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"Small Business Act" for Europe
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Improving the business environment
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Promoting Entrepreneurship
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Access to markets
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Facts and figures
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Good practices in SME policy
SME Definition
On 6 May 2003 the Commission adopted Recommendation 2003/361/EC regarding the SME definition which replaced Recommendation 96/280/EC
as from 1 January 2005. The revision takes account of the economic developments since 1996 and the lessons drawn from the application of the definition. In particular, it raises the financial ceilings to take into account price and productivity increases since 1996 and introduces a typology of enterprises (difference between the three categories: autonomous, partner and linked) and a calculation method for the thresholds, which gives a realistic picture of their economic strength. It ensures that enterprises which are part of a larger grouping and could therefore benefit from a stronger economic backing than genuine SMEs, do not benefit from SME support schemes.
Enterprises qualify as micro, small and medium-sized enterprises (SMEs) if they fulfil the criteria laid down in the Recommendation which are summarized in the table below. In addition to the staff headcount ceiling, an enterprise qualifies as an SME if it meets either the turnover ceiling or the balance sheet ceiling, but not necessarily both.
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Enterprise category |
Headcount |
Turnover |
or |
Balance sheet total |
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medium-sized |
< 250 |
≤ € 50 million |
≤ € 43 million |
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small |
< 50 |
≤ € 10 million |
≤ € 10 million |
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micro |
< 10 |
≤ € 2 million |
≤ € 2 million |
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This Recommendation concerns all Community policies applied within the European Economic Area in favour of SMEs (Structural Funds, Framework Programme for Research and Development) as well as State Aid, where SMEs can benefit from exemption provisions and higher aid ceilings (see General Block Exemption Regulation in the field of State Aid). The Recommendation is addressed to the Member States, the European Investment Bank (EIB) and the European Investment Fund (EIF).
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SME User Guide explaining the new SME definition
[2 MB]
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SME definition: Commission Recommendation of 06 May 2003
[234 KB] , OJ L 124 of 20.5.2003, p. 36
Micro, small and medium-sized enterprises are socially and economically important, since they represent 99 % of all enterprises in the EU. They provide around 65 million jobs and contribute to entrepreneurship and innovation. However, SMEs face particular difficulties which the EU and national legislation try to address by granting them various advantages. The application of a common definition by the Commission, Member States, the EIB and the EIF ensures consistency and effectiveness of those policies targeting SMEs and, therefore, limits the risk of distortions of competition in the Single Market.