Commission proposes common definition for European SMEs
The Commission has, at the initiative of Commissioner Christos Papoutsis, put forward a proposal for a common definition of small and medium-sized enterprises (SMEs) in the European Union. The proposed definition, adopted by the Commission in the form of a Communication, is based on a combination of the following criteria: - The number of employees; - Independence; - Turnover; - Balance-sheet total. According to the proposed new definition, in order to be considered as an SME, a company must have less than 250 employees. More specifically, and in order to distinguish between small and medium-sized enterprises, a company is considered as "medium-sized" if it has: - More than 50 and less than 250 employees; - An annual turnover not exceeding ECU 40 million or an annual balance-sheet total of no more than ECU 27 million. To be defined as "small", a company must have: - Less than 50 employees; - An annual turnover not exceeding ECU 7 million or an annual balance-sheet total not exceeding ECU 5 million. Companies with less than 10 employees will be considered as "very small". The independence of a company will be applied at a further basic criterion for classification as an SME. In this context, not more than 25% of an SME may be owned, either singly of jointly, by a large company. The adopted Communication will be addressed as a Recommendation to the Member States, the European Investment Bank (EIB) and the European Investment Fund (EIF). It moreover provides a reference framework for the Community programmes, policies and legislation concerning SMEs. It should be noted that, in the case of the Member States, the recommended thresholds are only maximum ceilings. This is due to the great disparities currently existing between them and the need to allow some flexibility so that local and regional circumstances can be taken into consideration. Commissioner Papoutsis, commenting on the decision, said: "We finally have a comprehensive framework, which can be the new basis for all the specific measures in favour of SMEs. In the years to come, the efficiency of these measures, and especially of the concerted actions, will be greatly enhanced and I am confident that our SMEs, the backbone of our economies, will profit from this evolution as our actions will be much better targeted towards those enterprises most in need of support because of their size".