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The transition toward the circular economy of European small and medium‐sized enterprises (SMEs) is one of the focuses of the Agenda in Europe. The paper aims to evaluate if this drive should transform the SMEs and keep European production sustainable and competitive. The paper offers a comparative analysis of the circular economy SMEs shift within the 13 sectors of EU Member States, that have involved innovative SMEs and have begun to use or have long adopted smart technologies for the needs of control, effectiveness, efficiency, and environmental protection and energy aspect. The study highlights and evaluates the transition in 13 sectors with the highest SMEs performance with a major specialization in Smart Technologies. Five key points are identified and evaluated to analyze, the transition degree of every sector toward the circular economy. The research shows a heterogeneous transition with both sectors and countries during which the existence of best practices, are discovered, but cannot be transmitted to other sectors. A series of deterrents to the transition from a linear to a circular economy is composed within the SMEs sectors, specifically technical, commercial, and regulatory. [ABSTRACT FROM AUTHOR]