EU Data Act Article 7 SME Exemption: Who Is Actually Exempt? (2026)

Last updated: 23 August 2026

The EU Data Act contains an important exemption for some smaller connected-product manufacturers and related-service providers. But calling it simply the “EU Data Act SME exemption” can be misleading.

Article 7 does not say that every startup, every SME, every company with fewer than 250 employees, or every small marketplace seller is exempt from the Data Act.

The current rule is narrower.

Under Article 7 of Regulation (EU) 2023/2854, the obligations in Chapter II do not apply to data generated through connected products manufactured or designed, or related services provided, by a qualifying microenterprise or small enterprise, provided additional conditions are met.

Those additional conditions matter. A company can be small on its own payroll and still fail the Article 7 test because of:

• partner enterprises;
• linked enterprises;
• group ownership;
• subcontracting;
• the role it plays in the product/value chain.

Medium-sized enterprises are also treated differently: they do not receive the same permanent micro/small carve-out. Instead, Article 7 contains limited transitional treatment for enterprises that have only recently become medium-sized and for certain newly placed connected products.

This guide explains exactly what Article 7 currently does, how the EU SME thresholds work, why a headcount-only check is unreliable, how partner and linked enterprises affect the result, how subcontracting changes the analysis, and what the exemption means for Product Data Notices and connected-product workflows.

Working on a connected product? Start with What Is a Connected Product Under the EU Data Act?, then use the free EU Data Act Product Data Notice Generator if Article 3 information is relevant to your product.

Important: This guide is informational and is not legal advice. Enterprise status, corporate ownership, subcontracting arrangements, product roles and transitional dates can materially change an Article 7 analysis.

Quick answer: is there an SME exemption in the EU Data Act?

There is an exemption in Article 7, but it is not a blanket exemption for all SMEs.

Article 7(1) says that the obligations of Chapter II do not apply to data generated through the use of connected products manufactured or designed, or related services provided, by a microenterprise or small enterprise where:

1. the enterprise does not have a partner or linked enterprise that fails to qualify as a microenterprise or small enterprise; and
2. the micro/small enterprise is not subcontracted to manufacture or design the connected product or provide the related service.

Article 7 also provides limited transitional treatment for an enterprise that has qualified as a medium-sized enterprise for less than one year and for connected products for one year after they were placed on the market by a medium-sized enterprise.

Read the current text directly in Article 7 of Regulation (EU) 2023/2854 on EUR-Lex.

The most important takeaway is:

“SME” is too broad a shorthand for Article 7. The core carve-out is for qualifying micro and small enterprises, not every company below 250 employees.

What does Article 7 actually exempt?

Article 7 is titled:

Scope of business-to-consumer and business-to-business data sharing obligations

It appears at the end of Chapter II of the Data Act.

Chapter II contains Articles 3–7, including rules about:

• making product data and related-service data accessible;
• user rights to access and use data;
• data-holder obligations;
• the user's right to share data with third parties;
• obligations of third parties receiving the data.

Article 7 says the obligations of this Chapter do not apply to the specified data when the exemption conditions are satisfied.

That wording is important.

It does not say:

“This company is exempt from the Data Act.”

The Data Act contains other chapters dealing with data-sharing conditions, unfair contractual terms, public-sector access, cloud switching, interoperability and enforcement.

A company should therefore identify:

1. which Data Act role it performs;
2. which chapter creates the obligation;
3. whether a size-based rule applies to that obligation.

A useful official starting point is the European Commission's Data Act explained.

Why “startup” is not a legal exemption

The Data Act does not use “startup” as a size category for Article 7.

A startup could be:

• a microenterprise;
• a small enterprise;
• a medium-sized enterprise;
• part of a larger corporate group;
• controlled or partnered in a way that changes its SME calculation.

The relevant categories come from Commission Recommendation 2003/361/EC, which the Data Act incorporates by reference.

The assessment is based on staff numbers, financial thresholds and relationships with other enterprises, not fundraising stage or how recently the company was founded.

EU SME thresholds used by the Data Act

The Commission currently summarises the thresholds as follows:

Source: European Commission — SME definition

For a small enterprise, the company therefore needs:

• fewer than 50 staff; and
• annual turnover not exceeding €10 million or annual balance-sheet total not exceeding €10 million,

subject to the rules for partner and linked enterprises.

