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Do you have to add a parent company's staff and turnover to your own?

Source last checked: 27 September 2026

If the parent is a linked enterprise, you add all of it

Where another company holds a majority of your shareholders' or members' voting rights, or can appoint or remove a majority of your administrative, management or supervisory body, or can exercise a dominant influence over you under a contract or under a provision in your memorandum or articles of association, the two of you are linked enterprises. In that case 100 % of its staff, turnover and balance sheet total is added to yours before the size ceilings are applied. Consolidated accounts are not an escape route: the Annex adds the linked figures in full wherever they were not already brought in through consolidation.

The same applies through a chain. A company that stands in one of those relationships to you through one or more intermediate companies is linked to you just as directly. Relationships that run through a natural person or a group of natural persons acting jointly also create linked enterprises, but only where the companies are active in the same relevant market or in adjacent markets — an adjacent market being the market for a product or service situated directly upstream or downstream of the relevant one.

Source: Commission Recommendation 2003/361/EC, Annex, Article 3(3) and Article 6(2) (EUR-Lex).

If the parent is a partner enterprise, you add a slice of it

A company that holds 25 % or more of your capital or voting rights without any of the control relationships above is a partner enterprise, and its figures come in proportionally rather than in full. The share that applies is the percentage interest in the capital or in the voting rights, whichever of the two is greater; where there are cross-holdings, the greater percentage applies again. Only partner enterprises situated immediately upstream or downstream of you are counted — the pro rata chain does not run on indefinitely the way the linked-enterprise chain does.

To the data referred to in the first subparagraph are added the data of any partner enterprise of the enterprise in question situated immediately upstream or downstream from it. Aggregation is proportional to the percentage interest in the capital or voting rights (whichever is greater). In the case of cross-holdings, the greater percentage applies.

To the data referred to in the first and second subparagraph is added 100 % of the data of any enterprise, which is linked directly or indirectly to the enterprise in question, where the data were not already included through consolidation in the accounts.

Commission Recommendation 2003/361/EC, Annex, Article 6(2)

Source: Commission Recommendation 2003/361/EC, Annex, Article 3(2) and Article 6(2) (EUR-Lex).

If you are autonomous, you add nothing

An autonomous enterprise is one that is neither a partner nor a linked enterprise, and its data, headcount included, are determined exclusively on the basis of its own accounts. Nothing is aggregated and nothing is consolidated. This is also where the investor exemption lands: a holding of 25 % or more by certain categories of investor — public investment corporations, venture capital companies, business angels within the stated investment limit, universities and non-profit research centres, institutional investors including regional development funds, and small autonomous local authorities — leaves you autonomous, provided those investors are not linked to you and are not involving themselves in the management of the company.

Whether a particular shareholder puts you in one box or another is a classification question, and it is the subject of a separate guide rather than this one. What matters here is that the box decides the arithmetic.

Source: Commission Recommendation 2003/361/EC, Annex, Article 3(1), Article 3(2) second subparagraph, Article 3(3) and Article 6(1) (EUR-Lex).

What you add, side by side

Source: Commission Recommendation 2003/361/EC, Annex, Article 6(1) and Article 6(2) (EUR-Lex).

A worked example, because the chain catches people out

The trap is not the pro rata percentage itself. It is what the partner's own figures already contain by the time you apply that percentage. Take a company with 40 annual work units, turnover of EUR 6 million and a balance sheet total of EUR 4 million:

• It holds 80 % of the voting rights in a subsidiary with 25 annual work units and turnover of EUR 3 million. Majority of voting rights means linked, so the whole of the subsidiary comes in: 65 annual work units, EUR 9 million of turnover.
• An operating company holds 30 % of its capital and nothing else — no board rights, no dominant influence. That is a partner enterprise, and the share to apply is 30 %.
• That partner has 200 annual work units and turnover of EUR 30 million of its own, and it wholly owns another company with 60 annual work units and EUR 9 million. Before the 30 % is applied, the partner's own linked company is added to it in full, so the partner's figures stand at 260 annual work units and EUR 39 million.
• Applying the 30 % gives 78 annual work units and EUR 11.7 million, which is what joins your own column.

