Business law
SME (KMU)
Abbreviation of ‘small and medium-sized enterprises’ (in German ‘kleine und mittlere Unternehmen’, KMU). In Germany often used synonymously with the Mittelstand. Covers businesses with up to around 250 employees and EUR 50 million in turnover. Legally relevant because of the many exemptions and funding opportunities. Common thresholds are:
- Micro-enterprises: up to 9 employees and EUR 2 million in turnover
- Small enterprises: up to 49 employees and EUR 10 million in turnover
- Medium-sized enterprises: up to 249 employees and EUR 50 million in turnover
The legal classification depends on the provision in question.
In practice
Founders usually first come across the term in the context of public funding, where the EU, the federal government and the German states often provide funding specifically for SMEs. It is not only the company’s own figures that count. The figures of partner enterprises are included proportionately, those of linked enterprises in full. Exceptions apply to business angels and venture capital funds, provided they do not exercise control. Under EU legislation, SME status often means lower fees and fewer obligations.
German law also provides for exemptions, with its own thresholds. General protection against dismissal only applies in establishments with more than ten employees. Under the HGB (German Commercial Code), a company is a small corporation if it does not exceed two of the following three thresholds: EUR 7.5 million balance sheet total, EUR 15 million turnover, 50 employees on annual average.
Sources
Licence: CC BY 4.0*
How to cite: SME (KMU), in: Berlin Online Glossary of German Business Law, published by STRUB.LAW, as at 24 September 2026, https://strub.law/en/glossary/sme/, CC BY 4.0
*This licence applies only to the written entries of the Berlin Online Glossary.