Why the financial “or” matters

A company can exceed one of the financial ceilings while remaining within the other.

For example:

• 42 staff;
• €11 million annual turnover;
• €7 million balance-sheet total.

The €11 million turnover does not by itself end the small-enterprise analysis because the balance-sheet criterion remains within the €10 million ceiling. The staff and relationship rules still need to be satisfied.

Staff headcount is not simply “number of employees today”

Recommendation 2003/361/EC calculates staff using annual work units (AWU).

The official rules include:

• full-time staff working the full year as full units;
• part-time and seasonal workers as fractions;
• employees;
• certain persons treated as employees under national law;
• owner-managers;
• partners regularly working in the business and receiving financial advantages.

The Recommendation says apprentices or students under qualifying vocational-training arrangements are not included as staff, and periods of maternity or parental leave are not counted.

See Recommendation 2003/361/EC.

For rough prospecting, public headcount estimates can help. For a real Article 7 conclusion, use the Recommendation's calculation rules.

Which accounting period counts?

The relevant staff and financial data are normally taken from the latest approved accounting period, calculated on an annual basis.

Turnover is calculated excluding VAT and other indirect taxes.

For newly established enterprises whose accounts have not yet been approved, the Recommendation permits a bona fide estimate made during the financial year.

This is another reason “current headcount today” is not enough.

The two-consecutive-accounting-period rule

Recommendation 2003/361/EC contains an important stability rule.

If an enterprise exceeds or falls below the relevant staff or financial ceilings during one accounting period, that does not normally cause immediate loss or acquisition of micro/small/medium status. The ceilings generally need to be exceeded or fallen below over two consecutive accounting periods.

See Article 4(2) of the Annex to Recommendation 2003/361/EC.

So hiring employee number 50 does not necessarily make a company medium-sized under the EU definition on that exact day.

For a fast-growing manufacturer, this timing should then be reconciled with Article 7's separate one-year transition once the enterprise has actually qualified as medium-sized.

Autonomous, partner and linked enterprises

For Article 7, company size cannot always be assessed by looking at one legal entity.

Recommendation 2003/361/EC distinguishes:

• autonomous enterprises;
• partner enterprises;
• linked enterprises.

This is one of the most important parts of the Article 7 test.

Autonomous enterprise

An enterprise is autonomous where it is not classified as a partner or linked enterprise under the Recommendation.

For a genuinely independent manufacturer, the SME calculation is relatively straightforward.

Partner enterprise

The Recommendation generally treats enterprises as partners where one enterprise holds 25% or more of the capital or voting rights of another and they are not already classified as linked.

There are specified exceptions for certain investors, including qualifying public investment corporations, venture-capital investors, universities/non-profit research centres, institutional investors and certain local authorities.

So this rule is also too simplistic:

“Someone owns 25%, therefore we definitely have a partner enterprise.”

Check the exact Recommendation and the investor/control facts.

Linked enterprise

Relationships can make enterprises “linked” where, for example:

• one has a majority of voting rights in another;
• one has the right to appoint/remove a majority of management or supervisory members;
• one has the right to exercise dominant influence under a contract or constitutional document;
• one controls a majority of voting rights under an agreement with other shareholders.

The Recommendation can also treat enterprises as linked through other enterprises and, in some circumstances, through natural persons acting jointly.

The Court of Justice has confirmed that the linked-enterprise analysis can extend beyond a purely formal shareholding chart where legal and economic relationships show that businesses constitute a single economic unit.

See the CJEU summary in Case C-110/13.

Why partner and linked enterprises matter especially under Article 7

Article 7 does not merely say:

Calculate group numbers and see whether the company remains small.

It expressly conditions the carve-out on the enterprise not having a partner or linked enterprise that does not itself qualify as a microenterprise or small enterprise.

That is a strong anti-circumvention feature.

Illustrative example: small subsidiary of a larger group

Assume:

• DeviceCo has 28 staff;
• DeviceCo has €6 million turnover;
• it manufactures connected sensors;
• it is linked to a parent company with 400 employees.

Looking only at DeviceCo would suggest “small.”

But the linked-enterprise relationship means the Article 7 condition must be reassessed. A company cannot assume the carve-out because the operating subsidiary itself has fewer than 50 staff.

Illustrative example: small company with a medium-sized partner

Assume:

• SensorStart has 35 staff;
• €8 million turnover;
• another company owns 30%;
• that partner is a medium-sized enterprise.

