Late Payment of Invoices (2002)

A User’s Guide to late payment legislation – The Late Payment of Commercial Debts (Interest) Act 1998, as amended and supplemented by the Late Payment of Commercial Debts Regulations 2002

Definition of Small and Medium Sized Enterprises (SMEs)

This extract is taken from the Commission Recommendation 96/280/EC of 3 April 1996 concerning the definition of small and medium-sized enterprises (OJ L 107, 30.4.1996, p.4).

  1. Small and medium-sized enterprises, hereinafter referred to as ‘SMEs’, are defined as enterprises which:
    • have fewer than 250 employees, and
    • have either,
    • an annual turnover not exceeding EUR 40 million, or
    • an annual balance-sheet total not exceeding EUR 27 million,
    • conform to the criterion of independence as defined in paragraph 3.
  2. Where it is necessary to distinguish between small and medium-sized enterprises, the ‘small enterprise’ is defined as an enterprise which:
    • has fewer than 50 employees and
    • has either,
    • an annual turnover not exceeding EUR 7 million, or
    • an annual balance-sheet total not exceeding EUR 5 million,
    • conforms to the criterion of independence as defined in paragraph 3.
  3. Independent enterprises are those which are not owned as to 25% or more of the capital or the voting rights by one enterprise, or jointly by several enterprises, falling outside the definitions of an SME or a small enterprise, whichever may apply. This threshold may be exceeded in the following two cases:
    • if the enterprise is held by public investment corporations, venture capital companies or institutional investors, provided no control is exercised either individually or jointly,
    • if the capital is spread in such a way that it is not possible to determine by whom it is held and if the enterprise declares that it can legitimately presume that it is not owned as to 25% or more by one enterprise, or jointly by several enterprises, falling outside the definitions of an SME or a small enterprise, whichever may apply.
  4. In calculating the thresholds referred to in paragraphs 1 and 2, It is therefore necessary to cumulate the relevant figures for the beneficiary enterprise and for all the enterprises that it directly or indirectly controls through possession of 25% or more of the capital or of the voting rights.
  5. Where it is necessary to distinguish micro-enterprises from other SMEs, these are defined as enterprises having fewer than 10 employees.
  6. Where, at the final balance sheet date, an enterprise exceeds or falls below the employee thresholds or financial ceilings, this is to result in its acquiring or losing the status of ‘SME’, ‘medium-sized enterprise’, ‘small enterprise’ or micro-enterprise’ only if the phenomenon is repeated over two consecutive financial years.
  7. The number of persons employed corresponds to the number of annual working units (AM), that is to say, the number of full-time workers employed during one year with part-time and seasonal workers being fractions of AM. The reference year to be considered is that of the last approved accounting period.
  8. The turnover and balance sheet total thresholds are those of the last approved 12-month accounting period. In the case of newly-established enterprises whose accounts have not yet been approved, the thresholds to apply shall be derived from a reliable estimate made in the course of the financial year.
1 2 3 4 5 6 7

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>