The EU SME definition European Commission DG Enterprise and Industry October 2012 José Becerra, Thomas Elsner
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 Headcount Annual or Annual turnover balance category sheet Medium < 250 ≤ € 50 million ≤ € 43 million (in 1996: € 40 M) (in 1996: € 27 M) Small < 50 ≤ € 10 million ≤ € 10 million (in 1996: € 7 M) (in 1996: € 5 M) Micro < 10 ≤ € 2 million ≤ € 2 million (previously. not defined) (previously. not defined)
The EU SME definition First step: am I an enterprise? an enterprise = « any entity engaged in an economic activity, irrespective of 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 other 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 one 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 TYPE TREATMENT Autonomous Use solely the data of the company Less than 25% participation by/of the enterprise Partner 100% of the data of the enterprise Between 25% and 50% + data of the upstream/downstream participation by/of the enterprise aggregated proportionally to the participation (one level only) Linked More than 50% participation by/of Use of existing consolidated accounts the enterprise (or equivalent control) or 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
Reducing regulatory burden for SMEs European Commission DG Enterprise and Industry Brussels, 26 October 2012 Maarit Nyman Deputy Head of Unit D.4
Background The European Council of June 2011: « the regulatory burden on 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 of 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.
Entrepreneurship2020 Action Plan European Commission DG Enterprise and Industry Brussels, 26 October 2012 Maarit Nyman Deputy Head of Unit D.4
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
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