The Article 7 wording specifically asks whether a partner enterprise fails to qualify as micro or small.

Again, the result cannot be determined from SensorStart's standalone headcount alone.

How group data are calculated under the SME Recommendation

The Recommendation also provides rules for calculating staff and financial data.

In simplified terms:

• for partner enterprises, relevant data are generally added proportionally according to the capital or voting-right interest;
• for linked enterprises, 100% of relevant data are generally added where not already included through consolidation.

The detailed rules are in Article 6 of the Annex to Recommendation 2003/361/EC.

For an independent manufacturer, this may be simple.

For a private-equity-owned group, multinational structure or company with several subsidiaries, it can become a corporate-structure calculation.

The subcontracting exception

Article 7 contains another critical limit.

The micro/small enterprise carve-out does not apply where the enterprise is subcontracted to manufacture or design a connected product or to provide a related service.

This prevents a larger business from routing manufacturing or design through a small subcontractor to avoid Chapter II obligations.

Recital 41 explains the logic: where a larger enterprise subcontracts manufacturing or design to a micro/small enterprise, the commissioning enterprise can compensate the subcontractor for the burden.

Illustrative example: small contract manufacturer

Assume:

• ContractDevice Ltd has 24 employees;
• it manufactures connected control units;
• a large OEM subcontracts manufacture to ContractDevice.

ContractDevice's small size does not automatically put the product's data inside the Article 7 carve-out.

The subcontracting condition has to be considered.

Illustrative example: independent small manufacturer

Assume instead:

• IndependentSensor Ltd has 24 employees;
• it designs, manufactures and sells its own connected sensor;
• it has no partner or linked enterprise that is medium or large;
• it is not acting as a subcontractor.

That is much closer to the Article 7 micro/small enterprise pattern, assuming all SME thresholds and other facts are satisfied.

A small company can still have Data Act obligations in another role

Recital 41 makes an important point:

A micro or small enterprise may still be subject to Data Act requirements as a data holder where it is not the manufacturer of the connected product or provider of the related service.

This helps explain why size must be assessed together with role.

Examples:

• a small software company could become a data holder for data originating from a product made by a larger manufacturer;
• a small seller could sell connected products made by a large manufacturer;
• a small distributor may still need to pass required pre-contractual product information to users.

The Article 7 carve-out is keyed to the qualifying manufacturer/designer/provider behind the data. It is not a universal shield around a small legal entity.

Why small marketplace sellers are not automatically exempt

This distinction is especially important for ecommerce.

Imagine a 10-person retailer selling a connected camera manufactured by a large multinational.

The retailer cannot safely say:

“We're small, therefore we don't need to care about Article 3 product information.”

Article 7 focuses on data generated through products manufactured or designed by qualifying micro/small enterprises or related services provided by qualifying micro/small enterprises.

The camera in this example comes from a large manufacturer.

That helps explain why marketplaces can impose Data Act product-information workflows on many small sellers: the seller's own size does not necessarily create the manufacturer-side Article 7 carve-out.

Kaufland's current guidance, for example, asks sellers to identify relevant products and provide a manufacturer information URL per affected item.

See Kaufland Global Marketplace — EU Data Act.

For the operational seller fields and listing-risk workflow, see the Kaufland EU Data Act seller guide. For bol's marketplace-document workflow and why small sellers should not treat seller size as a shortcut, see the bol EU Data Act seller guide.

What happens when a company becomes medium-sized?

Medium-sized enterprises are where the phrase “SME exemption” causes the most confusion.

Under the EU SME definition, a medium-sized enterprise generally has:

• fewer than 250 staff; and
• annual turnover not exceeding €50 million or balance-sheet total not exceeding €43 million,

subject to the partner/linked-enterprise rules.

But Article 7 does not give established medium-sized enterprises the same permanent carve-out as qualifying micro and small enterprises.

Instead, Article 7 says the same treatment applies to:

• data generated through connected products manufactured by or related services provided by an enterprise that has qualified as medium-sized for less than one year; and
• connected products for one year after the date they were placed on the market by a medium-sized enterprise.

This is transitional relief, not a permanent medium-enterprise exemption.

Medium-sized transitions should be tracked with dates

For a growing manufacturer, keep:

• the accounting period in which enterprise status changed;
• the date the enterprise actually qualified as medium-sized;
• product placing-on-market dates;
• relevant related-service dates;
• the expected end of transitional treatment.

