SME COMPLIANCE GUIDE

Does the EU Digital Product Passport Apply to Small Fashion Brands?

Published 24.09.2026 · Reading time ~4 min · by Lior Gabriel Graetz · LG Fashion Labs

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.

No exemption

The DPP obligation applies to small and medium-sized fashion brands with no exemption based on company size.

Art. 22(3)

A binding EU commitment of dedicated support for smaller companies — tied to the textile delegated act's own adoption, not available before it.

Size still matters

Elsewhere in ESPR, brand size genuinely does change what applies, and when.

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, except in the cases listed in Article 3(2), second subparagraph, of the Recommendation. 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 once 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 "at least two of the three following 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 two main types 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. Article 25 prohibits destroying unsold apparel, clothing accessories and footwear (Annex VII) and Article 24 requires disclosure of all discarded unsold consumer products; 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, by delegated act, where there is sufficient evidence that such enterprises could be used to circumvent either obligation. Separately, under Article 25(2), any operator that is not subject to the ban must not destroy unsold consumer products supplied to it for the purpose of circumventing the ban.

That large-enterprise line is not a future deadline: the destruction ban has applied to large enterprises since 19 July 2026 and the disclosure duty already applies to them (its first disclosure covers the first full financial year during which ESPR is in force), so the exemption micro and small enterprises get today is relief from rules already in force against their larger competitors, not from something still years off.

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 tied to delegated acts, 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, as a minimum, ensure the availability of one-stop shops or similar mechanisms 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 commitment 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 Commission digital tools, SME-specific guidance and one-stop shops or similar mechanisms in your home Member State are covered by commitments that Article 22 places on the Commission (digital tools and guidance only "where appropriate") and on the Member States, tied to the textile delegated act rather than available in advance of it — 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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Frequently asked questions

Is there an SME exemption for the EU Digital Product Passport? +

No. The Commission's DPP FAQ lists two main types of exemption — products outside the Ecodesign Regulation's scope, and products already covered by an equivalent EU digital system — and company size isn't one of them. Small and large brands face the same DPP obligation.

What EU size category is my fashion brand? +

Per Commission Recommendation 2003/361/EC (adopted by ESPR Article 2): micro = under 10 employees AND €2m turnover/balance sheet or less. Small = under 50 employees and €10m or less. Medium = under 250 employees and €50m turnover or €43m balance sheet or less. The employee count is always mandatory; only the financial test is either/or — and ownership matters, since a 25%+ stake from another company can require folding that company's numbers in. This is ESPR's own definition; other EU laws, like the EU Deforestation Regulation, use a different one (based on the Accounting Directive).

Does the EU's unsold-goods destruction ban apply to small fashion brands? +

No — and this is a separate obligation from the DPP itself. Micro and small enterprises are currently exempt from ESPR's destruction ban and disclosure duty (Articles 24–25), although the Commission may extend both to them by delegated act where there is sufficient evidence that they could be used to circumvent the ban or the duty (Article 25(5)). Medium-sized enterprises are covered from 19 July 2030. For large enterprises, the destruction ban applies from 19 July 2026 and the disclosure duty already applies.

What SME support has the EU actually committed to for the DPP? +

Article 22 ESPR requires the Commission to accompany each delegated act, "where appropriate," with SME-specific digital tools and guidance, and requires every Member State, as a minimum, to ensure the availability of one-stop shops or similar mechanisms to help SMEs adapt. It's a legal commitment — but tied to the textile delegated act's adoption, not available before it.

Sources

ESPR — SME definition & supportRegulation (EU) 2024/1781 of 13 June 2024, Article 2, point defining "SMEs," "small enterprises" and "microenterprises" by direct reference to Article 2(1)–(3) of the Annex to Commission Recommendation 2003/361/EC; Article 4(4) (18-month minimum transition); Article 22 (SME support — digital tools and guidelines accompanying the Commission's delegated acts, Member State one-stop shops or similar mechanisms, and optional further measures); Articles 24–25 (unsold-goods disclosure and destruction ban, size-based dates and exemptions, including the Article 25(5) power to extend the ban and the disclosure duty to micro/small enterprises to prevent circumvention). CELEX 32024R1781 ↗
Commission Recommendation 2003/361/EC — SME thresholdsCommission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises, Annex, Articles 2–6: the employee-count-plus-turnover-or-balance-sheet test, partner/linked enterprise aggregation rules, the 25% public-body disqualification rule, annual work units, and the two-consecutive-accounting-period rule for changing category. CELEX 32003H0361 ↗
Accounting Directive — the other EU size definitionDirective 2013/34/EU, Article 3, as amended: an "at least two of the three following criteria" size test used by the EU Deforestation Regulation and the Corporate Sustainability Reporting Directive, with its own, lower current thresholds (a micro-undertaking capped at €900,000 net turnover / €450,000 balance sheet total / 10 employees) — distinct from ESPR's own Recommendation-2003/361/EC-based definition. See our SME thresholds comparison guide for the full breakdown.
European Commission — DPP FAQ, exemptions & SME guidanceEuropean Commission, "Explore our FAQs" (Digital Product Passport), live webpage, accessed and verified 29.09.2026: Q6 (the two main types of exemption from the ESPR/DPP framework), Q8 (SME technology-upgrade and training burden). single-market-economy.ec.europa.eu ↗

All sources were accessed and verified directly on EUR-Lex and the European Commission's published FAQ on 29.09.2026. This is general information, not legal, financial or investment advice.