The EU SME definition (Recommendation 2003/361)
The employee, turnover and balance-sheet thresholds that decide whether "SME" applies to your company under EU rules.
The EU's single definition of micro, small and medium-sized enterprises comes from Commission Recommendation 2003/361/EC of 6 May 2003, and it is the definition almost every EU and Member State SME scheme, grant and de minimis rule points back to. Article 2 sets three thresholds, and a company must stay under the headcount limit AND under at least one of the two financial limits:
| Category | Employees (AWU) | Annual turnover | or balance-sheet total |
|---|---|---|---|
| Medium-sized (the SME ceiling) | < 250 | ≤ €50 million | ≤ €43 million |
| Small | < 50 | ≤ €10 million | ≤ €10 million |
| Micro | < 10 | ≤ €2 million | ≤ €2 million |
Two details that trip people up. First, "employees" means annual work units (AWU) — full-time-equivalent staff for the year, not a headcount snapshot; part-timers and seasonal staff count as fractions. Second, the size test is not just about your own company: Article 3 requires adding in a proportional share of any "partner enterprise" (25%+ cross-ownership) and 100% of any "linked enterprise" (majority control either way) — a small-looking subsidiary of a large group is very often not an SME once its parent's numbers are added in. A company only loses or gains SME status once these thresholds are crossed over two consecutive accounting periods, not on a single bad (or good) year.
Sources
Last reviewed 2026-09-25. Rules and figures change — follow the links above to confirm anything you plan to rely on.