This should not be managed as a generic checkbox saying:

SME exemption = yes.

Illustrative example

A manufacturer becomes medium-sized and has multiple connected products launched at different times.

The product-placement element means different products can have different transition dates.

For real implementation, obtain legal review of the interaction between:

• the two-accounting-period SME status rule;
• the date the company qualifies as medium-sized;
• Article 7's one-year enterprise transition;
• product placing-on-market dates.

Recital 41 and newly medium-sized enterprises

Recital 41 explains the purpose of the transition: a company that has only recently become medium-sized should have time to adjust before facing the full Chapter II data-sharing framework.

The recital also discusses circumstances involving partner/linked enterprises and subcontracting in which the transitional treatment is not intended to apply.

Because these cases depend heavily on corporate structure and timing, RegCatalog should treat them as review-required, not as an automated legal conclusion.

Read the recitals and Article 7 in the official Data Act.

Article 7 is not the only SME rule in the Data Act

Another major source of confusion is that the Data Act uses SME status differently in different provisions.

Article 7: Chapter II scope

Core beneficiaries:

• qualifying microenterprises;
• qualifying small enterprises;
• limited transition for newly medium-sized enterprises.

Article 9: compensation for making data available

Article 9 contains a different rule.

Where the data recipient is an SME and does not have partner or linked enterprises that are non-SMEs, the compensation for making data available is capped at the relevant direct costs specified in Article 9.

In that context, “SME” includes medium-sized enterprises under Recommendation 2003/361/EC.

So a medium-sized company can receive an SME protection under Article 9 even though it does not have the same permanent Article 7 manufacturer carve-out.

See Article 9 in the Data Act.

Better question

Instead of asking:

“Are SMEs exempt from the Data Act?”

ask:

“Which Data Act article applies, to which company, in which role?”

That produces a much more reliable answer.

A practical Article 7 decision tree

Use this as an internal review tool, not legal certification.

Step 1 — Identify the obligation

Is the issue actually in Chapter II?

Typical questions include:

• Article 3 connected-product information;
• Article 3 related-service information;
• Article 4 user data access;
• Article 5 user-directed data sharing.

If the issue is cloud switching, unfair contract terms, public-sector data access or another chapter, Article 7 may not be the relevant rule.

Step 2 — Identify the manufacturer/designer

Which legal enterprise actually manufactured or designed the connected product?

Do not assume the following are always the same party:

• brand owner;
• seller;
• distributor;
• OEM;
• contract manufacturer.

Step 3 — Identify the related-service provider

If there is a related service, identify its legal provider separately.

A hardware manufacturer and a related-service provider can be different enterprises.

Step 4 — Calculate enterprise status

Apply Recommendation 2003/361/EC:

• annual work units;
• turnover;
• balance-sheet total;
• reference period;
• two-consecutive-period rule.

Step 5 — Check partner enterprises

Does the enterprise have a partner company that is not micro/small?

If yes, the Article 7 carve-out may not be available.

Step 6 — Check linked enterprises

Does the enterprise belong to a larger linked group?

Do not assess the operating entity in isolation.

Step 7 — Check subcontracting

Was the small enterprise subcontracted to:

• manufacture;
• design;
• provide the related service?

If yes, Article 7 expressly limits the carve-out.

Step 8 — If medium-sized, check transition dates

Record:

• date the enterprise qualified as medium-sized;
• relevant placing-on-market dates.

Step 9 — Document the analysis

Keep:

• enterprise-status evidence;
• ownership/group analysis;
• role analysis;
• subcontracting evidence;
• product dates;
• review date.

Five illustrative Article 7 examples

These examples explain the structure of the rule. They are not legal opinions for real companies.

Example 1: independent 22-person smart-lock manufacturer

Facts:

• 22 annual work units;
• €5 million turnover;
• €4 million balance sheet;
• no partner or linked company;
• designs and manufactures its own connected locks.

This is a strong candidate for the micro/small Article 7 carve-out.

Still verify the formal SME status and actual corporate relationships.

Example 2: 35-person subsidiary of a 500-person group

Facts:

• operating company has 35 staff;
• parent controls the company;
• group is substantially larger.

Do not rely on the 35-person standalone headcount.

