ARTICLE · 09 MAY 2014

EU Definition Of Small And Medium Sized Enterprises

Smith & Williamson

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The EU recommended definition of small and medium sized enterprises (SMEs) is used in several places in UK tax law.

European UnionTax

The EU recommended definition of small and medium sized enterprises (SMEs) is used in several places in UK tax law. In an important recent case from Germany, the Court of Justice of the European Union (CJEU) considered the extent of linkage to be applied in assessing whether an entity is an SME, concluding that linkage can exist without formal relationships or contractual arrangements. Linked enterprises can broadly be amalgamated with other linked enterprises in considering whether an enterprise is an SME.

The EC recommendation states that "linked enterprises" are enterprises which have any of the following relationships with each other.

a. An enterprise has a majority of the shareholders' or members' voting rights in another enterprise.

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