07 May 2018

ESBG responds to EU Commission consultation on SME definition review

The ESBG said that the application of the SME definition has a high practical relevance for retail and savings banks in Europe due to the strong existing links with SMEs and the inherent capacities of retail and savings banks to provide finance to SMEs.

The revision of the SME definition should serve three objectives:

1. Facilitating application: Due to its high complexity - especially when considering the interdependencies of companies - the application of the SME definition is currently resource-incentive which causes irritations and is time consuming. The audit process repeatedly holds the potential for errors, which can have negative consequences for current and future financing options for companies. The revision should therefore be used for simplification and harmonization with other EU regulations, in particular with the so called de minimis Regulation (Regulation EU 1407/2013).

2. Establishing legal certainty: Increasing legal certainty is urgently needed. Two rulings by the European Court of Justice delivered in September 2016 provided ground for legal uncertainty as to the extent to which the interdependence of companies is to be taken into account in determining SME status (Chimica case (T-675/13) and Crosfield case (T-587/14).

3. Adapting to economic developments: The current thresholds for SME criteria were set in 2003. An average inflation of around 30 percent over the last 15 years in the EU and productivity growth over the same period provide clear rationale for intervention and for a revision of the definition. The possible need to adjust the thresholds was already investigated in 2012 in an evaluation of the SME definition on behalf of the Commission (ENTR/172/PP/2012/FC – LOT 4). Keeping the thresholds at 2003 levels would mean that, regardless of their real growth, increasingly more companies would fall out of SME categorisation over time.

Full position paper

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