The European Commission has unveiled a major regulatory overhaul that will exempt more than 38,000 companies from eight key EU laws, in what it describes as a turning point for European business policy. A new “small mid-cap” category will be created to support companies with up to 750 employees and either €150 million in turnover or €129 million in total assets, sparing them from complex reporting obligations that were previously only waived for firms with fewer than 250 staff.

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The move, announced on Wednesday, is part of a broader deregulation strategy aimed at helping regional companies scale up without being overwhelmed by European red tape. The Commission says these businesses often fall into a regulatory grey zone: too big to benefit from SME exemptions, but too small to navigate the full burden of EU compliance with the same ease as corporate giants.‎

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Companies that qualify under the new classification will be relieved of requirements under high-impact laws such as the General Data Protection Regulation (GDPR), the Markets in Financial Instruments Directive (MiFID II), and the Batteries Regulation, among others. Internal market and industry commissioner Stéphane Séjourné called the shift “one of the most important economic strategies” the EU has launched in recent years. He argued that the change will prevent the “brutality” of mid-sized firms suddenly having to comply with complex legislation that can sap resources and hinder growth.

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The EU executive sees the reform as more than just a technical tweak. It’s a deliberate attempt to shape the future of European industry by supporting the companies that fuel regional economies but rarely get the spotlight. By reducing regulatory drag, Brussels hopes to foster the emergence of a new class of competitive, homegrown businesses that can grow into continental champions.

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The exemption list is being introduced through targeted amendments and is expected to expand further. The Commission confirmed that ongoing reviews of other major EU laws, including the Carbon Border Adjustment Mechanism and the Corporate Sustainability Due Diligence Directive, will also factor in the new “small mid-cap” definition. That means even more regulatory relief could be on the table.

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Despite the broad scope of the reform, GDPR itself will not be reopened unless it forms part of a wider legislative simplification process. The Commission appears wary of sparking political backlash over the bloc’s flagship privacy law, but says specific carveouts can still be implemented for smaller firms without dismantling the entire legal framework.

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In Brussels, the pitch is clear: lift the burden now, and watch Europe’s economic base flourish later. But turning legislative ambition into results will depend on how national governments and regulators apply the exemptions—and whether the bet on Europe’s mid-sized businesses pays off.

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