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REACH: An overview of the SME identification process

If you have decided to carry out a REACH registration, you must first determine the size of your company. The process of determining whether or not an enterprise is an SME consists of four steps.

STEP 1: Am I an enterprise?

According to the Definition, an enterprise is ‘any entity engaged in an economic activity, irrespective of its legal form’. This wording reflects the terminology used by the European Court of Justice in its judgments.

In practice, this means that the self-employed, family firms, partnerships and associations or any other entity that is regularly engaged in an economic activity may be considered as enterprises. An economic activity is usually seen as ‘the sale of products or services at a given price, on a given/direct market’.

STEP 2: Which criteria need to be checked and what are the thresholds?

The SME Definition takes into account the following three criteria:

  • staff headcount,

  • annual turnover,

  • annual balance sheet total.

The category of micro, small and medium-sized enterprises consists of enterprises which:

  • employ fewer than 250 persons; and

  • have either an annual turnover not exceeding EUR 50 million or an annual balance sheet total not exceeding EUR 43 million.

By comparing its data with the thresholds for the three criteria, an enterprise can determine whether it is a micro, small or medium-sized enterprise.

  1. Micro-enterprises are defined as enterprises that employ fewer than 10 persons and whose annual turnover or annual balance sheet total does not exceed EUR 2 million.

  2. Small enterprises are defined as enterprises that employ fewer than 50 persons and whose annual turnover or annual balance sheet total does not exceed EUR 10 million.

  3. Medium-sized enterprises are defined as enterprises that employ fewer than 250 persons and either have an annual turnover that does not exceed EUR 50 million, or an annual balance sheet not exceeding EUR 43 million.

STEP 3: What do these criteria cover?

The staff headcount criterion covers full-time, part-time, temporary and seasonal staff and includes the following:

  • employees;

  • persons working for the enterprise who have been seconded to it and are considered to be employees under national law (this can also include temporary or so-called interim employees);

  • owner-managers;

  • partners engaged in a regular activity in the enterprise and deriving financial advantages from the enterprise.

Annual turnover is determined by calculating the income that an enterprise received during the year in question from the sale of products and provision of services falling within the company’s ordinary activities, after deducting any rebates. Turnover should not include value added tax (VAT) or other indirect taxes.

The annual balance sheet total refers to the value of a company’s main assets.

STEP 4: How do I calculate these data?

Check HERE.

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Article source: ECHA


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