The Commission adopts the First Amendment to the Temporary Framework to support the economy in the context of the coronavirus outbreak
On Friday 3 April 2020, the European Commission extended the Temporary Framework to enable Member States to accelerate the research, testing and production of coronavirus relevant products such as vaccines, medicines, medical devices, disinfectants and protective equipment, to protect jobs and to further support the economy in the context of the coronavirus outbreak including additional support to cross-border projects between Member States and to timely delivery of products.
This amendment incorporates five additional types of aid measures:
(i) Support for coronavirus related research and development (R&D) with bonuses for cross-border cooperation projects between Member States.
(ii) Support for the construction and upscaling of infrastructures needed to develop and test products useful to tackle the coronavirus outbreak, up to first industrial deployment. These include medicinal products (including vaccines) and treatments; medical devices and equipment (including ventilators and protective clothing, as well as diagnostic tools); disinfectants; data collection and processing tools useful to fight the spread of the virus. To encourage cooperation and to support quick action, companies can benefit from a bonus when their investment is supported by more than one Member State and when the investment is concluded within two months after the granting of the aid.
(iii) Support for the production of products relevant to tackle the coronavirus outbreak: Member States can grant aid in the form of direct grants, tax advantages, repayable advances and no-loss guarantees to support investments enabling the rapid production of coronavirus-relevant products (as listed under ii.). To encourage cooperation and to support quick action, companies may benefit from a bonus when their investment is supported by more than one Member State and when the investment is concluded within two months after the granting of the aid.
(iv) Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions to further reduce the liquidity constraints on companies due to the coronavirus crisis and to preserve employment in those sectors, regions or for types of companies that are hit the hardest by the outbreak.
(v) Targeted support in the form of wage subsidies for employees.
The amendment Temporary Framework also expands on the existing types of support that Member States can give to companies in need. For example, it now enables Member States to give, up to the nominal value of € 800 000 per company, zero-interest loans, guarantees on loans covering 100% of the risk, or provide equity. This can be combined also with so-called de minimis aid (to bring the aid per company to up to €1 million) and with other types of aid. It should be particularly useful to address urgent liquidity needs of small and medium-sized enterprises in a very speedy manner.
The proactive approach of the Commission regarding the use of state aid in this crisis is remarkable. It has adopted Temporary rules very quickly and is continuously assessing and monitoring whether further measures are necessary for Member States to support their economies in these difficult times and encourage cooperation across Member States in particular regarding research and production of goods that are essential in fighting this sanitary crisis with so devastating economic consequences.
Please access this link for an updated overview of the Commission’s decisions related to COVID-19 measures notified by the Member States EN
EFTA Surveillance authority amends its own state aid legislation:
The EFTA Surveillance Authority had explained that it will apply the conditions set out by the Commission in the Temporary Framework in the assessment of state aid granted in the context of the COVD-19 crisis. ESA will accordingly do the same and apply the amended Temporary Framework adopted on 3 April 2020 without adopting a specific framework for the EEA EFTA States.
ESA has nonetheless also amended some state aid guidelines it had adopted in the past to face the challenges this unprecedented crisis. ESA has made it easier to provide cheaper loans to business by reducing the state aid base rates which will allow for reduced interest rates on loans from public lenders in Norway and Iceland. Base rates are used to calculate the lowest interest rates possible for state aid free loans from public authorities. The previous level was severely misaligned with market interest rates in Iceland and Norway after the COVID-19 outbreak. ESA has therefore made use of an exceptional circumstances provision in its Reference and discount rates guidelines and reduced the state aid base rates for Norway and Iceland by almost a third. This will make it possible to provide cheaper loans to businesses without approval by ESA.
ESA intends to monitor and possibly update the base rates as from 1 May 2020, to make sure the rates reflect the market situation.
Please access this link for an updated overview of the Commission and ESA’s decisions related to COVID-19 measures notified by EU Member States and EEA EFTA States EN