The EU SME definition European Commission DG Enterprise and - - PowerPoint PPT Presentation

European Commission DG Enterprise and Industry October 2012 José Becerra, Thomas Elsner

The EU SME definition

The EU SME definition

• Entered into force on 1 January 2005
• Contained in a recommendation adopted in 2003 by the Commission

(Recommendation 2003/361/EC)

• Result of wide-ranging discussions between the Commission, Member

States, business organisations as well as two open consultations on the Internet

The EU SME definition

• Applies to all policies and programmes that the Commission operates

for SMEs

• Member States are invited to apply it as widely as possible
• Taken over in the field of State Aid and EU programmes

The EU SME definition

Enterprise category

Headcount Annual turnover

• r

Annual balance sheet

Medium

< 250

≤ € 50 million

(in 1996: €40 M)

≤ € 43 million

(in 1996: €27 M)

Small

< 50

≤ € 10 million

(in 1996: €7 M)

≤ € 10 million

(in 1996: €5 M)

Micro

< 10

≤ € 2 million

(previously. not defined)

≤ € 2 million

(previously. not defined)

The EU SME definition

• First step: am I an enterprise?
• an enterprise = « any entity engaged

in an economic activity, irrespective

• f its legal form »
• reflects the terminology of the European Court of Justice

The EU SME definition

• Second step: how to calculate the data of my enterprise?
• compulsory to respect staff headcount threshold
• only one of the financial thresholds has to be respected

(turnover or balance sheet)

The EU SME definition

• Staff headcount covers full time, part-time and seasonal staff
• Apprenticeship/vocational training with contract is not counted in the

headcount, nor is maternity or parental leave

• Is expressed in AWU (Annual Working Unit)
• 1 employee full time/year = 1 AWU
• 1 employee 3 months/year = 0,25 AWU

The EU SME definition

• Data to take into account = those of the latest approved accounting

period, calculated on an annual basis

• If thresholds are exceeded
• during the year, enterprise will retain its SME status
• during two consecutive accounting periods, loss of SME status ( and

vice versa)

The EU SME definition

• Third step : what else do I take into account when calculating my

data?

• => relationships you may have with other enterprises
• To work out your individual data, you will have to establish

whether your enterprise is AUTONOMOUS – PARTNER – LINKED

The EU SME definition

• What is an “autonomous” enterprise?
• totally independent enterprise or
• holding less than 25% of capital or voting rights in one or more
• ther enterprises (and vice versa) – Art. 3.1
• Exceptions in case of certain investors (venture capital

companies, business angels etc.) – Art. 3.2

The EU SME definition

• Autonomous enterprise: calculation of data
• Use your own staff headcount and financial data to check if

thresholds of Art.2 are respected

The EU SME definition

• What are “partner” enterprises?
• holding equal or greater than 25% of capital or voting rights in
• ne or more other enterprises (and vice versa) – Art. 3.2
• not classified as linked enterprise, i.e. voting rights in other

enterprise do not exceed 50%

• Special case: no SME if 25% of capital or voting rights controlled

by one or more public bodies – Art. 3.4

The EU SME definition

• Partner enterprises: calculation of data
• Add to your own data a proportion of the other enterprise’s data
• This proportion corresponds to the percentage of shares or

voting rights that are held

• Ex. 30% shares => add 30% of data

The EU SME definition

• What are “linked” enterprises?

(= enterprises which form a GROUP)

• An enterprise is LINKED to another when it:
• holds a majority of the shareholders’ or members’ voting rights
• is entitled to appoint or remove a majority of management body
• is able to exercise a dominant influence through

contract/provision in the memorandum or articles of association

The EU SME definition

• Linked enterprises: calculation of data
• Add to your own data 100% of the data of the enterprise(s) to

which you are directly or indirectly linked

• (where the data were not already included through

consolidation)

The EU SME definition

The EU SME definition

The EU SME definition

The EU SME definition

Less than 25% participation by/of the enterprise

Autonomous

Between 25% and 50% participation by/of the enterprise

Partner

More than 50% participation by/of the enterprise (or equivalent control)

Linked

TYPE TREATMENT

Use solely the data of the company 100% of the data of the enterprise + data of the upstream/downstream aggregated proportionally to the participation (one level only) Use of existing consolidated accounts

• r addition of 100% of the data of all

linked enterprises

Disclaimer: Simplified presentation ; some specific cases are not described.

