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Definition of Small and Medium-Sized Enterprises

There are 19 million small and medium-sized enterprises in the European Union representing 99,8 % of all EU enterprises and employing more than 74 million people. These enterprises are a source of employment, innovation, entrepreneurship and growth. They are particularly important in a context of insecurity and with a view to achieving the objectives of the Lisbon European Council regarding the competitiveness of the European Union.

As a recognition of their important social and economic function, as well as of the particular difficulties they might face in their development, SMEs benefit from specific treatment in several areas such as national state-aid schemes, Community programmes to support Research and Innovation, the Regional Funds and financial intervention in favour of venture capital funds and guarantees for loans to SMEs. This means that the various categories of SMEs (micro, small and medium) have to be defined in a way that is economically fair, legally secure for the enterprises and easy to apply by the Member State administrations.

The SME definition that is currently in use was adopted with the  Commission Recommendation 96/280/EC. It is clear however that this definition now needs to be adapted in order to

• take account of economic developments and

• reduce the likelihood of the definition being circumvented, particularly with regard to state aid, Structural Funds and the Research and Development Framework Programme.

In the view of Enterprise Directorate-General, the suggested increase in the level of the financial ceilings, even though significant in percentage to avoid penalising enterprises that are investing, would not in any case result in a significant increase of the number of SMEs covered by the definition. To this effect, it is notably not proposed to modify the ceilings in the number of persons occupied in an enterprise in order for that enterprise to qualify as a micro, small or medium enterprise. At the same time, anti-circumvention measures would ensure that only the enterprises facing the specific handicaps of SMEs would be considered SMEs.

An important aspect of the proposal is the special attention given to the definition of micro-enterprises and to the inclusion in this category of all types of enterprises, whatever their legal status. Family businesses and artisans might particularly benefit from this adaptation of the definition.

All interested parties were invited to comment on the text of the Recommendation by 9th of November 2001.

	Recommendation 96/280/EC (Link to Eur-Lex)
	Revised proposal for SME Definition Original version : FR  (all other linguistic versions not checked by legal translators).

See also second consultation on the SME definition (open until 10 September 2002)

Last update: 10/07/2002