04-29-2020  | Update State Aid April 2020

Coronavirus pandemic: Actions by EU Member States




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The EU Commission has implemented a Temporary Framework for State aid measures and provided the Member States with a toolbox of instruments to support their companies in the crisis. Germany has implemented some of these instruments. The following article takes a look at instruments that have been notified by other Member States and are also of interest to Germany.

Temporary Framework

On 19 March 2020, the European Commission adopted the Temporary Framework for State aid to support the economy in view of the current COVID-19 outbreak (Communication C(2020) 1863). During the financial crisis, the EU Commission has worked with a Temporary Framework as well to allow Member States to support the real economy. The Temporary Framework is not legally binding, but a communication from the EU Commission on how it applies and interprets the rules of EU law when deciding on state aid notifications by Member States.

The EU Commission bases its toolbox on Art. 107 (3) b) TFEU ("aid […] to remedy a serious disturbance in the economy of a Member State"). In addition, the Temporary Framework allows compensation payments to certain companies or industry sectors affected by the COVID-19 pandemic on the basis of Art. 107 (2) (b) TFEU ("aid to make good the damage caused by [...] exceptional occurrences").

Extension of the Temporary Framework

On 3 April 2020, the EU Commission extended the Temporary Framework (Communication C(2020) 2215). Now the Member States can also support the following activities:

  • Research and development in connection with coronavirus,
  • Construction and expansion of test laboratories,
  • Manufacture of products relevant for combatting coronavirus.

On the basis of the Temporary Framework, the EU Commission has already approved numerous aid schemes notified by  the Member States as compatible with EU state aid law. Some of these notifications are presented below.

Denmark

On 12 March, 2020, the EU Commission approved a Danish state aid scheme (SA.56685) that allows organisers of public events with more than 1,000 participants to receive compensation for the cancellation of the event. Organisers of events with less than 1,000 participants aimed at risk groups can also receive compensation. It is irrelevant whether or not the events were subject to a charge. Public bodies are excluded from compensation in principle. Eligible for compensation are loss of income and additional costs due to cancellation, postponement or change in the conditions of the event organisation. Compensation of up to 100 percent of eligible costs is possible. This aid scheme is based on Article 107 (2) (b) TFEU. 

Sweden

Sweden has notified two new schemes: By means of measure SA.57501 (released on 22 April 2020), the state compensates organisers of cultural events on the basis of Art. 107 (2) (b) TFEU. Up to 75 percent of the lost turn-over for events in the period from 12 March to 31 May 2020 can be compensated. By means of measure SA.56972 (released on 15 April 2020), Sweden supports companies in paying rent. The prerequisite is that the tenant and landlord agree on a rent reduction. The state pays up to 50 percent of the reduced rent for three months. This aid scheme was adopted on the basis of Art. 107 (3) (b) TFEU.

The Netherlands

A newly introduced scheme by the Netherlands (SA.56915), approved by the EU Commission on 3 April 2020, aims to enable companies to acquire, lease, license and implement e-health applications. Applications for funding can be submitted by social support services, health care services and youth care services. The funding will mobilise providers to distribute e-health applications that enable continuous support and remote care for patients who are to stay at home during the coronavirus pandemic. Treatments not related to coronavirus should be carried out at home rather than in hospitals, if possible. The sudden increase in demand for these services requires investment in expanding the availability of such applications. The funding is intended to minimise liquidity bottlenecks in the expansion of these services.

Italy

On 22 March 2020, the EU Commission approved an Italian state aid scheme (SA.56786), which provides for direct grants and repayable advances to companies that

  • set up factories for the production of medical appliances and personal protective equipment,
  • expand production for the manufacture of such equipment or
  • convert their production line for this purpose.

The aid is granted for medical equipment such as respirators and personal protective equipment such as masks, glasses, gowns and protective suits. The products will be remunerated according to the market prices applicable in December 2019.

Luxembourg

On 8 April 2020, the EU Commission approved a scheme designed by Luxembourg (SA.56954) under which the state grants non-repayable subsidies to companies of all sizes for R&D activities for products relevant to the COVID-19 pandemic. The government is providing a total of EUR 30 million. The scheme covers basic research, industrial research and experimental research projects. In addition to funding research, the government will cover up to 80 percent of the eligible costs in order to create the necessary production capacity.

United Kingdom

The United Kingdom – which is still subject to EU regulations until the end of the year – has, among other measures, made use of the opportunity to support research and development in connection with the coronavirus pandemic. The British government intends to support the following projects with grants:

  • Projects for research and development on coronavirus,
  • Construction and expansion of test facilities for the development, testing and manufacture of medical products needed to combat coronavirus.

With its decision SA.56841, the EU Commission approved this state aid scheme on 6 April, 2020.

Further states granting R&D aid

Due to the dynamic development, further companies have notified R&D schemes with the EU Commission. Hungary (SA.57007, approval dated 17 April 2020) supports R&D activities with wage subsidies to companies that would otherwise have laid off employees. Malta (SA.57075, approval of 22 April 2020) also supports R&D activities with direct grants of between 80 and 100 percent of eligible costs. Portugal (SA.57035, approval of 17 April 2020) supports R&D activities with direct grants as well. The Czech Republic (SA.56961, approved on 14 April 2020) supports SMEs producing medical products to combat the COVID 19 pandemic.

Conclusion

The examples presented from other Member States show that Germany has further instruments at its disposal to support the real economy. As far as can be seen, the Federal Government has not yet notified any regulation providing for compensation payments to event organisers. The Federal Government seems to adopt the "voucher solution" (i.e. converting a ticket into a voucher for a future event) in order to help the affected companies. With regard to e-health applications, R&D activities and the production of medical equipment, no notifications from Germany have been published so far. However, the situation is dynamic and decisions are made daily by the EU Commission. It is therefore possible that Germany will take further measures to support the economy. It would be desirable to have aid schemes that promote digitisation in the health sector and develop solutions that can also be used after the coronavirus pandemic.

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