SME status check and partnerships in EIC projects

The verification of SME status is one of the most important steps for a company to get its EIC grant secured – read more about this at https://getpolite.eu/verification-of-sme-status-in-the-eic-accelerator/ 

The number of employees and financial situation (turnover and balance sheet) are the main criteria to establish if a company is an SME according to the EU definition. However, these criteria alone are not sufficient to establish if a company can in fact be considered an SME.

The legal relationships that EIC beneficiaries may have with other entities is also very important to determine whether the company can be considered an SME and is eligible for funding.

In fact, when assessing the SME status of a potential EIC beneficiary, the EU validation services check not only its size and financial statements, but they also review the ownership structure and the legal links with other entities to classify the company either as autonomous, partner or linked.

Autonomous SME

A company is considered “autonomous” if it has less than 25% participation in one or more other entities and if external parties have stakes of no more than 25% in it.

Partner SME

A company is considered as a “partner” entity if it has between 25% and 50% participation in other entities and if external parties have stakes between 25% and 50% in it.

Linked SME

A company is considered as a “linked” entity if it has more than 50% participation in other entities and if external parties have stakes of more than 50% in it. Additionally, two companies are considered as linked if there is dominant influence or sole control of one company over the other.

The ownership structure and the definition as an autonomous, partner or linked company is accounted for in proportion to the participation of other entities. There is no impact on the SME status in case of autonomous SMEs, but the result can be different in case of partner and linked SMEs, with the data of connected entities being also revised by the EC validation services.

However, shall we consider only partners and linked SMEs? Not exactly… in fact, many exceptions and special cases apply in the assessment of a company as an SME. What if the partner entity is a public body? Do natural persons owning capital or voting rights count as legal entities? Are partners of partner companies also considered in the assessment?

If you want more specific answers to such questions or just want to learn more about these SME categories, do not hesitate to get in touch at hello@getpolite.eu