Art. 4

• The annual turnover is determined by calculating the income that your enterprise received during the year in question from its sales and services after any rebates have been paid out. Turnover should not include Value Added Tax (VAT) or other indirect taxes.
• The annual balance sheet total refers to the value of your company's main assets.

If your enterprise exceeds the headcount or financial ceilings during the course of the reference year, this will not affect your situation. You retain the SME status with which you began the year.

However, you will lose the status if you go above the ceilings over two consecutive accounting periods.

Conversely, you will gain SME status if you were previously a big enterprise, but then fall below the ceilings for two consecutive accounting periods.

Art 5.

Covers full-time, part-time and seasonal staff and includes the following:

• Employees.
• Persons working for the enterprise being subordinated to it and considered to be employees under national law.
• Owner-managers.
• Partners engaged in a regular activity in the enterprise and benefiting from financial advantages from the enterprise.

Apprentices or students engaged in vocational training with apprenticeship or vocational training contracts are not included in the headcount. Nor do you include maternity or parental leave.

The staff headcount is expressed in annual work units (AWU). Anyone who worked full-time within your enterprise, or on its behalf, during the entire reference year counts as one unit. You treat part-time staff, seasonal workers and those who did not work the full year as fractions of one unit.

To Define SME Definition:

• Staff headcount.
• Balance sheet.
• Annual turnover.

E-Commerce is increasingly important for new and established firms:

• To innovate.
• Improve their products and production.
• Expand their markets and
• Become more dynamic.

Nevertheless,

There is still limited knowledge of many of the factors which determine whether ad how SMEs adopt e-commerce and maximise benefits.

Specific issues pertaining to E-Commerce:

• What areas are most promising for the development of SME e-commerce.
• Are opportunities for SMEs largely in business-to-business or business-to-consumer segments?

What kind of factors are particularly important for SMEs:

• Lack of information.
• Costs and quality associated with network infrastructure, authentication and security systems, shortages of skills and management knowledge?

It is a widely observed phenomenon that a powerful competing tendency is for firms to locate and operate in close physical proximity.

Documented competitive advantages derived from clusters include:

• High levels of investment.
• Low unemployment.
• High average wages,

Specific issues pertaining to clusters:

• What is the optimal role of public policy in consolidating and developing clusters?
• How can we overcome co-ordination failures and foster collaborative behaviour when dealing with groups of co-located firms?
• Is there a significant emerging trend towards the internalisation of industrial districts?

Innovation is a fundamental factor of competitiveness:

• A means of continual improvement in product quality, marketing, management and logistics through technological up-dating and associated organisational changes.
• However, in reality, many small firms have not yet developed a culture of innovation and they lack capabilities and incentives to address more creatively evolving competitive challenges.
• In the long run, the possibilities for SMEs to survive and create jobs will depend on their ability to put innovation at the core of their business strategy.

Specific issues pertaining to innovation:

• What are the most important framework conditions that influence SMEs' incentives and capacities to innovate?
• Which measures are warranted to correct market failures that affect the financing of investment in innovation, including investment in training and organisational change?

• Innovation.
• Clusters.
• E-Commerce.
• Partnerships.