Enterprise size and Commission Recommendation 2003/361/EC
The AnaCredit Reporting Manual Part II (page 258) indicates that the data attribute “enterprise size” is based on the data of the individual legal entity and it refers to Commission Recommendation 2003/361/EC. The Manual also excludes from the calculation “partner enterprises, linked enterprises or consolidated account”. However, the exclusion of consolidated accounts may not be in line with the same Commission Recommendation. Therefore, could you confirm that the data attribute “enterprise size” is reported in accordance with the Commission Recommendation?
Regulation (EU) 2016/867 states that the enterprise size is reported in accordance with the SME classification provided in Commission Recommendation 2003/361/EC. In particular, a counterparty is classified as a “large enterprise” if it is an enterprise not qualifying as a micro, small or medium-sized enterprise (SME), in accordance with the Annex to Recommendation 2003/361/EC.
Article 2 of Recommendation 2003/361/EC clarifies that the SME category is made up of enterprises which employ fewer than 250 persons and which have either an annual turnover not exceeding €50 million, or an annual balance sheet total not exceeding €43 million. Within the SME category, a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover and/or annual balance sheet total does not exceed €10 million. A microenterprise, which also falls under the SME category, is defined as an enterprise which employs fewer than ten persons and whose annual turnover and/or annual balance sheet total does not exceed €2 million.
Moreover, in the case of an autonomous enterprise, the data used for the size classification are determined exclusively on the basis of the accounts of that enterprise (Art. 6(1)), while the data of an enterprise having partner enterprises or linked enterprises are determined on the basis of the accounts and other data of the enterprise or, where they exist, the consolidated accounts of the enterprise, or the consolidated accounts in which the enterprise is included through consolidation (Art. 6(2)).
The reference data attribute “enterprise size” is applicable only to enterprises, i.e. any entity, regardless of its legal form, engaged in economic activity, as defined in Article 1 in the Annex to Recommendation 2003/361/EC. “Non-applicable” is reported in all other cases. Moreover, in the case of a debtor or protection provider which is a foreign branch, the data attribute “enterprise size” is only reported to AnaCredit in the head office’s data record. The same applies to the data attributes “number of employees”, “balance sheet total” and “annual turnover”.
It should be noted that, differently from the “enterprise size”, the “number of employees”, “balance sheet total” and “annual turnover” are calculated only in relation to the counterparty itself, i.e. without considering partner enterprises or linked enterprises. This means that the value reported for such data attributes, as part of the data record of the head office representing the whole legal entity, is assessed taking into account the number of employees of the head office (with all its domestic offices) and of all foreign branches of the legal entity (if any).
- the “number of employees” of the counterparty is equivalent to the concept of “staff headcount” described in Art. 5 of Recommendation 2003/361/EC;
- the “balance sheet total” is the carrying value of the counterparty’s total assets;
- the “annual turnover” corresponds to the value of annual sales net of all discounts and sales taxes of the counterparty.
As stated, in the case of a legal entity with one or more foreign branches, the value reported for these data attributes includes both the head office and the foreign branches of the entity.
Finally, it is clarified that for legal entities where the value of the “enterprise size” in accordance with the SME classification provided in Commission Recommendation 2003/361/EC (i.e. also considering partner or linked enterprises) is not available to the reporting agent and is considered to be burdensome to produce, the value of the “enterprise size” is calculated on the basis of the “number of employees”, “balance sheet total” and “annual turnover” of the legal entity only (i.e. with all its foreign branches but without considering partner or linked enterprises). The calculation is made by analogously applying the criteria laid down in Commission Recommendation 2003/361/EC.
 Further guidance on the SME definition can be found in the following document http://fundacaoaip.pt/wp-content/uploads/2015/11/SME-definition-user-guide-2015.pdf
 Please note that in accordance with the user guide to the SME definition, meeting one of the two conditions is sufficient to qualify as an SME, provided that the headcount condition is fulfilled.