On 19 March 2020, the European Commission adopted the Temporary Framework on State aid measures to assist the economic system in the present context of the COVID-19 outbreak (“Temporary Framework”). The Temporary Framework is predicated on Article 107(3)(b) TFEU and goals to treatment a critical disturbance in the European economic system. The Temporary Framework allowed States to undertake measures to contribute to the continuity of financial exercise throughout the COVID-19 pandemic and to guarantee restoration after the crisis.
The Temporary Framework, adopted in March 2020 and initially in power till the finish of 2020, offered for 5 classes of aid which may, below sure situations, be thought of by the Commission to be suitable with the inner market:
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aid in the kind of direct grants, repayable advances or tax concessions, up to a most quantity of EUR 800,000 per firm;
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aid in the kind of mortgage ensures;
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aid in the kind of subsidised rates of interest for public loans;
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aid in the kind of public ensures and diminished rates of interest offered to enterprises by credit score or different monetary establishments; and
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aid in the kind of short-term export credit score insurance coverage.
In view of the pandemic’s improvement and its impression on the economies of EU Member States, the Temporary Framework has been amended a number of instances and its length prolonged.
On 3 April 2020, the Commission adopted a primary modification in order that aid could possibly be used to speed up analysis, testing and manufacturing of COVID-19-related merchandise, to defend jobs and to additional assist the economic system throughout the crisis (see our article of 7 April 2020).
On 8 May 2020, it adopted a second modification to additional facilitate entry to capital and liquidity for firms affected by the crisis (see our article of 13 May 2020).
On 29 June 2020, it adopted a 3rd modification to additional assist start-ups and micro, small and medium-sized enterprises and to encourage non-public funding (see our article of 10 July 2020).
On 13 October 2020, it adopted a fourth modification to extend the Temporary Framework and to enable aid to be used to cowl half of the uncovered mounted prices of firms hit by the crisis (see our article of 16 October 2020).
On 28 January 2021, it adopted a fifth modification to additional prolong the Temporary Framework, to adapt the aid thresholds set out in the Temporary Framework and to enable reimbursable devices to be transformed into direct grants below sure situations (see our article of 3 February 2021).
Finally, on 18 November 2021, the European Commission prolonged the Temporary Framework till 30 June 2022 (see our article of 24 November 2021). The important change issues the introduction of two classes of phasing-out aid, i.e. the possibility for Member States to grant funding and solvency assist measures past the mounted expiry date (i.e. past 30 June 2022).
- Investment assist measures
Member States can stimulate non-public funding in enterprises, offered that the funding aid is granted below an aid scheme and in varied kinds and that the most particular person aid to an enterprise doesn’t exceed EUR 10 million in nominal worth. This ceiling is elevated to EUR 15 million the place the aid scheme gives for aid solely in the kind of ensures or loans. In addition, particular person aid should not exceed 1% of the whole finances of the scheme, save in distinctive conditions duly justified by the Member State involved.
The eligible prices lined by these funding assist measures should solely embody the prices of funding in (in)tangible belongings, excluding monetary investments.
In addition, the aid depth should not exceed 15% of the eligible prices, though will increase could also be justified the place small or medium-sized enterprises are involved. In the case of aid in the kind of ensures or loans, the aid depth should not exceed 30% of the eligible prices.
Finally, Member States might restrict funding aid to particular financial areas which can be of explicit significance for financial restoration, offered that such limits are designed in a normal method and don’t represent a synthetic restriction on eligible investments.
This instrument is obtainable to Member States till 31 December 2022 if the investments involved have been made earlier than 1 February 2020.
- Solvency assist measures
Solvency assist is meant to alleviate the difficulties related to an organization’s degree of indebtedness and to act as an incentive for personal funding in fairness, subordinated debt or quasi-equity, with the intention of reaching danger sharing between Member States and personal traders.
Risk sharing is achieved by limiting the worth of such a assure to a most of 30% of the underlying portfolio when overlaying first losses, with a restrict of EUR 10 million on the whole quantity of funding offered per firm.
Like funding aid, solvency assist is granted below an aid scheme established on the foundation of clear and goal standards, in the kind of state ensures or related measures. Such assist shall be granted on market-oriented phrases and can solely be focused at SMEs as remaining beneficiaries. Financial establishments are explicitly excluded from the measure.
This instrument is obtainable to Member States till 31 December 2023.
In addition, the Commission has made different modifications, particularly:
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extending from 30 June 2022 to 30 June 2023 the possibility for Member States to convert sure reimbursable devices (corresponding to ensures, loans and repayable advances) granted below the Temporary Framework into different kinds of aid, corresponding to direct grants;
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adjusting the most quantities of sure sorts of aid in proportion to their prolonged interval;
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clarifying the distinctive flexibility provisions of the Commission’s rescue and restructuring pointers; and
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extending by three months (from 31 December 2021 to 31 March 2022) the tailored listing of non-marketable danger nations for short-term export credit score insurance coverage.
At the starting of 2022, the Commission consulted Member States on a doable extension of the Temporary Framework and requested associated macroeconomic knowledge.
However, the European Commission introduced on 12 May 2022 that the Temporary Framework wouldn’t be prolonged past 30 June 2022, though some measures might be carried out by States after this date; for instance, Member States will nonetheless have the ability to convert loans into restricted quantities of aid in the kind of direct grants, topic to the situations of the Temporary Framework and offered that this feature has been envisaged of their nationwide schemes. This conversion possibility could possibly be used below strict situations to cancel loans or elements of loans for the profit of debtors who’re unable to repay.
Similarly, Member States will even have the ability to implement their schemes to restructure loans, for instance by extending their length or reducing the relevant rates of interest, inside outlined limits.
In addition, throughout the phasing-out and transition section, Member States shall be in a position to undertake the particular funding assist and solvency assist measures described above till 31 December 2022 and 31 December 2023 respectively, topic to prior authorisation by the Commission (see above).
In conclusion, simply over two years after the Temporary Framework’s entry into power, the Commission may have enabled Member States to present speedy and versatile assist to firms affected by the COVID-19 crisis. The Commission has in reality adopted greater than 1,300 choices in the context of the coronavirus pandemic, authorising virtually 950 nationwide measures for a complete quantity of State aid estimated at virtually EUR 3,200 billion.