CORDIS Archive

SME Definitions

Under the Fourth Framework Programme, an enterprise must satisfy the following general criteria to be classified as an SME:

• Have no more than 500 employees
• Not more than one third owned by an organization larger than an SME (based on turnover and number of employees), unless it is a financial investor such as a bank or venture capitalist
• Have an annual turnover of no more than ECU 38 million

It is important to note, however, that for some programmes, an enterprise must satisfy additional criteria in order to be considered as an SME. For instance, under the Environment and Climate and the Standards, Measurements and Testing programmes, SMEs whose main activity is consultancy are not eligible. Details of additional eligibility criteria are set out in the relevant programme information packs.

In April 1996, the Commission proposed a recommendation setting out a new common definition for SMEs (Official Journal No L 107 of 30.4.1996). If adopted, this definition will be applied to all new Community programmes whereas existing programmes which use different criteria will continue to be implemented to the benefit of enterprises which were considered as SMEs when the programmes were adopted.

To be considered an SME under the new definition, an enterprise must fulfil the following criteria:

• Have no more than 250 employees
• Not more than 25% owned, either singly or jointly, by a larger company
• Have an annual turnover of no more than ECU 40 million

RTD programmes under the 4th Framework Programme will continue to apply the above-mentioned definition until their completion at the end of 1998. In principal, it is expected that the new definition will apply to the research programmes to be adopted under the 5th Framework Programme.