Government Approves New Business Size Criteria in Ukraine

The Government Has Approved a Draft Law on New Criteria for Defining Micro, Small, Medium, and Large Businesses in Ukraine

The draft law proposes amendments to:

• the Law of Ukraine dated March 22, 2012 No. 4618-VI “On the Development and State Support of Small and Medium Entrepreneurship in Ukraine”;
• the Law of Ukraine dated January 9, 2025 No. 4196-IX “On the Specifics of Regulating the Activities of Legal Entities of Certain Organizational and Legal Forms in the Transitional Period and Associations of Legal Entities,”in order to align them with Commission Recommendation 2003/361/EC of May 6, 2003 on the definition of micro, small, and medium-sized enterprises.

The draft amendments provide for an update of the criteria used to classify business entities into specific categories of entrepreneurship. This concerns three key indicators: the average number of employees, net revenue, and the book value of assets.

Main parameters of the new classification (preliminary):

• Micro-enterprises — up to 9 employees and/or up to the equivalent of EUR 2 million in revenue or assets;
• Small enterprises — up to 49 employees and/or up to EUR 10 million in revenue or assets;
• Medium-sized enterprises — up to 249 employees and/or up to EUR 50 million in revenue or up to EUR 43 million in assets;
• Large enterprises — those exceeding these thresholds.

In addition, the draft law provides for specific exclusions:

• enterprises that are not required to maintain accounting records and submit financial statements will be able to obtain micro, small, or medium enterprise status without taking the balance sheet value of assets into account;
• legal entities with a state or local government ownership share exceeding 25% of the charter capital generally will not qualify as small or medium-sized enterprises (except for local self-government bodies whose annual local budget is less than the equivalent of EUR 10 million and whose territorial community has fewer than 5,000 residents).

The draft law is being prepared for consideration by the Verkhovna Rada of Ukraine and subsequent approval, after which the relevant amendments will enter into force and be applied officially.