The linked-enterprise rules and Article 7 conditions make this different from an independent 35-person manufacturer.

Example 3: 18-person contract manufacturer for a large OEM

Facts:

• financially small;
• independent legal entity;
• large OEM subcontracts connected-device manufacture or design.

Article 7 expressly addresses subcontracting.

The small-company status alone is insufficient.

Example 4: 120-person manufacturer that recently became medium-sized

Facts:

• the enterprise has only recently qualified as medium-sized under Recommendation 2003/361/EC.

Article 7 provides temporary treatment.

This should be managed as a transition case with dates, not a permanent exemption.

Example 5: 12-person ecommerce seller of large-brand smart devices

Facts:

• retailer has 12 staff;
• products are manufactured by large multinational companies.

The seller's small size alone does not make the large manufacturer's product data fall under the Article 7 micro/small manufacturer carve-out.

The retailer may still need manufacturer Article 3 information for pre-contractual or marketplace workflows.

What about the new EU “small mid-cap” category?

In 2025, the European Commission introduced a small mid-cap (SMC) category through Recommendation (EU) 2025/1099.

The category covers enterprises that have outgrown the SME definition but remain below specified staff and financial thresholds.

See Commission Recommendation (EU) 2025/1099.

However, the current Article 7 text still points to the micro, small and medium categories in Recommendation 2003/361/EC.

Therefore:

Being a small mid-cap does not automatically create the current Article 7 Chapter II carve-out.

The SMC concept is becoming relevant across EU simplification measures, but it should not be inserted into current Article 7 analysis unless legislation actually does so.

What does the Digital Omnibus change in 2026?

The European Commission proposed a Digital Omnibus Regulation in November 2025.

As of 23 August 2026, the ordinary legislative procedure for COM(2025) 837 remains ongoing.

The proposal restructures and simplifies parts of the EU data framework and would extend selected forms of relief to small mid-cap companies. Commission materials specifically highlight targeted relief in areas such as data-processing-service/cloud-switching requirements.

Useful current sources:

• Digital Omnibus proposal — EUR-Lex
• Legislative procedure 2025/0360/COD
• European Commission Digital Package FAQ

For current Article 7 implementation, the safe approach is:

Apply the Data Act currently in force and track the Digital Omnibus separately until adopted amendments become applicable.

Do not treat a Commission proposal as a current exemption.

Does Article 7 remove the need for a Product Data Notice?

Article 7 can materially affect Article 3 because both sit in Chapter II.

For data generated through products manufactured/designed or related services provided by a qualifying Article 7 enterprise, the Chapter II carve-out can affect the Article 3 obligations.

But the correct workflow is not:

“32 employees = no Product Data Notice.”

Use this sequence:

1. identify whether the item is a connected product;
2. identify the manufacturer/designer;
3. identify the related-service provider;
4. calculate enterprise status;
5. check partner/linked companies;
6. check subcontracting;
7. check medium-sized transition if relevant;
8. identify the seller/rentor/lessor and actual pre-contractual workflow.

For the underlying Product Data Notice fields, see:

**EU Data Act Product Data Notice Guide**

For connected-product scope:

**What Is a Connected Product Under the EU Data Act?**

What evidence should a manufacturer keep?

Even if the conclusion is that Article 7 applies, the company should be able to explain why.

A practical internal record can contain:

Enterprise identity

• legal entity;
• group/parent;
• relevant business activity.

Size evidence

• latest approved accounting period;
• annual work units;
• turnover;
• balance sheet total;
• status history across the relevant accounting periods.

Ownership and relationship evidence

• shareholder structure;
• partner enterprises;
• linked enterprises;
• group chart.

Product/service role

• manufacturer;
• designer;
• related-service provider;
• seller;
• distributor;
• data holder.

Subcontracting

• whether manufacture/design/service is subcontracted;
• commissioning party;
• relevant agreement/reference.

Medium-sized transition evidence

• date medium-sized status began;
• placing-on-market date by product;
• transition end date;
• next review date.

Company size and ownership can change. An Article 7 conclusion should therefore have an owner and review date.

Common Article 7 mistakes

Mistake 1: “All SMEs are exempt”

Incorrect.

The permanent Article 7 carve-out centers on qualifying micro and small enterprises, with limited medium-sized transitional treatment.

Mistake 2: “Fewer than 50 employees means small”

Not by itself.

