SME Definition

The European Commission recognizes the social and economical importance of small and medium sized enterprises across Europe. Combined they provide around 65 million jobs and represent 99% of all enterprises in the EU.

In Order to address the particular difficulties faced by SMEs the commission applied a common definition of an SME to ensure the consistency and effectiveness of policies targeting them.

On 1 January 2005 Recommendation 2003/361/EC replaced Recommendation 96/280/E as the commission’s official definition.

New additions include

• The typology of enterprises: Autonomous, Partner, Linked
• As well as the calculation method for the thresholds

With a realistic picture of their economic strength it ensures enterprises with strong economic backing from a larger grouping do not benefit from SME support schemes.

A summary of the criteria, which needs to be fulfilled in order to qualify as a micro, small and medium sized enterprise (SME), is shown below. In addition to the staff headcount limitations an enterprise qualifies if it meets either the turnover or balance sheet ceiling, but not necessarily both.