The EU Directive 2023/2775 of December 21, 2023, introduces significant changes to the size criteria for small and medium-sized enterprises (SMEs), in response to the inflation recorded in 2021 and 2022.

New size criteria

The European Union has recognized the impact of rising prices on business classification by adjusting balance sheet and revenue criteria by 25%. Member States must adopt these new provisions by December 24, 2024, which will affect financial statements starting January 1, 2024. These rules will be enforced once the Directive is implemented at the national level.

Updated parameters for business classification

Directive (EU) 2023/2775 updates the parameters for classifying enterprises by size:

• Micro enterprises:
  • Total balance sheet: €450k (previously €350k)
  • Net turnover: €900k (previously €700k)
  • Average number of employees: up to 10
• Small enterprises:
  • Total balance sheet: €5M (previously €4M)
  • Net turnover: €10M (previously €8M)
  • Average number of employees: up to 50
  • Member States may opt for higher thresholds, but not exceeding €7.5M (previously €6M) for the balance sheet and €15M (previously €12M) for net turnover.
• Medium enterprises:
  • Total balance sheet: €25M (previously €20M)
  • Net turnover: €50M (previously €40M)
  • Average number of employees: up to 250
• Large enterprises:
  • Total balance sheet: over €25M (previously €20M)
  • Net turnover: over €50M (previously €40M)
  • Average number of employees: over 250

Goals of the new european directive

The aim of this adjustment is to simplify business classification, making it easier to identify companies as SMEs across the EU. Along with the new size criteria, the Directive introduces additional accounting disclosure requirements to enhance transparency and consistency in financial reporting. Adhering to these new standards will transform the business environment within the European Union.

Implementation of the Directive in Member States

Member States must adopt the new legislative, regulatory, and administrative provisions by December 24, 2024, applying them to financial statements from January 1, 2024. Exceptions allow for applying these provisions to fiscal years starting January 1, 2023.

Winnerge for SMEs

Among the growth opportunities for SMEs, mergers and acquisitions (M&A) stand out. We recognize the challenges medium-sized businesses face in accessing credit, managing change, and streamlining processes—especially when they have a rich history and strong values but may not have the structure to manage an M&A transaction.

That’s why our Winnerge team is composed of individuals with entrepreneurial experience who understand the dynamics and challenges of SMEs. We are M&A professionals dedicated exclusively to small and medium-sized enterprises (SMEs) because we believe these businesses have the most potential and the greatest need to have their specific requirements heard, whether they are selling or looking to acquire a new business.

Our expertise in the SME market enables us to provide customized solutions and maximize the value of M&A transactions for our clients.

For more details, you can consult the official regulation [qui].