Financial thresholds, accounting-period rules, and partner/linked relationships also matter.

Mistake 3: “We only count this subsidiary”

A linked or partner-company structure can change the analysis.

Mistake 4: “Venture-backed means not small”

Too simplistic.

Recommendation 2003/361/EC includes specific investor and relationship rules. Review actual control and ownership.

Mistake 5: “Our contract manufacturer is small, so the product is exempt”

Article 7 expressly addresses subcontracted manufacture/design and related-service provision.

Mistake 6: “Medium-sized companies are SMEs, therefore Article 7 permanently exempts them”

No.

Article 7 treats newly medium-sized enterprises through transitional language.

Mistake 7: “Our reseller is small, so Article 3 disappears”

The carve-out is tied to the qualifying manufacturer/designer/provider behind the product or related service.

Mistake 8: “Small mid-cap means exempt”

Not under the current Article 7 text.

Mistake 9: “The Digital Omnibus is already current law”

As of August 2026, the relevant proposal remains in the legislative process.

Mistake 10: “We can waive user rights by contract”

Article 7(2) prevents contractual terms from taking away Chapter II user rights to the user's detriment where those rights apply.

Article 7(2): Chapter II user rights cannot simply be contracted away

Article 7 has a second paragraph that is easy to overlook.

It states that a contractual term which, to the detriment of the user:

• excludes the application of;
• derogates from; or
• varies the effect of

the user's rights under Chapter II is not binding on the user.

This means enterprise size is not the only point covered by Article 7.

Where Chapter II rights apply, a contract cannot simply eliminate them.

See the current Article 7 text on EUR-Lex.

Article 7 checklist

Use this as a structured internal screening list, not legal certification.

Is Article 7 the relevant rule?

• The issue concerns a Chapter II obligation.
• We know which Article 3/4/5 requirement is being analysed.

Enterprise size

• We have identified the legal manufacturer/designer or related-service provider.
• We have the latest approved accounting period.
• We have annual-work-unit staff data.
• We have turnover.
• We have balance-sheet total.
• We have reviewed the two-consecutive-accounting-period rule.

Corporate relationships

• We have assessed autonomous/partner/linked status.
• We have identified partner enterprises.
• We have identified linked enterprises.
• We know whether a partner/linked enterprise fails to qualify as micro/small.
• Relevant ownership/investor exceptions have been reviewed.

Subcontracting

• We know whether manufacture is subcontracted.
• We know whether product design is subcontracted.
• We know whether related-service provision is subcontracted.
• We know which enterprise commissioned the work.

Medium-sized transition

• If medium-sized, we know when status began.
• We have product placing-on-market dates.
• We have an expected transition end date.
• A re-review is scheduled.

Operational follow-through

• Product Compliance owns the conclusion.
• Product/ecommerce teams know whether Article 3 information is needed.
• Marketplace teams know whether manufacturer URLs/documents are required.
• The conclusion is documented, not assumed.

Frequently asked questions

Does the EU Data Act exempt all SMEs?

No. Article 7 creates a Chapter II carve-out for qualifying micro and small enterprises, subject to partner/linked-enterprise and subcontracting conditions. Medium-sized enterprises have limited transitional treatment rather than the same permanent exemption.

What is the EU Data Act Article 7 exemption?

Article 7 says Chapter II obligations do not apply to data generated through connected products manufactured/designed or related services provided by qualifying micro or small enterprises when its conditions are met. It also contains transitional treatment for newly medium-sized enterprises and certain connected products.

What size is a small enterprise under the Data Act?

The Data Act uses Recommendation 2003/361/EC. A small enterprise generally has fewer than 50 staff and annual turnover no greater than €10 million or balance-sheet total no greater than €10 million, subject to partner and linked-enterprise rules.

Does a company with 49 employees automatically qualify?

No. Financial thresholds, partner/linked enterprises, group structure, subcontracting and the accounting-period rules can change the result.

Does turnover above €10 million automatically end small-enterprise status?

Not necessarily. The definition uses turnover or balance-sheet total for the financial limb, together with the staff and relationship rules.

Are medium-sized enterprises exempt under Article 7?

Not permanently in the same way as qualifying micro and small enterprises. Article 7 contains limited transitional treatment for newly medium-sized enterprises and connected products placed on the market by medium-sized enterprises.

Does crossing 50 employees immediately make a company medium-sized?

