POSITION | MITTTELSTAND-POLICY | SMALL MID-CAPS
8 October 2025
Small mid-cap companies (SMC): Leverage the potential! Strengthening industrial Mittelstand in Europe
8 October 2025
Context On the basis of intensive preparations and comprehensible considerations, the European Commission proposed in May 2025 to introduce a separate category of "small mid-cap companies" (SMC) to complement the category of "micro, small and medium-sized enterprises" (SMEs). This is to be expressly welcomed in the interests of a tangible EU Mittelstand-policy. The proposal has gained political momentum thanks, among other things, to the European Commission's SME relief package of September 20231 and the stirring analyses and clear recommendations contained in Mario Draghi's report on European competitiveness and Enrico Letta's report on the EU internal market. Scientific studies from a wide variety of sources have measured the quantity / landscape of SMCs across Europe and – above all and unanimously – highlighted their special qualities. Noteworthy examples include the findings of the AIT2, the EIB3 and the IW Cologne4. In and from Germany, the Federal Government5, the BDI6 and all kinds of industry associations have promoted an SMC category to enable targeted support for a specific category of companies in addition to SMEs. Despite differing proposals on the design of the thresholds, there was a common conviction that differentiated structures of industries and companies guarantee dynamic competitive advantages for
1 COM 2023/535 final 2 Austrian
Institute of Technology: "Study to map, measure and portray the EU mid-cap landscape", Luxembourg 2022 (commissioned by the European Commission) 3 European Investment Bank (EIB): “Hidden champions, missed opportunities – mid caps crucial role in Europe’s economic transition”, Brussels 2024 (in collaboration with European Policy Centre EPC) 4 German Economic Institute (IW Cologne): “Mid caps and family businesses: How strong is the large SME sector in Germany”, Cologne 2024 (= IW Analysis 157) 5 German Federal Government: Statement on the public consultation on the review of the European SME definition, Berlin 2018 6 Federation of German Industries (BDI): "Making the European SME definition future-proof", Berlin 2018 and "Introducing mid-caps as a business category to complement SMEs", Berlin 2023
Fabian Wehnert | SMEs and Family Businesses | T: +49 30 2028-1470 |f.wehnert@bdi.eu | www.bdi.eu
Small Mid-Cap Companies (SMC): Resolutely leveraging potential
German industry in Europe and worldwide. Entrepreneurial ecosystems, clusters and network structures that withstand constant scrutiny and dynamic change are particularly important for developing pools of expertise and synergies – and thus competitive advantages. In this context, SMCs play a particularly important role.
Proposal by the European Commission and initial assessment According to the EU Commission's proposal7, small mid-caps (SMCs) are companies that are no longer formally SMEs but do not yet have the structures or resources of large companies. Specifically, a company is considered an SMC if it:
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employs more than 249 and fewer than 750 people, and
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either generates annual turnover of more than €50 million and less than €150 million, or has a balance sheet total of more than €43 million and less than €129 million.
This means that SMCs are subject to thresholds that are three times higher than those for SMEs, which is in line with business practice in industrial Mittelstand companies and high-performance value-added networks, what represents a significant step forward in terms of EU-policy. A targeted and operational differentiation of EU policy along company size lines was long overdue. The SMC category offers clear advantages for competitive companies and tangible EU policy. It appears to be a good basis for further helpful measures.
Conclusion and recommendations for action The European Commission is currently proposing to operationalise the SMC category exclusively for bureaucratic relief in selected cases. The "Omnibus Package IV" explicitly mentions the following:
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General Data Protection Regulation (GDPR) - Regulation (EU) 2016/679
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Regulation on protection against dumped imports - Regulation (EU) 2016/1036
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Regulation on protection against subsidised imports - Regulation (EU) 2016/1037
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Markets in financial instruments Directive – Directive (EU) 2014/65
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Prospectus Regulation - Regulation (EU) 2017/1129
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Batteries Regulation - Regulation (EU) 2023/1542
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Critical entities resilience Directive - Directive (EU) 2022/2557
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Fluorinated greenhouse gas Regulation - Regulation (EU) 2024/573
7 COM C 2025/3500 final
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Small Mid-Cap Companies (SMC): Resolutely leveraging potential
The EU Commission estimates (plausibly) that exemption rules for SMCs alone will save between around €79 and €93 million per year in bureaucratic costs for companies in the EU in the cases mentioned. In view of the growing economic and structural challenges facing industrial Mittelstand-enterprises, the European Commission, the European Parliament and the Council of the European Union are called upon to swiftly introduce the SMC category8 across the board and to operationalise it comprehensively. This would be a further building block for an EU Mittelstand-policy that delivers tangible results in practice. Concentrated and rapid implementation of the "Omnibus Package IV" proposed by the European Commission offers further hope for reducing bureaucratic costs in companies. At the same time, it is important to take advantage of the momentum in Brussels and in many EU Member States and to take further steps in Mittelstand-policy beyond pure SME policy in favour of greater competitiveness and stronger resilience. With this in mind, all EU institutions are called upon to:
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To evaluate and develop the SMC and SME categories in an overall review In addition to the proposal on SMC, the definition of SMEs also needs to be modernised. The quantitative criteria for turnover and balance sheet total are over 20 years old and do not reflect dynamic cost increases, particularly in recent years, for example in raw materials or energy. The SME thresholds could be doubled to €100 million in turnover and €86 million in total assets. Based on this, the thresholds for SMCs would also rise in a next step. Again, based on three times the SME definition, SMCs should then generate annual turnover of more than €100 million and less than €300 million, or have total assets of more than €86 million and less than €258 million. In principle, SMEs and SMCs should be able to identify clear development and growth prospects. Growth paths must be specifically supported by Mittelstand-policy in order to strengthen the international competitiveness and resilience of companies and industrial value chains in the region.