Implementation

• Art. 9 of Annex to Recommendation
• Implementation reports 2006, 2009
• External Evaluation in 2012

External Evaluation - scope

• Literature review
• Statistics
• Interviews at EU and Member State level

10 Member States (which represent over two-thirds of the EU enterprise population)

External Evaluation – Results I

• Size distribution across time
• Headcount ceiling
• Financial ceilings
• Enterprises of intermediate category

External Evaluation – Results II

• International comparisons
• Investments by Venture Capital Funds
• 2-year rule
• Partner and Linked enterprises

The EU SME definition

For more information: http://ec.europa.eu/enterprise/policies/sme/facts- figures-analysis/sme-definition/index_en.htm entr-sme-definition@ec.europa.eu

European Commission DG Enterprise and Industry Brussels, 26 October 2012 Maarit Nyman Deputy Head of Unit D.4

Reducing regulatory burden for SMEs

Background

• The European Council of June 2011: « the regulatory burden
• n SMEs needs to be further reduced and where appropriate

micro-enterprises should be exempted from certain future regulations or at least subject to lighter regime »

• The Report on Minimising Regulatory Burden for SMEs.

Adapting EU regulation to the needs of micro-enterprises (COM 2011 803 final).

Main proposals of the Report

• Strengthening the SME Test: Introduce the principle of the

reversed burden of proof in the Commission's impact assessment procedure.

• Screening the acquis to implement the « Think Small First »

principle

• Involving SMEs better in law-making and in evaluating the

progress made (e.g. TOP10 consultation).

• Setting up a scoreboard of COM legislative proposals.

Strengthening the SME Test

• Better awareness raising and training on how to apply the

test

• Guidance on how to apply the principle of reversed burden
• f proof
• Building knowledge on SMEs in various policy areas and

sectors (SME Performance Review, data sources, studies)

• The role of the Impact Assesment Board

Involving SMEs better in law-making

• TOP10 public consultation launched on 1 October
• Will run until 21 December
• To define most burdensome areas of EU legislation or the

specific pieces of EU legislation which are considered burdensome

• COM to make taylor-made changes to legislative acts

identified as burdensome

Scoreboard

• To show all exemptions and lighter regimes for SMs and

micro companies proposed by the COM

• The way they change during the co-decision process and the

final outcome

• The subsequent implementation by Member States with

emphasis on highlighting « gold plating ».

Small Business Act Governance

• Network of national SME Envoys
• The SME Assembly
• Both have a crucial role in evaluating the uptake of the Small

Business Act and promoting the exchange of good practices, including in the area of reducing regulatory burden.

Next Steps

• Commission is preparing the follow-up to the EU Smart

Regulation agenda (December 2012)

• No new quantitative targets for burden reduction but a

bottom-up approach involving stakeholders closely.

• A report on the follow-up of the November 2011 report and

the results achieved scheduled for January 2013.

European Commission DG Enterprise and Industry Brussels, 26 October 2012 Maarit Nyman Deputy Head of Unit D.4

Entrepreneurship2020 Action Plan

Concept

• Building on the Small Business Act and its Review
• Action and impact-oriented
• Timing: adoption by College before year-end

Action Pillars

• Improve framework conditions
• for entrepreneurs' business activities
• for preserving, maintaining, and transmitting existing

entrepreneurial capital

• Create a more entrepreneurial Europe - support would-be and

new entrepreneurs

Action Pillar 1 Framework Conditions

• Facilitating start-ups
• Transfers of business
• Efficient bankruptcy procedures, second chance for honest

bankrupts

• Reduction of administrative burden and smart regulation:

strengthening of existing efforts

• Support new entrepreneurs in initial stages
• Improve access to finance

Action Pillar 2 – Create a more entrepreneurial Europe

• Fostering entrepreneurial mindsets in education and training
• Women, seniors – untapped pools of entrepreneurial potential in

Europe

Implementation and governance

• Actions: both Commission and national/regional governments
• Commission: all DGs playing key role in entrepreneurship

support, DG ENTR as lead

• Member States: under umbrella of Small Business Act as

Commission’s medium-term follow-up of implementation under the Annual Growth Survey and Europe2020

• SBA implementation reviews

Thank you for your suggestions

• Public consultation closed on 1 October: over 600 replies received
• http://ec.europa.eu/enterprise/policies/sme/public-consultation/index_en.htm