More flexibilities to EU State aid rules due to COVID-19 outbreak
The European Commission issued a Communication on 3 April 2020 to considerably increase the flexibilities in the State aid rules. The aim is to facilitate the targeting of the aid to COVID-19 relevant research and development and to investments. The new rules will also make it possible to target support to preserving employment.
The State aid rules already allow to support research, development and investments, subject to certain conditions. However, now the conditions included in the new rules allow even more flexibility than normally.
The Commission’s decisions are a follow-up to the Communication issued on 19 March 2020, where the Commission eased the State aid rules especially with respect to liquidity and access to financing.
Categories of aid enabled by the new Communication
- Aid for COVID-19 relevant research and development: The aid may be targeted e.g. to personnel costs or R&D activities and costs arising from assessing the compliance with the requirements of medicines or medical equipment. The aid may be granted in the form of direct grants, tax advantages and repayable advances.
- Investment aid for testing and upscaling COVID-19 relevant infrastructures The aid may be granted to infrastructures that are required to develop, test and upscale, up to first industrial deployment prior to mass production, medicinal products, vaccines, treatments and medical devices and equipment (including ventilators and protective clothing). The aid may be granted in the form of direct grants, tax advantages and repayable advances and loss cover guarantees.
- Investment aid for the production of COVID-19 relevant products: Products that are considered relevant in terms of responding to the coronavirus outbreak include medicines, vaccines and medical equipment such as protective clothing and disinfectants. The aid intensity may not exceed 80% of the eligible costs of the investment project. The aid may be granted in the form of direct grants, tax advantages and repayable advances and loss cover guarantees.
- Aid in the form of selective deferrals of payment of taxes and social security contributions: The aid is targeted to undertakings that are particularly hard hit by the financial problems caused by the COVID-19 outbreak e.g. in a certain sector or region The eligible types of aid include measures to ease the liquidity constraints faced by the undertakings such as deferral of payments due in instalments, granting of interest free periods, suspension of tax debt recovery, and expedited tax refunds. Deferral of payments due in instalments that apply equally to all undertakings are not covered to the State aid rules
- Aid in form of wage subsidies to avoid lay-offs during the COVID-19 outbreak
In addition, the Communication contains certain further flexibilities to State aid rules aimed to ensure access to financing for undertakings, issued by the Commission on 19 March 2020. Besides direct grants and repayable advances, in future the EU’s State aid framework allows to grant loans, guarantees and equity up to the overall cap of EUR 800,000.
The Communication also clarifies the rule that the Member States must publish relevant information on each individual aid granted under the new Communication within 12 months from the moment of granting.
The EU State aid rules create the overall framework for the business aid policy of the Member States. The relevant State aid authorities in each Member State will decide on the national implementation of the flexibilities now allowed in the State aid rules. The business funding programmes introduced by the Finnish Government to respond to the coronavirus epidemic are based on both the State aid rules in force before the current situation and the flexibilities issued by the Commission Communications. The flexibilities to the rules introduced by the Commission will facilitate the implementation of the support packages targeted to businesses.
All support measures referred to in the Communication require a notification of State aid to the Commission, and their introduction requires prior approval by the Commission.
Olli Hyvärinen, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 504 7026
Tanja Müller, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 29 504 7068