The combined figures are 143 annual work units and EUR 20.7 million of turnover. That is still inside the SME category, which runs to fewer than 250 persons with turnover not exceeding EUR 50 million and/or a balance sheet total not exceeding EUR 43 million. It is well outside the small-enterprise category, which needs fewer than 50 persons and turnover and/or a balance sheet total not exceeding EUR 10 million. A company that had read only the pro rata rule would have added 30 % of 200 and arrived at 60 annual work units, kept its small-enterprise status on paper, and been wrong.

Source: Commission Recommendation 2003/361/EC, Annex, Article 2(1), Article 2(2), Article 6(2) and Article 6(3) (EUR-Lex).

Which year's figures, and what happens when you cross a ceiling

The figures to use are those of the latest approved accounting period, calculated on an annual basis, and they are taken into account from the date on which the accounts were closed. Turnover is taken excluding value added tax and other indirect taxes. A company whose accounts have not yet been approved because it was only recently established works from a bona fide estimate made in the course of the financial year.

Crossing a ceiling in a single year does not move you between categories:

Where, at the date of closure of the accounts, an enterprise finds that, on an annual basis, it has exceeded or fallen below the headcount or financial ceilings stated in Article 2, this will not result in the loss or acquisition of the status of medium-sized, small or microenterprise unless those ceilings are exceeded over two consecutive accounting periods.

Commission Recommendation 2003/361/EC, Annex, Article 4(2)

That rule cuts in both directions. An acquisition that pushes the combined headcount over a ceiling does not strip the status at once, and a year of shrinking does not hand it back at once either.

Source: Commission Recommendation 2003/361/EC, Annex, Article 4(1), Article 4(2) and Article 4(3) (EUR-Lex).

Headcount means annual work units, not people on the payroll

The headcount is expressed in annual work units: the number of persons who worked full time within the company or on its behalf through the whole of the reference year. Anyone who did not work the full year, anyone part time regardless of how few hours, and seasonal workers all count as fractions of an annual work unit. The staff comprises employees, persons subordinated to the company and deemed to be employees under national law, owner-managers, and partners engaging in a regular activity in the company and drawing financial advantages from it.

Apprentices and students engaged in vocational training under an apprenticeship or vocational training contract are not included as staff at all, and the duration of maternity or parental leave is not counted. Where the consolidated accounts show no staff data for a company in the group, its staff figures are built up by aggregating the partner data proportionally and adding the data of the companies it is linked to.

Source: Commission Recommendation 2003/361/EC, Annex, Article 5 and Article 6(4) (EUR-Lex).

How far out the chain runs

The Annex sets out what the data of each counterparty must already contain before it reaches you. A partner enterprise's data are taken from its own accounts, consolidated if they exist, with 100 % of its linked companies added unless already consolidated — the step the worked example above turns on. A linked enterprise's data are taken from its accounts, consolidated if they exist, with the data of its own immediately upstream or downstream partner enterprises added pro rata, unless already included in the consolidated accounts at a percentage at least proportional to the one identified for partner aggregation.

So the linked relationship travels in full in both directions along the chain, while partner aggregation is a single step taken at each hop. Companies may themselves declare their status as autonomous, partner or linked together with the figures for the ceilings, and may do so in good faith where the capital is spread so widely that the holders cannot be identified exactly — without prejudice to checks and investigations under national or Community rules.

Source: Commission Recommendation 2003/361/EC, Annex, Article 3(5) and Article 6(3) (EUR-Lex).

Which programmes this binds, and which it does not

This is where the question stops being arithmetic. The Recommendation concerns the definition of micro, small and medium-sized enterprises used in Community policies applied within the Community and the European Economic Area, and it is addressed to the Member States, the European Investment Bank and the European Investment Fund, who are invited to comply with Title I of the Annex for their programmes directed towards medium-sized, small or microenterprises.

What it does not do is fix those ceilings as the figure every programme must use. The ceilings in Annex Article 2 are maximum values. Member States, the EIB and the EIF may fix lower ones, and in implementing certain of their policies they may choose to apply only the criterion of number of employees — except in fields governed by the rules on State aid, where the financial criteria must also be used and adhered to. A national scheme may therefore run a stricter headcount limit than the Annex, or ignore turnover entirely, and still be applying this definition correctly.

