An agreement on new, simpler accounting rules, which will benefit up to 1.5 million small British firms, has been reached.
The agreement, which was reached during a regular meeting of business ministers from across the European Union, will exempt small companies from certain accounting obligations, potentially saving between £150 and £300 million per year in reduced administrative costs.
Business minister Ed Davey welcomed the proposals and said they consitituted a "significant step in reducing red tape and a clear signal that we will take action to stop our smallest companies being held back by excessive regulation".
“I believe this shows what can be achieved by a positive and constructive engagement with the European Union - the first ever exemption for micro-entities from an existing EU directive.
"We now need to build on this breakthrough and I hope that further improvements can be agreed before the proposal becomes law," he added.
Member States will now discuss the measures with members of the European Parliament, who must also give their approval before the new rules can come into force.
The agreement introduces a new category of companies called "micro-entities". A company can be defined as a micro-entity if it does not exceed the limits of two of the following three criteria: a balance sheet total of €250,000, a net turnover of €500,000 and an average number of ten employees during the financial year in question.