Bureaucracy in the EU: Germany in midfield-a comprehensive analysis for entrepreneurs, start-ups and scale-ups

What is the main problem for small and medium -sized companies in the EU?

Small and medium -sized companies (SMEs) in the European Union are faced with various challenges, but one stands out: the bureaucracy. According to the current Eurobarometer survey on start-ups, scale-ups and entrepreneurship from 2025, 28 percent of German companies surveyed state that regulatory hurdles and administrative effort are the biggest problem. This number is remarkable because it shows that bureaucratic stress is the most pressing topic for more than every fourth company.

But what exactly is behind this term “bureaucracy”? It is about the large number of regulations, forms, reporting requirements and approval procedures that companies have to meet. From founding to ongoing operations to expansion - entrepreneurs encounter complex regulations everywhere, time, money and nerves.

How does Germany cut off in EU comparison?

Surprisingly, Germany is not as bad at the bureaucracy stress as many would assume. With 28 percent of companies, the bureaucracy as the biggest problem, Germany is only in the EU midfield. Ten countries even have higher values, which means that the bureaucracy stress there is even more pronounced there.

The Czech Republic is at the forefront of the bureaucracy problem, where half of all companies surveyed indicate that bureaucracy is their biggest problem. This is a drastic difference to Germany and shows that the situation in some EU countries is much more difficult.

These figures come from the Eurobarometer survey 3359 with the title “Start-up, Scale-Up and Entrepreneurship” from July 2025, which surveyed over 17,000 companies, including 13,000 in the EU-22. Of the respondents, 5 percent identified as start-ups and 18 percent as scale-ups.

Why is the bureaucracy load in the EU higher than in other regions?

The view beyond the borders of the EU is revealing. In the United States, only 11 percent of companies state that bureaucracy is their biggest problem, in Japan it is only 9 percent. These clear differences have structural reasons.

In the EU there are tends to be more detailed requirements for accounting and documentation obligations to ensure important goals such as employee protection, tax equality and consumer rights. These high standards have their price: they lead to a higher administrative effort for companies.

In addition, in many EU countries, including Germany and Italy, the founding processes are more complicated and longer than in the USA and Japan. While a company foundation is possible within a few days in some countries, it often takes weeks or even months in Germany and other EU countries.

The documentation obligations in the EU are also more extensive. The General Data Protection Regulation (GDPR), for example, obliges companies on extensive documentation of their data processing processes. While this serves to protect consumers, it means considerable additional effort for companies.

What other problems plague SMEs besides bureaucracy?

Bureaucracy is the biggest problem, but not the only one. As the second most common problem, companies state payment delays with 16 percent of the entries. This is a particularly serious problem for smaller companies, since they often do not have the financial reserves to cope with longer payment failures.

The limited access to financial resources takes third place with 11 percent. This problem primarily affects start-ups and growing companies that rely on external financing for their expansion. Compared to bureaucratic obstacles, however, these problems brake much less frequently.

The EU Commission reacted to these challenges and presented a comprehensive SME relief package in September 2023. The centerpiece is a new regulation on late payment in business transactions, which introduces a stricter upper limit for payments of 30 days and provides for automatic interest payments when delay.

How significant are SMEs for the German economy?

The numbers speak a clear language: SMEs are the backbone of the German economy. In 2021 there were around 3.14 million small and medium -sized companies in Germany. These make up over 99 percent of all companies in Germany. Only 0.7 percent of all companies were large companies.

The majority of SMEs are one of the small companies. This definition includes companies with up to 9 employees and annual sales of a maximum of 2 million euros. Small companies have up to 49 employees and up to 10 million euros in sales, while medium -sized companies have up to 249 employees and have up to 50 million euros in sales.

The economic importance of SMEs goes far beyond its sheer number. In 2022 they generated around 2.66 trillion euros 27.3 percent of total sales in Germany. They also had around 19.1 million employees, which corresponds to 53.6 percent of all dependent employees.

What is the Eurobarometer and what role does it play?

The Eurobarometer is a regular survey program of the European Commission that has been investigating public opinion in all EU member states since 1973. It provides data on the attitudes of citizens and companies on topics such as business, politics, environment, digitization or society.

The aim of the Eurobarometer is to capture trends and opinions comparable and representative in order to better align political decisions on the needs and perceptions. The surveys are carried out every six months, each in April and October.

The current survey on start-ups, scale-ups and entrepreneurship is particularly relevant because it systematically records the challenges of growth-oriented companies in the EU for the first time. The results flow directly into the political design and influence EU initiatives such as the Commission's start-up and scale-up strategy.

What specific bureaucracy problems affect start-ups and scale-ups?

Start-ups and scale-ups face special challenges that go beyond the general bureaucracy problems. Regulatory complexity remains the most important concern that is mentioned by almost two thirds of the respondents. This is particularly problematic for young companies that often do not have resources in order to navigate through complex regulations.

The different national regulations within the EU are a central problem. What is allowed in a country can be banned in another country or can be regulated differently. This applies, for example, consumer law, the General Data Protection Regulation or tax provisions. For start-ups that want to expand across Europe, this means enormous effort.

The founding processes are still complex and time-consuming in many EU countries. While companies can be founded online in Denmark, Estonia or other digital pioneers in a few days, it takes significantly longer in Germany, Italy or other countries. The involvement of notaries, complex commercial register entries and numerous approval procedures considerably delay the founding process.

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How do high energy costs and a shortage of skilled workers have an impact?

