Government approves draft law harmonizing criteria for determining micro, small, and medium-sized enterprises with EU legislation

The Cabinet of Ministers of Ukraine has approved a draft law “On Amendments to Certain Laws of Ukraine Regarding the Definition of Business Entities,” which fully harmonizes the criteria for classifying enterprises with European Union standards.

The bill modernizes approaches to defining micro, small, and medium-sized enterprises (SMEs) and removes barriers that, due to outdated criteria, limited Ukrainian businesses' access to European support programs. Previously, companies were unable to attract grants, preferential loans, and investments, and were forced to separately confirm their status to European partners. Meanwhile, large players artificially fragmented their businesses in order to take advantage of SME benefits.

The new law introduces three European classification criteria: number of employees, annual income, and balance sheet value of assets. The thresholds are fully in line with EU standards:

• Microenterprise — up to 9 employees, up to EUR 2 million in income or assets;
• Small enterprise — up to 49 employees, up to EUR 10 million in income or assets;
• Medium-sized enterprise — up to 249 employees, up to EUR 50 million in revenue or up to EUR 43 million in assets.

The indicators of related companies are added together, which makes it impossible to artificially split up a business. Companies with a state share of more than 25% shall lose their SME status after the end of martial law with a transition period.

The result is fair and transparent rules for all market participants, as well as access to EU resources.

For Ukrainian businesses, this means automatic recognition of SME status in the EU, full access to European support programs (grants, loans, guarantees, innovation and export projects), increased demand for state support programs in Ukraine for an additional UAH 5-20 billion per year, more investment, and easier access to European markets. The reform also ensures a level playing field — resources intended for SMEs will no longer be used by large companies.

Overall, the reform has a powerful medium-term effect on the economy — it strengthens investment opportunities, innovation, exports, and the competitiveness of Ukrainian enterprises and is an important step in Ukraine's European integration.