Definition: Small and medium-sized enterprises

Category: Business registers

1. The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43 million.

2. Within the SME category, a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 10 million.

3. Within the SME category, a micro enterprise is defined as an enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million.

Types of enterprise taken into consideration :

1. An "autonomous enterprise" is any enterprise which is not classified as a partner enterprise or as a linked enterprise.

2. "Partner enterprises" are all enterprises which are not classified as linked enterprises and between which there is the following relationship: an enterprise (upstream enterprise) holds, either solely or jointly with one or more linked enterprises 25 % or more of the capital or voting rights of another enterprise (downstream enterprise).

However, an enterprise may be ranked as autonomous, and thus as not having any partner enterprises, even if this 25 % threshold is reached or exceeded by the following investors, provided that those investors are not linked either individually or jointly to the enterprise in question:

a. Public investment corporations, venture capital companies, individuals or groups of individuals with a regular venture capital investment activity who invest equity capital in unquoted businesses ("business angels"), provided the total investment of those business angels in the same enterprise is less than EUR 1 250 000;

b. Universities or non-profit research canters;

c.  Institutional investors, including regional development funds;

d. Autonomous local authorities with an annual budget of less than EUR 10 million and fewer than 5 000 inhabitants.

3. "Linked enterprises" are enterprises which have any of the following relationships with each other:

a. An enterprise has a majority of the shareholders' or members' voting rights in another enterprise;

b. An enterprise has the right to appoint or remove a majority of the members of the administrative, management or supervisory body of another enterprise;

c. An enterprise has the right to exercise a dominant influence over another enterprise pursuant to a contract entered into with that enterprise or to a provision in its memorandum or articles of association;

d. An enterprise, which is a shareholder in or member of another enterprise, controls alone, pursuant to an agreement with other shareholders in or members of that enterprise, a majority of shareholders' or members' voting rights in that enterprise.

Only autonomous enterprises are regarded as SMEs. Apart from the exceptions for public bodies, as mentioned in paragraph 2, no partner enterprise or linked enterprise is considered as SME. http://eur-lex.europa.eu/LexUriServ/site/en/oj/2003/l_124/l_12420030520en00360041.pdf