There are 20 million Small and Medium Size Enterprises (“SMEs”) in the EU representing 99% of the total number of businesses. To ensure that this important sector is not unduly burdened by REACH, certain costs are reduced.
Most notable is the cost for submission of jointly submitted Registration Dossiers to ECHA. Costs are reduced 30%, 60% and 90% for Medium, Small and Micro companies respectively compared with the costs for a non-SME.
ECHA reviewed SME status in 2011 and announced in February 2012, and again in August 2012, their concerns about under-reporting of company size. They asked Registrants to check their company size and make voluntary adjustments as necessary. ECHA also has the stick-approach, the “Verification Process” and if a company is unable to substantiate its claim for SME status, it will be charged a “top-up” to offset the discount which they wrongly availed of at time of Registration as well as the dreaded “Administration Charge” which varies from €2,000 to €20,000.
Here are some guidelines and tips to navigate through this complex area.
- haven’t yet Registered so does this apply to me? : If you have not yet Registered, your company size is less important. Good practice suggests you should correct your REACH-IT account, however.
- Where do I enter this company size? When you set up your REACH-IT account, you make a declaration as to your company size. Check to ensure it is correct.
- How do I find out my company size? This is a combination of Headcount and a financial measure being either Turnover or Balance sheet. The accounting period is the last full set of audited accounts immediately prior to the Registration. This is relatively simple when the company is “autonomous,” when less than 25% of the company is held by another or the company itself holds less than 25% interest of another enterprise. Once passing this 25% threshold, the company is considered “linked” or “partnered” and further evaluation is required to allocate the appropriate percentages of these associated companies.
What are the thresholds? The size of a company is as indicated in the table below
What if my company has grown since my Registration? Do I need to pay more fees? No, the fees are based on the company size at the time of the Registration, not the size of the company now.
What if my company was larger at the time than indicated in my REACH-IT account? The advice is to act immediately and follow the ECHA process:
- Complete the ECHA Helpdesk Contact Form available at the link below. Inform them that you incorrectly indicated the company size and the Registration Submission numbers affected (http://apps.echa.europa.eu/forms/cms_helpdesk_form.aspx )
- A communication from ECHA will follow along with a Credit Note for the original invoice and a new Invoice for the correct submission fee
- Will this ensure that I don’t have to pay the Administration Fee? Probably. The ECHA language indicates, “you may avoid the levy of an Administration Fee”.
- If I don’t make the adjustment, would I be likely to be caught? ECHA has an active “Verification Campaign” to actively approach Registrants to have them prove their credentials.
- If challenged, how do I prove my company size? While you may have a drawer statement on record, perhaps signed by a senior executive, this is not the type of documentation they are looking for. Instead, ECHA will require formal Documentary evidence including Organisation Structure, Official Audited Accounts and a statement from an appropriate Local Authority on the company headcount.
- But I am outside the EU and have an Only Representative (“OR”) so this doesn’t affect me! Your OR acts on your behalf and the company size they submit is the size of your non EU entity which they are representing, not their own size. Your OR should ask you for your company size to protect both you and them.
But my company size is set by my own local authority here in Texas so surely I can pass this information to the OR as proof? No.The EU definition of a SME applies, not any other local/national/federal definition which you may already have.
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