EU agreement on small mid‑caps: Draghi and Letta proposals come to life for firms with up to 1,000 employees

Brussels – A new category of businesses is set to be introduced into the EU regulatory framework: small “mid-caps” (SMCs). The provisional agreement reached today (9 June) by negotiators from the European Parliament and the Council has the stated aim of “supporting the growth of companies that exceed the SME threshold, preventing them from suddenly facing a drastic increase in bureaucratic burdens – the so-called cliff-edge effect.” This initiative forms part of the package of recommendations contained in the Draghi report on competitiveness and the Letta report on the future of the single market. The new rules are part of the fourth Omnibus package on simplification proposed by the Commission in May 2025. 

Small and medium-sized enterprises will be defined as companies with fewer than 1,000 employees and an annual turnover of up to 200 million euros or total assets of up to 172 million euros, thresholds that are higher than those in the Commission’s initial proposal. 

The core of the agreement lies in extending to SMCs various exemptions and simplifications previously reserved exclusively for SMEs: first and foremost, in the area of data protection, where simplified registration requirements are granted for the processing of data that does not pose a high risk. In addition, there are provisions for easier market access and less stringent transparency rules for prospectuses. Furthermore, in the Battery Regulation, the turnover threshold for exemptions from so-called due diligence – that is, the preventive investigations a company must carry out to analyse its supply chain – rises to 200 million euros; finally, simplifications are provided for the F-gases Regulation and easier access to the Helpdesk in the event of anti-dumping or anti-subsidy investigations.

EU, Vivaldini (FdI-ECR): final agreement reached on the Small and Mid-Cap Regulation. 

“We have safeguarded the funds earmarked for SMEs, which account for around 92 per cent of European businesses, while ensuring freedom of enterprise.

Europe is getting back to doing what really matters: creating the conditions for businesses to invest, innovate and grow,” says Mariateresa Vivaldini, MEP for Fratelli d’Italia-ECR and the European Parliament’s rapporteur for the Regulation. 

The agreement must now be formally adopted by the Parliament and the Council to become law. Once published in the Official Journal of the EU, the regulation will enter into force 20 days later, while Member States will have 15 months to transpose the directive into national law. The Commission has also undertaken to draw up a report on the impact of these thresholds within five years of their entry into force, with the possibility of a future review.