Micro-, small- and medium-sized enterprises: definition and scope

SUMMARY OF:

Commission Recommendation – the definition of micro, small and medium-sized enterprises

SUMMARY

WHAT DOES THIS RECOMMENDATION DO?

It sets out the criteria for identifying whether a company is a micro, small or medium-sized enterprise (SME). These different categories, based on the number of a company's employees and its turnover or balance sheet, determine its eligibility for EU and national financial and support programmes. The definitions came into effect on 1 January 2005.

KEY POINTS

Definitions:
- micro enterprise: fewer than 10 employees and an annual turnover (the amount of money taken in a particular period) or balance sheet (a statement of a company's assets and liabilities) below €2 million.
- small enterprise: fewer than 50 employees and an annual turnover or balance sheet below €10 million.
- medium-sized enterprise: fewer than 250 employees and annual turnover below €50 million or balance sheet below €43 million.
SMEs meeting the different criteria can benefit from
- EU and national business support programmes, such as research, competitiveness and innovation funding, which otherwise would not be allowed under EU state aid rules,
- fewer requirements or reduced costs when complying with EU legislation.
The European Commission regularly monitors the practical impact of the definitions. An independent study published in September 2012 concluded that there was no need to revisit the criteria, but some clarification and guidance of the existing rules might be useful.
In 2015, after an evaluation of the first user guide to the SME definition, the Commission published an updated version.

BACKGROUND

SMEs represent 99 % of all businesses in the EU. They are the backbone of its economy. They generate 2 out of every 3 jobs. In 2013, over 21 million SMEs provided almost 90 million jobs throughout the EU. They stimulate a sense of entrepreneurship and innovation, helping to foster European competitiveness, economic growth and employment.

ACT

Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (notified under document number C(2003) 1422) (OJ L 124, 20.5.2003, pp. 36–41)

last update 11.01.2016