What are small mid-caps under the AI Act?

Where does the SMC definition come from?

Regulation (EU) 2026/1744, the Digital Omnibus on AI, added a definition of small mid-cap enterprises, or SMCs, to Article 3 of Regulation (EU) 2024/1689, by reference to Commission Recommendation (EU) 2025/1099 of 21 May 2025 on the definition of small mid-cap enterprises. The Recommendation defines the category in its Annex as enterprises which are not small and medium sized enterprises in accordance with Recommendation 2003/361/EC, employ fewer than 750 persons and have an annual turnover not exceeding 150 million euro or an annual balance sheet total not exceeding 129 million euro. The Recommendation also contains rules for the types of enterprise taken into consideration in calculating headcount and financial amounts, including autonomous, partner and linked enterprises, and for public body control. Those rules must be checked in the Recommendation, in the same way as the SME aggregation rules. A company that is an SME cannot also be an SMC, because the SMC definition starts with enterprises that are not SMEs. A company that grows beyond the SME ceilings does not automatically become an SMC, because it must also meet the SMC headcount and financial ceilings and the aggregation rules. The definition should be checked in the consolidated Article 3 text and in the Recommendation together.

What thresholds and calculation rules apply?

The SMC thresholds are fewer than 750 persons for staff headcount, and turnover not exceeding 150 million euro or balance sheet total not exceeding 129 million euro for the financial criterion. The financial criterion uses or, so an enterprise is excluded only where both the turnover and the balance sheet exceed the ceilings, on the Recommendation approach, subject to the full text. Staff headcount is the main criterion, and the Recommendation sets out how headcount is calculated and how partner and linked enterprise data is to be taken into account. A company in a group, with a parent, subsidiaries, joint ventures or significant investors, must work through the aggregation rules before concluding that it is an SMC. The figures should be taken from the last annual or consolidated accounts, with the reference period and the source recorded. A company near a threshold should keep the calculation with the accounts, so that a reviewer can test it. A company that relies on SMC treatment for a fee, a sandbox application or a penalty matter should be prepared to produce that calculation. An estimate, a forecast or a figure taken from a press release is not a substitute for the accounts based calculation.

For the broader regulatory framework, see SMEs, startups and open source overview.

Which SME measures were extended to SMCs?

Regulation (EU) 2026/1744 extended defined SME measures to SMCs in the provisions it amended. The extensions include, in outline, the subject matter reference in Article 1(2) to measures to support innovation with a particular focus on SMCs and SMEs including startups, simplified technical documentation and proportionate quality management in Articles 11 and 17, sandbox and support consideration in Article 62, codes of conduct consideration in Article 95, and the lower penalty cap rule in Article 99 for defined penalty tiers. Each extension is provision specific. A company that is an SMC for one provision is not necessarily entitled to the same treatment under a provision that was not amended, and a provision that was amended may have conditions that go beyond SMC status, such as eligibility criteria for a sandbox or the specific simplified form specified by the Commission. The record should therefore cite the provision relied on, the amendment that extended it, and the conditions met, rather than stating a general SMC status and assuming that it carries across the Act. The consolidated text, with the M1 amendments marked, is the source to check for each provision.

How does SMC treatment differ from SME treatment?

SMC treatment differs from SME treatment in scope and in purpose. SME treatment is the primary support framework for micro, small and medium sized enterprises, with a long established definition and a wide range of Union measures that use it. SMC treatment is a newer, targeted extension for companies that have grown beyond SME size but that still face similar scaling and administrative burden challenges. The SMC definition is deliberately set at three times the SME headcount ceiling in the Recommendation approach, to smooth the transition as companies scale. In the AI Act, the extension is limited to the provisions amended by Regulation (EU) 2026/1744. A company that has just grown beyond the SME ceilings should not assume that every SME measure it previously used continues on the same terms as an SMC measure. It should check each measure again, record the new status and the provision, and confirm the position with the authority or notified body concerned. A company that is between categories, or that is near the SMC ceilings, should also plan for the point at which it will exceed them, so that the loss of proportionate treatment does not come as a surprise in the middle of a conformity assessment.

What should a growing company record?

A growing company should keep a size file that tracks its SME and SMC status over time, with the accounts, the headcount calculation, the group structure and the aggregation calculation for each year. The file should show the date on which the company crossed a threshold, the measure affected, and the action taken. It should be updated when accounts are approved, when the group changes, when a major investment is received, or when a new AI Act measure is relied on. The file should be kept alongside the AI Act inventory, so that the size status and the system inventory can be read together. A company that grows quickly through acquisition, for example, can cross a threshold on aggregated data even where its own staff numbers have not changed, and the file should capture that. A company that is planning a fundraising, a merger or an acquisition should assess the size consequence as part of the transaction planning, with an accountant or legal adviser, rather than discovering it after the transaction has closed. The size file is a governance record, and it should be treated with the same care as the technical file.

Continue with who counts as an SME.

What does this guide not decide?

This guide does not decide whether any named company is an SMC, does not reproduce Recommendation (EU) 2025/1099 in full, and does not list every AI Act provision extended to SMCs. The Recommendation calculation rules, the consolidated Article 3 definition and each amended provision must be checked for the specific company and measure. A company near a threshold, in a group, or relying on SMC treatment for a fee, sandbox or penalty matter should confirm its status with an accountant or legal adviser. This guide explains the category and its limits, not the status of a particular company.

Frequently asked questions

Continue through this AI Act cluster

• SMEs, startups and open source overview
• who counts as an SME
• proportionate duties and support
• simplified quality management for microenterprises
• sandboxes for smaller firms
• providers