How to determine the company size category

Step 3

The third step is to determine the headcount, turnover and balance sheet total, in accordance with Articles 4 and 5 of the Annex to Commission Recommendation 2003/361/EC.

  • The staff headcount corresponds to the number of annual work units (AWU). Therefore, when calculating the staff numbers, not only the full time employees and/or those directly involved with REACH activities should be included in the staff headcount, but also seasonal workers, owner-managers and partners engaging in a regular activity in the enterprise and benefiting from financial advantages from the enterprise. Where staff do not work full time during the year, the work of those who have worked part-time, regardless of duration, and the work of seasonal workers should be counted as an appropriate fraction.
  • The annual turnover is determined by calculating the income that your enterprise received during the year in question from its sales and services after any rebates have been paid out. Turnover should not include value added tax (VAT) or other indirect taxes.
  • The annual balance sheet total refers to the value of the company's total assets.

For more details regarding the definitions of Turnover and Balance sheet total, please see Council Directive 78/660/EEC of 25 July 1978 based on Article 54 (3) (g) of the Treaty on the annual accounts of certain types of companies, Official Journal L 222, p. 11-31, of 14 August 1978.

It is necessary to note that while it is compulsory to respect the staff headcount thresholds, an SME may choose to meet either the turnover or balance sheet ceiling. It does not need to satisfy both and may exceed one of them without losing its status.

Continue to step 4

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