurements, named Security Action for Europe (SAFE). It also communicates to Member States inviting them to use the National Escape Clause under EU budget discipline rules, thus allowing a deviation from agreed expenditure for up to a maximum of 1.5% of GDP on defence spending from 2025 until 2029. Third, it publishes a White Paper outlining a five-year roadmap for the EU's defence priorities to address capability gaps and using joint EU defence procurement.
Chemicals, Cosmetics and Fertilisers
The sixth simplification omnibus introduces targeted changes to EU chemical, cosmetic, and fertilising product regulations to clarify language, standardise procedures, and give smaller players more predictability.
Regarding the Regulation on classification, labelling and packaging of substances and mixtures (CLP), changes are proposed to simplify labelling rules for hazardous chemicals, allowing for more flexible, easy-to-read designs, expanding digital labelling, and easing advertising rules. Regarding the Cosmetics Regulation, amendments clarify procedures and introduce clear timelines for exemptions from substance bans.
In principle, these changes should translate into reduced regulatory risk and reporting obligations, allowing companies to focus on innovation and development.
Impact on SMEs: Key takeaways
While simplification does not remove regulation, it does change the nature of compliance. The omnibus packages suggest a shift from uniformity to proportionality, where legal predictability is improving, and opportunities expand for SMEs.
The EU is recognising that small businesses should not be expected to meet the same procedural thresholds as multinationals. In areas such as defence and digital services, simplification is not just about cutting cost but also about seizing opportunities.
The simplification omnibus packages are a signal that Brussels is listening, and the EU is trying to rebalance the regulatory playing field in favour of usability, scalability and SME engagement. The packages will be up for negotiation in the European Parliament and Council in the coming months, meaning a lot can change until the final texts are agreed.
For business owners, the task now is to monitor these developments not just with a compliance mindset, but with a strategic one. Regulatory reform presents opportunities for realigning internal processes and engage in markets previously out of reach.
While simplification alone won’t make business easy, it may finally make it fairer.
*Katerina Kapodistria, Deputy Antici, Permanent Representation of Cyprus to the EU
