Small and medium sized enterprises

From INVESaTWIKI

SME

Micro, small and medium-sized enterprises are socially and economically important, since they represent 99 % of all enterprises in the EU and provide around 65 million jobs and contribute to entrepreneurship and innovation. However, they face particular difficulties which the EU and national legislation try to redress by granting various advantages to SMEs. A legally secure and user-friendly definition is necessary in order to avoid distortions in the Single Market.

The revision ensures that enterprises which are part of a larger grouping and could therefore benefit from a stronger economic backing than genuine SMEs, do not benefit from SME support schemes.

The increase of the financial ceilings is designed to take into account subsequent price and productivity increases since 1996, however the headcount ceilings remain fixed.

Definition

On 6 May 2003 the Commission adopted a new Recommendation 2003/361/EC regarding the SME definition which replaced [Recommendation 96/280/EC ]as from 1 January 2005. The revision takes account of the economic developments since 1996 and the lessons drawn from the application of the definition. It increases legal certainty, while reducing possibilities of its abuse, particularly with regard to state aid, Structural Funds and the Research and Development Framework Programme.

This Recommendation concerns all Community policies applied within the European Economic Area in favour of SMEs and is addressed to the Member States, the European Investment Bank and the European Investment Fund.

The definition will be adopted in a number of Community acts and programmes and integrated in the field of state aids where SMEs can benefit from exemption provisions including aid for R&D and vocational training (see state aid rules