On 8 June 2017, the European Commission published an inception impact assessment regarding a potential revision of the EU SME definition. The original definition dates back to 2003 when the Commission published its Recommendation. This definition has been accepted and widely used throughout the EU and is a very important tool to determine whether companies fall within the scope of certain legislation, as well as regulating the eligibility for access to finance, such as the EU COSME programme.
ESBA welcomes the idea to revise the financial thresholds, as the combined effects of inflation and a surge in productivity call for a reassessment of the thresholds. Another important consideration is the EU’s increased focus on EU scale-ups. These fast-growing SMEs are an important creator of employment and should receive maximum freedom and support. However, the Commission argues that under the current definition and thresholds, the majority of SMEs are discouraged from scaling up due to the fear of losing their preferential SME status. Scale-ups represent a very small portion of EU SMEs but ESBA believes that the Commission’s argumentations hold value.
Secondly, ESBA supports the Commission’s views that an airtight definition of what constitutes an SME is necessary to provide much needed legal certainty. The practice whereby large companies redesign their corporate structure to give the impression that it consists of many individual SMEs needs to stop, as it wrongly attributes benefits to these subsidiaries, away from real small businesses that actually need them.
Although the inception impact assessment does not strictly mention any plans to change the definition in terms of employee numbers, ESBA wishes to stress that the Commission should make no such attempt. In the past, there have been pressures, from certain countries and industries in particular, to include larger companies (mid-caps/Mittelstand) in the definition of SMEs. ESBA strongly opposes this idea as the SME definition is already very wide and inclusive; only 0.2% of EU companies fall outside of its scope. If anything, the definition should be further nuanced, to reflect the considerable differences between micro-companies and larger SMEs.
ESBA looks forward to working closely with the European Institutions on this matter, in support of its members, the SMEs.
Should you have any queries about ESBA’s position, please contact Mr. Patrick Gibbels by email at email@example.com or by phone at the +32 (0)2 274 2504.