SME COMPLIANCE GUIDE
Does the EU Digital Product Passport Apply to Small Fashion Brands?
Yes — the EU Digital Product Passport applies to small and medium-sized fashion brands, with no exemption based on company size. That much is unambiguous, confirmed directly by the European Commission's own DPP FAQ and by the Ecodesign for Sustainable Products Regulation (ESPR, Regulation (EU) 2024/1781) itself.
But that's not the full picture. Elsewhere in the same regulation, brand size genuinely does change what applies and when — and the EU has made a binding, if not yet defined, promise of dedicated support for smaller companies. This guide separates the two, using only what is written in the regulation and the Commission's own published FAQ.
1. What counts as an SME under EU rules?
ESPR does not invent its own size categories. Article 2 of the regulation defines "SMEs", "small enterprises" and "microenterprises" by direct reference to Commission Recommendation 2003/361/EC. The employee count is always mandatory; it's only the financial test that's either/or:
| Category | Employees (always required) | Turnover or balance sheet (either one) |
|---|---|---|
| Microenterprise | Fewer than 10 | €2 million or less |
| Small enterprise | Fewer than 50 | €10 million or less |
| Medium-sized enterprise | Fewer than 250 | €50 million turnover or less, or €43 million balance sheet or less |
A five-person label turning over €800,000 a year is a microenterprise. A 120-person contemporary brand with €30 million in revenue is medium-sized. Both sit inside the "SME" umbrella this guide refers to throughout — the SME category as a whole is simply micro, small and medium-sized enterprises combined.
Ownership counts too, and this is where brands get caught out. The Recommendation requires a "partner enterprise" — another company holding 25% or more of yours, or vice versa — to be folded in proportionally to its stake, and a "linked enterprise" — one with a controlling interest either way — to be added in at 100%. A public body holding 25% or more strips SME status entirely. Staff is counted in annual work units, and a size category only changes once the new thresholds are crossed for two consecutive accounting periods. In practice: a five-person label that clears every number above on its own accounts can still fail the test the moment a larger group takes a controlling stake, because ESPR then measures it with the parent's headcount and turnover folded in, not its standalone figures.
It's also worth being precise about which "SME" you mean, because this is ESPR's definition, not a universal one. The EU Deforestation Regulation (EUDR) — which no longer covers leather as of September 2026 — and the Corporate Sustainability Reporting Directive both define size by reference to Article 3 of the Accounting Directive (2013/34/EU) instead, a different "meet two of the three criteria" test with its own, lower thresholds — a micro-undertaking there is capped at €900,000 turnover, not €2 million. The same brand can be a small enterprise under ESPR and fall into a different bracket under EUDR. When a specific obligation is at stake, check which definition that particular law actually uses.
2. Does the DPP itself have a small-business exemption?
No. The Commission's own DPP FAQ lists exactly two categories of exemption from the DPP framework: products the Ecodesign Regulation does not cover at all — food and animal feed, medicinal products, living plants, animals and micro-organisms, products of human origin — and cases where another EU law already runs an equivalent digital information system. Company size is not on that list.
The same FAQ says it plainly elsewhere: small and medium-sized enterprises "may need technology upgrades and training" to meet the requirements — a hurdle to clear, not a reason to be excused from it. A one-person atelier and a listed group face the identical DPP data obligation once the textile delegated act applies.
3. Where size does matter: the unsold-goods destruction ban
Size becomes genuinely decisive elsewhere in ESPR — just not for the DPP. Articles 24 and 25 restrict discarding and require disclosing unsold consumer products, apparel and footwear included, and here the EU has built in real, size-based relief:
Related but separate obligation — not the DPP
ESPR Articles 24–25: unsold consumer products
- Large enterprises: destruction prohibited from 19 July 2026 (Art. 25); annual disclosure of discarded unsold goods required from the first full financial year after ESPR's entry into force onward — 2025 for calendar-year filers (Art. 24).
- Medium-sized enterprises: both obligations apply from 19 July 2030, roughly six years after ESPR entered into force on 18 July 2024.
- Micro and small enterprises: exempt from both obligations, as the regulation is written today.
Article 25(5) lets the Commission extend the destruction ban and the Article 24 disclosure duty to micro and small enterprises later, for specific products, if it finds sufficient evidence the exemption is being used to circumvent either obligation.
It is proof the EU does build size-tiered relief when it chooses to — it just has not, so far, for the DPP data obligation itself.
4. What has the EU actually promised SMEs?
Article 22 ESPR makes two commitments, both real, neither triggered yet:
From the European Commission: when it adopts each product's delegated act, it must, "where appropriate," accompany it with digital tools and guidelines built specifically for SMEs and micro-enterprises.
From your Member State: every EU country must run at least a one-stop-shop (or equivalent mechanism) to help SMEs adapt, and may add further support — fiscal advantages, access to finance, specialised training, technical assistance — within state-aid rules.
Neither exists yet for textiles, because the textile delegated act does not exist yet. Under Article 22, the support is tied to the act's adoption — a legal entitlement in principle, not something available in advance of it.
5. What this means for your brand
There is no exemption today, and nothing in ESPR or the Commission's own guidance points to one being planned — so it is not a safe assumption to build a timeline around. Start structuring your product data now, regardless of size. But budget for the fact that free Commission tooling, SME-specific guidance and a one-stop-shop in your home Member State become a legal entitlement the moment the textile delegated act lands — and track your own national contact point, since a meaningful share of the promised support is delivered at Member State level, not centrally.
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