The Article establishes quantitative size categories for undertakings. Micro‑undertakings are those that do not exceed at least two of: balance sheet total EUR 450,000; net turnover EUR 900,000; average employees 10. Small undertakings do not exceed at least two of: balance sheet EUR 5,000,000; net turnover EUR 10,000,000; employees 50, with Member States permitted to raise the balance sheet and turnover ceilings up to EUR 7,500,000 and EUR 15,000,000. Medium undertakings are not micro or small and do not exceed at least two of: balance sheet EUR 25,000,000; turnover EUR 50,000,000; employees 250. Large undertakings exceed at least two of those medium limits.

Small, medium and large groups are defined on a consolidated basis by the same thresholds; Member States may disapply set‑off/eliminations when calculating group limits, in which case balance sheet and turnover thresholds increase by 20%. Non‑euro Member States use the OJ exchange rate at the Directive’s entry into force, with up to 5% adjustment for round sums. Exceeding limits affects derogations only after two consecutive years. Balance sheet total means assets A–E in Annex III or IV. Member States may require inclusion of other income or consolidated/aggregated calculation where net turnover is not relevant or to prevent avoidance. The Commission will review and, where appropriate, amend thresholds by delegated acts at least every five years under Article 49, including specified related provisions.