Small and medium-sized enterprises (SMEs) represent 99% of all businesses. The definition of an SME is crucial for access to finance and EU support programmes. However, when SMEs grow beyond a certain size, they often face a significant increase in compliance obligations, which can create a ‘cliff-edge’ effect that discourages growth and limits competitiveness.
To address this challenge, the European Commission has worked on a new category, the small mid-cap (SMC), to provide a more gradual transition for growing businesses. The definitions of SMEs and SMCs are based on the number of employees, turnover, and balance sheet total.
SME definition
Small and medium-sized enterprises (SMEs) are defined in
- EU recommendation 2003/361 (ES, DA, DE, EL, EN, FR, IT, NL, PT, FI, SV)
- Document 32003H0361R(03) (BG, CS, ET, GA, HR, LV, LT, HU, MT, PL, RO, SK, SL)
The main factors determining whether an enterprise is an SME are
- staff headcount
- either turnover or balance sheet total
| Category | Micro | Small | Medium-sized |
| Staff | < 10 | < 50 | < 250 |
| Turnover | ≤ €2 million | ≤ €10 million | ≤ €50 million |
| OR | |||
| Balance Sheet | ≤ €2 million | ≤ €10 million | ≤ €43 million |
These ceilings apply to the figures for individual firms only. A firm that is part of a larger group may need to include staff headcount/turnover/balance sheet data from that group too.
Further details include
- The revised user guide to the SME definition (2020) (available in all EU languages)
- Declaring your enterprise to be an SME (the form is available in all languages as an annex in the revised user guide)
- The SME self-assessment tool which you can use to determine whether your organisation qualifies as a small and medium-sized enterprise
Help SMEs can get
There are 2 broad types of potential benefit for an enterprise if it meets the criteria
- eligibility for support under many EU business-support programmes targeted specifically at SMEs: research funding, competitiveness and innovation funding and similar national support programmes that could otherwise be banned as unfair government support ('state aid' – see block exemption regulation)
- fewer requirements or reduced fees for EU administrative compliance
Small mid-cap definition
To support growing businesses, the European Commission is introducing a new category for Small Mid-Caps (SMCs). The SMC definition applies to companies that have outgrown the SME definition. We will provide details soon.
Supporting documents
- Small Mid-caps factsheet (2025)
- Study to map, measure and portray the EU mid-cap landscape (2022)
- Staff working document on the evaluation of the SME definition (2021)
- Executive summary on the evaluation of the SME definition (2021)
- Q&A on the evaluation of the SME definition (2021)
- Final report on evaluation of the SME definition (2018)
- Final report on evaluation of the SME definition (2012)
- Executive summary on evaluation of the SME definition (2012)
- Implementing the SME definition (2009)
- Implementing the SME definition (2006)