Not necessarily. Recommendation 2003/361/EC generally requires the threshold to be exceeded over two consecutive accounting periods before status changes.

Do subsidiaries count separately?

Not always. Partner and linked-enterprise rules can require a wider group analysis, and Article 7 expressly considers whether partner or linked enterprises fail to qualify as micro/small.

What is a partner enterprise?

Under Recommendation 2003/361/EC, a partner relationship generally involves a holding of at least 25% of capital or voting rights without meeting the stronger linked-enterprise tests, subject to specified exceptions.

What is a linked enterprise?

Linked relationships include forms of majority voting control, rights to appoint/remove a majority of management or supervisory bodies, dominant influence, and certain shareholder voting-control arrangements.

Does VC or private-equity investment automatically remove small-enterprise status?

No automatic rule applies. Recommendation 2003/361/EC contains investor exceptions and detailed relationship tests. Actual ownership and control must be reviewed.

Are small contract manufacturers exempt?

Do not assume so. Article 7 expressly limits the carve-out where the enterprise is subcontracted to manufacture/design the connected product or provide the related service.

Is a small retailer exempt when selling a large manufacturer's connected product?

The retailer's own size does not automatically create the Article 7 manufacturer-side carve-out. The relevant product was manufactured/designed by another enterprise.

Can a small enterprise still be a data holder?

Yes. Recital 41 notes that a micro/small enterprise can still face Data Act requirements as a data holder where it is not the manufacturer of the product or provider of the related service.

Does Article 7 affect Product Data Notices?

Yes, potentially, because Article 3 is in Chapter II. But the conclusion depends on the actual manufacturer/service-provider, enterprise status, group relationships and subcontracting facts.

What is the difference between Article 7 and Article 9 SME rules?

Article 7 concerns the scope of Chapter II obligations for qualifying manufacturers/designers/providers. Article 9 separately limits compensation where certain SME data recipients receive data. Medium-sized enterprises can therefore receive Article 9 protection without having the same permanent Article 7 carve-out.

Are small mid-cap companies exempt under Article 7?

Not automatically under current law. The 2025 small-mid-cap definition is separate, and current Article 7 still relies on Recommendation 2003/361/EC.

Has the Digital Omnibus changed Article 7 already?

No final change should be assumed. As of 23 August 2026, COM(2025) 837 remains in an ongoing legislative procedure.

Can a contract waive Chapter II user rights?

Article 7(2) says terms that, to the user's detriment, exclude or vary the effect of Chapter II rights are not binding where those rights apply.

Practical next step

For connected-product manufacturers, Article 7 should be treated as a documented scope decision rather than a checkbox.

A sensible workflow is:

Identify connected product
        ↓
Identify manufacturer / designer / service provider
        ↓
Calculate enterprise status
        ↓
Check partner + linked enterprises
        ↓
Check subcontracting
        ↓
Check medium transition
        ↓
Document Article 7 conclusion
        ↓
If Chapter II applies:
prepare Article 3 product information

If Article 3 is relevant, RegCatalog's free generator can turn the underlying product facts into a review-ready notice:

**Generate an EU Data Act Product Data Notice**

For the product-scope test:

**What Is a Connected Product Under the EU Data Act?**

For the required Article 3 information:

**EU Data Act Product Data Notice Guide**

Primary sources and further reading

Start with primary EU sources.

1. Regulation (EU) 2023/2854 — EU Data Act
2. Commission Recommendation 2003/361/EC — SME definition
3. European Commission — SME definition
4. European Commission — Data Act explained
5. CJEU Case C-110/13 — linked enterprise interpretation
6. Commission Recommendation (EU) 2025/1099 — small mid-caps
7. Digital Omnibus proposal COM(2025) 837
8. Digital Omnibus legislative procedure
9. European Commission — Digital Package FAQ
10. Kaufland Global Marketplace — EU Data Act

Useful secondary commentary

• Gleiss Lutz — Data Act Q&A
• Faegre Drinker — Data Act impact on connected products and device manufacturers
• KPMG Law — Data Act upcoming deadlines 2026–2027

_RegCatalog provides product-data tooling and informational resources. It does not provide legal advice, legal representation, certification or a guarantee that a company or product qualifies for an Article 7 exemption. Enterprise status can depend on accounting data, corporate relationships, subcontracting arrangements, market placement and the facts of the specific case._