Building an Innovative Europe through the enhancement of Small and Medium sized Enterprises (SME) is one of the three main pillars of Horizon Europe’s structure. The European Innovation Council is responsible for leading this subdomain of the programme aimed at market-creating innovation and SME growth. It is therefore a pre-requisite of participation in the related calls (EIC Accelerator) to qualify as an SME.
The SME status
Verifying if your company meets the criteria to be considered as an SME is part of the initial validation process during the Grant Agreement Preparation stage. The validation process (known as Legal Entity Validation) is conducted to ensure that the company behind the innovation project is as described in the proposal. Part of this process is the verification of any special legal status required for the call, which in the case of EIC Accelerator is being an SME.
The definition of SMEs is set forth in EU recommendation 2003/361. As per the instrument, SMEs employ fewer than 250 persons, have an annual turnover not exceeding EUR 50 million and/or an annual balance sheet total not exceeding EUR 43 million.
Data from partner and linked enterprises may also be considered for the calculation of staff numbers and financial amounts. This will depend on the company’s decision-making and shareholder structure.
Furthermore, the SME status must be maintained throughout the entire duration of the project. Changes that may affect the status should be communicated to the EIC immediately as it is a pre-requisite for the Grant Agreement’s validity.
There are two types of processes applied for status verification depending on the relevant funding scheme (i.e. Grant only, Grant first or Blended finance).
Status determination usually takes place through self-assessment for Grant only and Grant first funding schemes. The process entails filling a questionnaire through the company’s Funding & Tenders account.
The questionnaire focuses on the company’s last closed accounting period. It may require introducing a forecast and also investigates the ownership structure. Details about linked entities are also required where applicable depending on the company’s ownership structure.
Although no supporting documentation is needed for this verification method, providing accurate information and being able to support it with documentation is crucial.
Once completed, the questionnaire automatically assesses whether the company qualifies as an SME. In case the assessment concludes that the SME status is not established, the company’s proposal is rejected as ineligible. If the assessment confirms the SME status, the results remain valid throughout the same calendar year.
Assessment by the Central Validation Services (CVS)
The assessment by the Central Validation Services process is applied for companies with Blended finance scheme, where the grant and investment components of the project are run and monitored together. The check is conducted in parallel with the Legal Entity Validation and is prompted by an official request from the CVS to produce specific documentation.
The documents need to be submitted through the Funding & Tenders Portal. The CVS communicates with the companies through this platform. Documentation is required to attest detailed shareholder information, including decision-making structures, as well as financial statements for the last closed financial year. The same details are also requested for entities that are directly or indirectly linked to the company.
In most cases, requests for clarification and additional documentation are addressed to companies. Responses to these enquiries are expected within a few days’ notice. The CVS may also use publicly available information for their assessment.
Once the process is concluded, the CVS informs companies of their decision.
Feel free to reach out to us at firstname.lastname@example.org if you have any doubts about the process and the right information to submit.