Two further boundaries are worth naming. The Recommendation replaced Recommendation 96/280/EC as from 1 January 2005, and as a transitional measure the programmes then running on the older definition continued for the benefit of companies that counted as SMEs when those programmes were adopted. And separately from all of the aggregation above, a company cannot be considered an SME at all where 25 % or more of its capital or voting rights are controlled, directly or indirectly, jointly or individually, by one or more public bodies, outside the investor cases in Article 3(2).

Source: Commission Recommendation 2003/361/EC, Article 1, Article 2, Article 3, Article 4, and Annex, Article 3(4) and Article 8(2) (EUR-Lex).

What this page does not cover

It does not decide whether a given shareholder makes you a partner or a linked enterprise. The ownership threshold, the investor categories that let you stay autonomous despite a large holding, and the public-body rule are classification questions, and they are set out in the companion guide on the ownership threshold rather than here. This page starts after that question has been answered and deals only with the consequence: which figures you add, in what proportion, from which year, and counted how.

It also does not state what any individual call requires. A call notice can demand a narrower definition, can ask for the declaration mentioned above, or can apply a lower ceiling under Article 2, and nothing on this page overrides the notice in front of you.

Source: Commission Recommendation 2003/361/EC, Article 2 and Annex, Article 3(2), Article 3(4) and Article 3(5) (EUR-Lex).

Frequently asked questions

Do you have to add a parent company's staff and turnover to your own?

If the parent is a linked enterprise, yes, and in full: 100 % of its staff, turnover and balance sheet total. If it is a partner enterprise, only in proportion to its percentage interest in your capital or voting rights, whichever is greater. If neither relationship exists, you are autonomous and your own accounts are the whole of it.

Does a 30 percent shareholder mean I add 30 percent of everything?

You add 30 % of the partner's figures, but the partner's figures are not simply what is in its own accounts. The data of companies linked to that partner are added to it in full first, and only then is your percentage applied. A partner with a wholly owned subsidiary therefore brings more into your column than its own balance sheet suggests.

What if the shareholder is just an investor and is not involved in management?

A holding of 25 % or more by certain categories of investor leaves you autonomous, provided those investors are not linked to you. There is also a presumption that no dominant influence exists where those investors do not involve themselves directly or indirectly in the management of the company, without prejudice to their rights as stakeholders.

Which year's figures do I use?

Those of the latest approved accounting period, calculated on an annual basis and taken into account from the date the accounts were closed, with turnover taken net of value added tax and other indirect taxes. A recently established company whose accounts have not yet been approved uses a bona fide estimate made during the financial year.

We went over the staff ceiling for one year, do we lose SME status?

Not on one year alone. Exceeding or falling below a headcount or financial ceiling changes the status only where the ceilings are exceeded over two consecutive accounting periods. The same delay applies in reverse, so a single year back under a ceiling does not restore the status either.

Do apprentices count towards the headcount?

No. Apprentices and students engaged in vocational training under an apprenticeship or vocational training contract are not included as staff. Maternity and parental leave periods are not counted either. Part-time and seasonal work counts as a fraction of an annual work unit rather than as a whole person.

Does a lower national ceiling override these figures?

The ceilings in the Annex are maximum values, so a Member State, the EIB or the EIF may set lower ones, and for some policies may apply only the employee-number criterion. The exception is fields governed by the State aid rules, where the financial criteria must be used and adhered to as well.

Related guides

• Is your company still an SME if an investor owns 30 percent of it?
• How much can you actually raise from an EIF-backed fund?
• What funding calls actually state about eligibility

Source: Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (2003/361/EC), OJ L 124, 20.5.2003, p. 36–41 — EUR-Lex. Every claim above cites the article of the Recommendation or its Annex that it rests on, and each article number was confirmed from the quoted text itself rather than from a stored label. The copy of the text used here was retrieved on 27 September 2026; the live text was not re-read for this page, so the date shown above is that retrieval date.

Written by Robert Grabarević, founder of Scalebiz. He built the radar as a tool for himself, so that he would not have to re-read the same funding rules for every application. Every guide on this site cites the regulation by section or page, so each claim can be checked against the source. About Scalebiz · Robert on LinkedIn.