EU defines startup and innovative company 2026: what criteria must you meet

Key data

If your company is considered innovative, technological or emerging, the Recommendation (EU) 2026/720 of the European Commission, published on March 24, 2026, can change the rules of the game for accessing European public financing. For the first time, the EU proposes harmonized and common definitions for three types of company: the innovative company, the innovative startup (innovative emerging company) and the innovative scaleup (innovative scaling company).

Until now, each Member State applied its own criteria to define what a startup or innovative company was for the purposes of aid, taxation and access to public programs. This fragmentation generated inequalities and made it difficult for Spanish companies to access European calls. Recommendation 2026/720 seeks to end this dispersion.

What does this regulation establish?

Recommendation 2026/720 defines three categories with their own criteria. The evaluation axes are common to all three figures:

The three categories defined are:

• Innovative company: Company that meets general criteria for innovation in product, process or business model.
• Innovative emerging company (innovative startup): Recently created company with high disruptive potential and growth orientation.
• Innovative scaling company (innovative scaleup): Company in accelerated growth phase that has already validated its model and seeks to scale.

Since it is a recommendation and not a regulation, it is not directly applicable or mandatory. However, its adoption by Member States can condition access to public financing, support programs and specific tax benefits. The real impact in Spain will depend on how the national legislator transposes these definitions into its regulatory framework.

Economic and operational impact

The economic value of this recommendation is not in sanctions or direct costs: it is in the financing opportunities that it can open or close depending on whether your company fits the definitions or not.

The European programs with the largest budget for innovative companies are Horizon Europe and the EIC (European Innovation Council). Accessing them requires demonstrating that the company meets the innovation criteria that the Commission considers valid. If Spain adopts these definitions in its national regulations, public R&D+i calls, tax benefits for innovation and startup support programs could be conditioned on the company fitting into one of the three categories.

For companies that already benefit from the Spanish Startups Law (Law 28/2022), this recommendation adds a European layer that can complement or clarify the current national criteria. Companies that meet both frameworks will be better positioned for any call, national or European.

Who does it affect?

• Technology startups seeking European or national financing linked to innovation criteria.
• SMEs with R&D activity that want to access programs such as Horizon Europe or the EIC.
• Scaleups in growth phase that need to accredit their status to public investors or European funds.
• Investors and venture capital funds that finance emerging companies and need to accredit the innovative profile of their portfolio.
• Public innovation support bodies (CDTI, regional agencies, public accelerators) that will need to adapt their selection criteria.
• Innovation advisors and consultants who accompany companies in accreditation processes or aid applications.

Practical example

A Spanish software company founded three years ago, with a team of 15 people, that allocates 20% of its budget to product development and operates in a market with few direct competitors, could fit into the category of innovative startup according to the criteria of Recommendation 2026/720: recent age, high R&D level, demonstrated growth potential and business model with disruptive nature.

If Spain adopts these definitions in its regulations, that company could formally accredit its status as an innovative startup and access EIC or Horizon Europe calls with greater documentary strength. Without this harmonized accreditation, its application would depend on disparate interpretations depending on the evaluating body.

On the other hand, a traditional professional services company with low R&D investment and consolidated business model would hardly fit into any of the three categories, remaining outside the scope of these financing programs.

What should companies do now?

1. Review whether your company meets the four criteria of Recommendation 2026/720: age, R&D level, growth potential and disruptive nature of the business model. This preliminary diagnosis is the basis for any subsequent action.
2. Document R&D activity and the innovative nature of your business model. Although the recommendation is not binding today, having this documentation ready accelerates any accreditation process or aid application.
3. Follow the Spanish transposition of these definitions. The real impact on national calls depends on how the Spanish legislator incorporates these criteria. Monitor news from the CDTI and the Ministry of Science and Innovation.
4. Evaluate the fit with Horizon Europe and the EIC if your company has a technological or scientific profile. Aligning with European definitions can significantly improve the chances of success in these calls.
5. Consult with an advisor specialized in European aid if your company is in active application phase. Correct classification within the three categories can be decisive for eligibility.