DPP and SMEs: Which Rules Actually Exempt You

Four EU regimes now ask manufacturers for supply chain evidence, and each one draws the small-company line in a different place. A company can be comfortably exempt from one, caught by the next, and — in the case that matters most — exempt from all four and still spend the year answering questions about them. This guide puts the four tests side by side, names the four ways an exemption is lost, and separates being exempt from being left alone.

The four tests

Read down the "what exemption gets you" column and the differences become the point. Only one of these is a clean exit. One buys time. One swaps a hard form for an easy one. One depends on a document that may not exist for your sector yet.

Four ways an exemption is lost

These are the failure modes, in the order we see them cause trouble.

1. Group consolidation. The battery test is explicitly two-part: your own turnover and the group's consolidated turnover. A EUR 12 million EU import entity inside a EUR 300 million group is not exempt. This is the most common loss, and it is usually discovered at a customer audit or at verification — the two worst moments, because both come after the point where records could have been built.

2. The lagging financial year. Article 47 measures the financial year preceding the last financial year. The year you are trading in is not the year that decides. A company that grew through the threshold two years ago is already in scope while its current management still thinks of it as small.

3. The "established as such by" date. The EUDR's deferral to 30 June 2027 is not available to every small operator — only to those established as such by 31 December 2024. A company incorporated in 2025 to handle EU imports is small, and is on the 30 December 2026 date anyway. Check the incorporation date, not just the headcount.

4. Assuming a deal is law. Parliament and Council provisionally agreed on 9 June 2026 to extend the battery regulation's exemption to small mid-caps below EUR 200 million in turnover. Until the amending regulation — proposed as COM(2025) 501 final — is adopted and published in the Official Journal, planning against it is planning against something that is not yet law.

The exemption that does not help: being asked anyway

This is the part that surprises people, and it is the same in all four regimes.

An exemption removes your obligation. It does not remove your customer's. Every one of these rules obliges someone downstream who cannot comply without information from upstream — and upstream is you. So the questions arrive regardless, in a different form: not as a filing deadline but as a clause in a purchase agreement, a supplier questionnaire, or a condition of staying on an approved vendor list.

There is a practical asymmetry here worth naming. A legal obligation has a date, a defined scope and a defined end. A commercial requirement has none of those — it is whatever your customer needs to satisfy their own obligation, it changes when their interpretation changes, and it has no appeal. Exempt suppliers frequently do more work than obliged ones, with less clarity about when they are finished.

Walkthrough: a supplier that is exempt from everything

A representative scenario. A manufacturer with 90 employees and EUR 18 million in turnover makes powered hand tools with integrated batteries, and sells to three European distributors.

The four tests, run honestly. Battery due diligence: below EUR 40 million and independently owned, so exempt — assuming nobody consolidates it, which is checked and confirmed. EUDR: it ships no listed commodity, and wooden pallets used only to carry its goods are outside the list. CSDDD: nowhere near 5,000 employees. ESPR: no adopted act covers powered hand tools today.

Exempt from four regimes. Now the actual year. Its distributors place the tools on the EU market, so they place the batteries on the market — and the battery passport binds them from 18 February 2027, with battery due diligence following on 18 August 2027. Both need data this manufacturer holds and they do not. The requests arrive in 2026.

What it does. It answers the passport data request, because that is a condition of supply. It answers cobalt, lithium, graphite and nickel origin questions it has no duty to answer, because its distributor has a duty and no alternative source. Its own exemption is irrelevant to every one of these conversations.

The counterfactual. Suppose it had run the four tests, concluded "we are exempt", and declined the questionnaires on that basis. The consequence would not have been enforcement — no authority has jurisdiction over it. The consequence would have been a distributor, facing a February 2027 deadline it cannot miss, moving to a supplier that answers. The exemption was real and it protected nothing that mattered.

Edge cases

Exempt under one, bound under another. A EUR 30 million wood furniture exporter is outside the battery rule and inside the EUDR chain. The lowest applicable threshold across your product range sets your workload, not your company size.

Growing through a threshold. Because the battery test lags by a year, the moment you cross is not the moment you notice. Put the check in the year-end process, not in the compliance calendar.

Micro versus small. These are defined categories, not adjectives. The EUDR routes differ between them, so establish which one you are before relying on either route.

Non-EU companies. Size thresholds are about the obliged entity. A large non-EU manufacturer selling through a small EU importer concentrates the obligation on the importer — and the importer's exemption, if any, is the one that counts.

Second-hand and remanufactured goods. Re-placing a product on the market can make you the obliged operator regardless of your size. Settle who that is before the transaction.

The one check worth doing annually

Three of the four tests above move without anyone deciding anything. Turnover crosses a threshold. A group restructures and a previously independent entity becomes a subsidiary. A financial year closes, and the lagging measure in the battery test starts pointing at a different year.

None of those events generates a notification. They are discovered, if at all, when someone runs the test again — which is why the check belongs in the year-end close alongside the accounts, not in a compliance calendar that gets reviewed when a deadline approaches.

The check itself is short: entity turnover, group turnover, headcount, incorporation date, and which product ranges are in scope. Five lines, once a year, against four regimes.

Zoom out: size stopped being the question

The older generation of EU product rules mostly asked what you make. The current generation asks what you know, and it distributes that question by contract rather than by statute. That is why the exemption tables above matter less than they look: they govern who files, and almost nobody's actual workload is set by who files.

For a small manufacturer the honest planning assumption is that you will answer questions from all four regimes without being obliged by any of them, and that the useful preparation is identical in each case — know your own suppliers, know which materials come from where, and have the right to ask. Our battery due diligence guide covers the regime with the clearest exemption text, the EUDR guide the one with the nearest deadline, and the CSDDD guide the one whose scope just moved furthest.

Related articles

EU Battery Regulation Due Diligence: The 2027 RulesWho the battery due diligence obligation binds, which four raw materials it covers, what the policy must contain, and why the date moved to 18 August 2027.EUDR Due Diligence: What Exporters Must FileWho files an EUDR due diligence statement from 30 December 2026, which seven commodities are covered, and what the 2025 amendment changed. Check your tier.CSDDD After Omnibus: Who It Binds and WhenOmnibus I raised the CSDDD due diligence thresholds to 5,000 employees and €1.5bn and moved application to 26 July 2029. Check if you are still in scope.