A micro enterprise can still have up to 10 staff, a small one up to 50 staff, while a medium enterprise must have less than 250 staff.
Staff in professional training or on parental or maternity leave are not counted in the staff ceilings in order to promote vocational training and a life-work balance.
Enterprise Commissioner Erkki Liikanen said:
"Small and Medium Sized Enterprises form the backbone of the European economy. A proper definition of which enterprises are SMEs makes it easier to identify their needs and to develop efficient policies to compensate for the specific problems linked to their small size. This is vital for the competitiveness of an enlarged European Union, its growth and employment."
The financial qualifications relate to both turnover and balance sheet totals. A micro enterprise, which previously had no financial ceiling to comply with, is now limited to a turnover or balance sheet total of €2 million.
A small enterprise, which formerly had ceilings of a €7 million turnover or a €5 million balance sheet total, now has a ceiling of €10 million for both turnover and balance sheet. Medium sized enterprises see their ceilings lift from €40 million turnover to €45 million, and from €27 million to €43 million in their balance sheets.
The Commission says the revisions will facilitate equity financing for SMEs by granting favourable treatment to regional funds, venture capital companies and business angels. Similar exemptions will be introduced for investment in spin-offs by universities and research institutes to promote investment in research and innovation.
The definition is due to come into effect on 1st January 2005.