Le Gouvernement du Grand-Duché du Luxembourg
Small and medium-sized enterprises

Company size: SME definition

Small and medium-sized enterprises (SMEs) may benefit from increased state aid rates compared to larger companies. They may also receive funding through aid measures dedicated only to SMEs. We give you an overview of the criteria that apply and the scope of assessment when determining whether or not a company is considered an SME.

SME definition: An EU standard

The Commission Recommendation 2003/361/ EC, as published in the Official Journal of the European Union L 124, p. 36 of 20 May 2003, is the sole authentic basis for determining the conditions regarding qualification as an SME. 

The aim of this webpage and video is to provide companies with simplified guidance when applying the SME definition. It is not legally binding, and its authors may not be held liable in any way whatsoever. 

User guide to the SME definition

Consult the User guide to the SME definition produced by the European Commission as general guidelines for entrepreneurs and other stakeholders. 
Download

SME definition

Your company is a small-sized enterprise if:

  • Its staff is less than 50 full-time equivalent
    and
    Its annual turnover is less or equal to €10 million 

Or

  • Its balance sheet total is less or equal to €10 million

Your company is a medium-sized enterprise if:

  • Its staff is less than 250 full-time equivalent
    and 
    Its annual turnover is less or equal to €50 million 

Or

  • Its balance sheet total is less or equal to €43 million

Calculating staff number, turnover and balance sheet total

When calculating your staff number, turnover and balance sheet total, it is important to understand the scope of data that you need to take into account. Unless your company qualifies as an autonomous enterprise, you need to include your legal entity as well as other legal entities considered linked or partner to your legal entity. 

Partner entities are all legal entities that have a direct or indirect shareholding link or voting rights with your legal entity spanning between 25% and 50%. The staff, turnover, and balance sheet figures of partner entities consolidate proportionately with the data of your legal entity.

Your enterprise is considered linked with another enterprise when: 

  • One enterprise has a direct or indirect shareholding link or voting right of more than 50% with another
  • One enterprise has a dominant influence, which is presumed if an enterprise’s operating and financial policies are influenced by the wishes of another enterprise.

The full staff, turnover, and balance sheet figures of linked entities are added at 100% with the data of your legal entity to perform a sound SME assessment.  

You should also take into account a relationship of this kind when it occurs through one or more individuals acting jointly, including through members of the same family, but only if the enterprises operate on the same or adjacent market. 

Whether an enterprise draws up consolidated accounts or not, the ultimate data to consider should include the data of: 

  • any partner company of the enterprise under SME assessment 
  • any company linked to the enterprise under SME assessment 
  • any company linked to any of the partners of the enterprise in question 
  • any company linked to any company that is linked to the enterprise under SME assessment
  • any partner to any company linked to the enterprise under SME assessment 

Partner-partner relationships are not to be considered.

Several practical examples of how to calculate figures correctly are provided in our tutorial video above.

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