SMEs and ESPR: Thresholds, Exemptions, and Simplified Obligations
Not every fashion brand faces the same Digital Product Passport requirements—here's how to determine whether your business qualifies for exemptions or simplified compliance under ESPR.
- **ESPR applies by product category, not company size**—but SMEs may benefit from extended timelines and simplified data requirements
- **Turnover and employee count** determine SME status under EU definitions: micro (<€2M, <10 staff), small (<€10M, <50), medium (<€50M, <250)
- **Textile DPP obligations begin in 2027** for most product categories, with phased rollouts through 2030
- **Exemptions are narrow**: only products placed on the market in very small quantities or bespoke/artisan items may qualify
- **Simplified compliance** means fewer data fields and longer transition periods—not zero obligations
The Confusion Around Who Must Comply#
Since the Ecodesign for Sustainable Products Regulation (ESPR) entered into force in July 2024, one question dominates conversations with mid-size fashion brands: Does this apply to us?
The short answer: probably yes, but with nuances.
Unlike some EU regulations that carve out blanket exemptions for small and medium enterprises, ESPR takes a product-centric approach. The obligations attach to the product being placed on the EU market, not the size of the company selling it. A 15-person workshop producing 10,000 garments annually faces the same fundamental DPP requirements as a multinational—though the timeline and depth of disclosure may differ.
Understanding SME Classifications#
Before assessing your obligations, confirm your SME status under the standard EU definition (Commission Recommendation 2003/361/EC):
| Category | Employees | Annual Turnover | Balance Sheet Total |
|---|---|---|---|
| Micro | < 10 | ≤ €2 million | ≤ €2 million |
| Small | < 50 | ≤ €10 million | ≤ €10 million |
| Medium | < 250 | ≤ €50 million | ≤ €43 million |
You must meet the employee threshold and at least one financial threshold. For groups of companies, consolidated figures may apply.
According to Eurostat, 99.8% of enterprises in the EU textile and apparel sector qualify as SMEs (Eurostat, 2023). This means the vast majority of the industry is watching carefully for clarity on how ESPR treats smaller operators.
What ESPR Actually Says About SMEs#
The regulation acknowledges the disproportionate burden compliance can place on smaller businesses. Article 5(6) and Recitals 27-29 of ESPR establish the principle that delegated acts—the product-specific rules—should consider SME impacts and may include:
- Extended implementation timelines (additional 12-24 months after large enterprises)
- Simplified information requirements (fewer mandatory data fields)
- Proportionate verification procedures (self-declaration vs. third-party audit for some categories)
However, these are not automatic. Each product category's delegated act will specify whether and how SME provisions apply. The first textile-specific delegated acts are expected in late 2025 or early 2026, with obligations phasing in from 2027 (European Commission, 2024).
The Narrow World of Exemptions#
True exemptions under ESPR are rare. The regulation permits exclusions only in specific circumstances:
- Bespoke or made-to-measure items produced individually for a specific customer (Article 1(3))
- Products placed on the market in very small quantities—though "very small" remains undefined and will be clarified per product category
- Second-hand goods re-entering the market without modification
- Products exclusively for military or national security use
Critically, being an SME does not automatically qualify your products for exemption. A small brand producing 5,000 identical t-shirts per season is placing a standardised product on the market at scale—those items will require DPPs.
The European Commission estimates that fewer than 3% of textile products will qualify for full exemptions (European Commission, 2024). Most SMEs should plan for compliance, not exemption.
Simplified Obligations: What They Mean in Practice#
For qualifying SMEs, "simplified" compliance typically means:
| Aspect | Standard Requirement | Simplified SME Requirement |
|---|---|---|
| Data fields | Full product passport (~40+ fields) | Core fields only (~15-20 fields) |
| Supply chain depth | Tier 1-4 traceability | Tier 1-2 traceability |
| Verification | Third-party audit | Self-declaration with spot checks |
| Timeline | 2027 start | 2028-2030 phased start |
| Digital infrastructure | Full API integration | Manual upload permitted |
These are illustrative projections based on Commission working documents and stakeholder consultations (EURATEX, 2024). Final requirements await the delegated acts.
Frequently asked questions
Does my €8 million turnover brand need a DPP?
Yes. At €8 million turnover, you are a "small enterprise" under EU definitions, but you are still placing products on the EU market. ESPR obligations apply to the product, not your company size. You may benefit from simplified requirements or extended timelines, but you will need DPPs for covered product categories.
What if I only sell 500 units of a particular style?
It depends on the forthcoming delegated acts. "Very small quantities" has not been defined numerically for textiles. Some expect thresholds around 100-200 units per model per year, but this is speculative. Until clarity arrives, assume compliance.
Can I wait until 2027 to start preparing?
You can, but it's risky. Supply chain data collection—knowing your Tier 1-3 suppliers, their certifications, material compositions—takes 6-18 months to systematise. Brands that begin now will face smoother compliance; those that wait may scramble.
Positioning for Proportionate Compliance#
The message for mid-size brands is clear: exemption is unlikely, but panic is unnecessary. ESPR was designed with proportionality in mind. Your obligations will likely be real but manageable—especially if you start collecting supply chain data now rather than in 2027.
Trama helps brands of all sizes build the data infrastructure needed for DPP compliance: capturing supplier information, mapping material flows, and generating compliant product passports—scaled to your actual complexity. Whether you're a 20-person atelier or a growing mid-market label, the foundation is the same: knowing your supply chain, documenting it systematically, and making that data accessible when regulators and consumers ask.
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