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Clarify and resolve practical questions regarding the implementation of the SMC category The practical application of the category would be easier if the two thresholds were to be checked as "or" rather than "and". In any case, regularly adjusting financial thresholds to reflect cost increases strengthens the current picture of reality. Legal and planning certainty for companies increases when the definition of "affiliated companies" is standardised, operationalised in a practical manner and communicated without ambiguity. It is often unclear whether a company belongs to the SME or SMC category, as there are ultimately no fully clear rules on which companies (entities, structures) are to be included as "affiliated". In order to obtain a transparent picture of the situation surrounding SMC and to enable targeted political operationalisation, official statistics – both European and national – need to be adapted. This requires
8 Recommendation published in OJ 2025/1099 of 28 May 2025
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Small Mid-Cap Companies (SMC): Resolutely leveraging potential
the employee size class 250 to 749 employees in European structural statistics. This can be done without placing a burden on companies, as data is available in national statistical offices and can be generated using calculation programmes. Reliable data on the number of companies, turnover, investments and other key figures enable targeted and tangible policies and allow for reliable impact assessments. An initial approximation of the figures for Germany can be found in the appendix.
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Relieve SMCs of bureaucratic costs beyond the legal acts mentioned in "Omnibus IV" For years, the BDI and its European umbrella organisation BusinessEurope have been actively involved in relevant committees and structures at national and European level with concrete proposals to avoid bureaucratic costs for companies arising from EU requirements (including national implementation / over-compliance) as far as possible ex ante and to reduce them in a targeted manner ex post. European and national policymakers should also take decisive action on this issue and identify further EU legal acts for exemptions in favour of SME and SMC. In addition, clear attention should be paid in future to identifying, understanding and avoiding the “trickle-down effects” of EU requirements between closely cooperating companies (or categories of companies) in value chains and supply chains. The relevant discussions on CSRD and CSDDD, the proposals in the context of the "Omnibus Package I" or the VSME standard offer plenty of illustrative material and political inspiration.
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Providing targeted financial support for small mid-caps The upcoming finalisation of the Multiannual Financial Framework (MFF) for 2028 onwards offers a good opportunity to introduce SMCs to targeted EU funding. In order not to compromise the desired SME funding, separate "SMC windows" could be provided for, and funds could be allocated on a degressive basis or capped. Pilot projects in areas such as transformation, climate, environment, research and development or internationalisation could demonstrate whether and how targeted support for SMCs is effective in closing the existing gap between support for SMEs and large enterprises, and to what extent this supports EU objectives. A detailed overview and position of the BDI on the EU Commission's proposal for the MFF is available separately9.
9 Federation of German Industries (BDI): Securing Europe´s Competitiveness. The new multiannual financial framework
must prioritise investment. Berlin 2025
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Small Mid-Cap Companies (SMC): Resolutely leveraging potential
Appendix: Overview of the corporate landscape in Germany (as of 2023) Number of companies by employment class Up to 250 employees
250 to 750 employees
750 to 1,500 employees
1,500 to 3000 employees
more than 3000 employees
3,450,236
3,443,033
6,162
805
173
63
12,771
7,530
4,240
733
232
36
6,911
2,028
2,174
1,361
796
552
3,469,918
3,452,591
12,576
2,899
1,201
651
Total
Turnover
under 50 million 50 million to 150 million 150 million and above =
BDI presentation; special analysis by the Institut für Mittelstandsforschung (IfM) Bonn based on data from the Federal Statistical Office / Destatis 2025.
Imprint Federation of German Industries (BDI) Breite Straße 29, 10178 Berlin www.bdi.eu T: +49 30 2028-0 Lobby register number: R000534
Editor Fabian Wehnert Head of Department, German Mittelstand and Family Businesses mittelstandspolitik@bdi.eu
BDI document number: D2184
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