In addition to the bureaucracy, German SMEs are plagued further structural problems. High energy costs are mentioned by 45 percent of German SMEs as the largest potential growth obstacle. This is well above the EU average and shows that Germany is particularly affected here.

The shortage of skilled workers also affects many companies, whereby Germany with its value is just below the EU average. Problems with maintaining or hiring specialists and the competition by other companies follow the third place in the growth obstacles.

These problems reinforce each other: high energy costs burden competitiveness, while the shortage of skilled workers inhibits innovations and growth. In combination with the bureaucracy stress, an environment is created that is becoming increasingly challenging for companies.

What are the solutions at the EU level?

The European Commission recognized the problems and started various initiatives. The EU strategy for start-ups and scale-ups from May 2025 aims to reduce bureaucracy, facilitate access to financial resources and to improve business opportunities in the internal market.

A central element is the so-called “28th regime”-an optional, EU-wide uniform legal framework for start-ups and scale-ups. This is intended to offer uniform rules in corporate, bankruptcy, labor and tax law and make all founding and administrative processes completely accessible digitally and multilingual.

The “Blue Carpet” initiative should make it easier to win top forces from Europe and beyond start-ups. In addition, a “Scaleup Europe Fund” is planned for large financing rounds from 100 million euros.

The SME relief package from September 2023 comprises 19 measures for short-term relief and long-term strengthening of competitiveness. This includes a new regulation on late payment and a tax simplification guideline.

How do the financing conditions differ internationally?

The financing conditions for SMEs vary greatly between the regions. In Anglo -Saxon countries, invoice financing is used significantly more frequently than in Germany. This gives the companies competitive advantages because they can better control their liquidity.

German SMEs are traditionally dependent on bank loans, but the monetary policy turn since 2022 has noticeably changed the financing environment. Around seven out of ten companies that led 2023 credit negotiations rated the interest rate offered as too high.

However, the equity ratio of German SMEs is robust: it is an average of 31 percent, with medium -sized companies with 34.7 percent achieving significantly higher values than small companies with 22.8 percent. This shows that the financial basis of many SMEs is solid.

What role do EU funding programs play?

EU funding programs are an important building block to support SMEs, but they also bring bureaucratic challenges. In theory, SMEs can benefit from the EU funds filled in many EU countries, but the bureaucratic effort of the application and the proof of evidence to use the funds startle.

The EU SME definition of the EU is crucial for access to funds and funding programs. Only companies that meet the criteria (fewer than 250 employees, a maximum of 50 million euros in sales or 43 million euros in balance sheet total) can benefit from special SME programs.

It is particularly problematic that larger family businesses from 250 employees in the EU are considered large companies and how corporations are treated. This leads to distortions of competition, since these companies often do not have the resources of real large corporations.

How does digitization develop at SMEs?

Digitization offers opportunities for bureaucracy relief, but progress is unevenly distributed. While large companies use 48 percent to use artificial intelligence, small companies are only 17 percent and medium -sized.

E-government solutions

In theory, many bureaucratic processes can simplify, but the implementation often lags behind. Estonia is considered a pioneer and shows how consistently driven digitization of the administration can look. There is still a lot of room for improvement in Germany.

Relocating electronic accounting abroad is generally possible and is used by many SMEs to save costs. This shows that companies find creative ways to deal with regulatory requirements.

What effects does bureaucracy have on innovation and growth?

The bureaucracy stress has a direct impact on the innovative strength and growth of companies. Every euro that flows into the fulfillment of reporting obligations is no longer available for investments. This is particularly problematic for SMEs that already have limited resources.

Studies show that bureaucracy inhibits economic growth. An increase in time for sovereign regulations by one percent reduces GDP growth by 0.030 percent. For an economy like Germany, this adds up to considerable losses.

The innovative strength suffers particularly because bureaucratic loads the already limited personnel resources bind in SMEs. Less space for innovations means less competitiveness in an international comparison.

What are the future prospects?

The future prospects for SMEs in the EU are mixed. On the one hand, there are positive signals: 67 percent of SMEs expect sales growth and 46 percent plan to expand their workforce. Start-ups are particularly optimistic, with almost a fifth, which projects growth over 20 percent per year.

On the other hand, the structural challenges remain. The scaling remains difficult, whereby growth -oriented SMEs refer to qualification bottlenecks, high energy prices, competitive pressure and regulatory stress as main obstacles.

Most SMEs (70 percent) still operate only nationally. Only about a quarter is also active on the EU internal market, which shows that the potential of the common market has not yet been exhausted.

A differentiated picture of the bureaucracy challenge

The analysis shows a differentiated picture of the bureaucracy problem in the EU. While Germany is not one of the most affected countries, bureaucracy remains the biggest problem for more than every fourth company. The differences to the USA and Japan make it clear that less regulatory complexity is possible without reducing the quality standards.

The EU initiatives to relieve SMEs go in the right direction, but their implementation will be decisive. The planned “28th regime” and the various relief packages could bring real improvements if they are consistently implemented.

Ultimately, the solution is not only in less bureaucracy, but in intelligent regulation. The challenge is to maintain high standards for consumer protection, employee rights and environmental protection, while the administrative expenses for companies are also reduced. This requires a continuous dialogue between politics, administration and business as well as the courage to fundamental reforms.

The numbers of the Eurobarometer make it clear: SMEs are the backbone of the European economy. Your support is not only an economic bid, but also a contribution to strengthening democratic and social structures in Europe. The bureaucracy debate is therefore much more than a technical discussion about administrative procedures-it is a key to the future viability of the EU.

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