State aid: Commission approves German 10 billion euro scheme to compensate companies for damage suffered as a result of the coronavirus epidemic – The European Sting – Critical News & Insights on European Politics, Economy, Foreign Affairs , Business & Technology

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The European Commission has ruled that a € 10 billion German scheme to compensate companies for damage related to the coronavirus outbreak complies with EU state aid rules.

Executive Vice President Margrethe Vestager, responsible for competition policy, said: “This The 10 billion euro scheme allows Germany to compensate, at least in part, companies in all sectors for the damage suffered and the emergency measures taken to limit the spread of the coronavirus. We continue to work closely with Member States to find viable solutions to support businesses in these difficult times, in line with EU rules. “

Under this scheme, companies in all sectors will be entitled to compensation for certain damages suffered as a result of the complete closure of their activities as a result of the coronavirus epidemic and the restrictive measures that the German government had to have. set up to contain the spread of the virus. . The compensation period will depend on the implementation of restrictions between March 16, 2020 and December 31, 2021. Compensation, in the form of direct grants, can cover up to 100% of the actual damage suffered by beneficiaries during the eligible period. period, and can only be granted after the damage has occurred.

The Commission assessed the measure against Article 107 (2) (b) of the Treaty on the Functioning of the European Union (TFEU), which allows the Commission to approve State aid granted by Member States to compensate specific companies or sectors for damage directly caused by exceptional events.

The Commission considers the coronavirus epidemic to be considered an exceptional event, as it is an extraordinary and unforeseeable event with a significant economic impact. Consequently, exceptional interventions by Member States to compensate for the damage directly linked to the epidemic are justified.

The Commission has found that the German aid scheme will compensate the damage directly linked to the coronavirus epidemic. The Commission also considered that the measure was proportionate, as the compensation envisaged does not exceed what is necessary to repair the damage.

The Commission therefore concluded that the scheme complies with EU state aid rules.

Background

Aid granted under the measure approved today can be combined with other aid for the compensation of eligible damage during the eligible period between 16 March 2020 and 31 December 2021, and with aid under state aid Temporary frame, up to a maximum amount of aid equal to 100% of the eligible damage. The other aid with which this measure can be combined includes aid already approved by the Commission on the basis of the temporary framework under the ‘Third modified federal scheme on small grants 2020’ (SA.56790, last amended by SA.61744), the “Federal subsidized loan scheme 2020” (SA.56863, last amended by SA.61744), the “Federal Guarantee Scheme 2020” (SA.56787, last amended by SA.61744), the “Federal scheme on fixed costs not covered 2020” (SA.59289, last amended by SA.61744), the “Federal scheme for recapitalization measures and subordinated loans 2020” (SA.58504, last amended by SA.61744), as well as the aid approved on the basis of Article 107 (2) (b) TFEU under the “Federal Damage Compensation Scheme for the November and December 2020 foreclosure” (SA.60045).

Financial support from the EU or from national funds to health services or other public services to tackle the coronavirus situation does not fall under state aid control. The same goes for any public financial support granted directly to citizens. Likewise, public support measures available to all businesses, such as for example wage subsidies and the suspension of the payment of corporate taxes and value added or social contributions, do not fall under the control of government aid. State and do not require Commission approval under EU state aid rules. In all these cases, Member States can act immediately.

Where state aid rules apply, Member States may design aid measures sufficient to support specific companies or sectors suffering from the consequences of the coronavirus outbreak, in accordance with the existing aid framework. ‘State of the EU. On March 13, 2020, the Commission adopted a Communication on a coordinated economic response to the COVID-19 epidemic setting out these possibilities.

In this regard, for example:

  • Member States may compensate specific companies or sectors (in the form of schemes) for damage suffered due and directly caused by exceptional events, such as those caused by the coronavirus epidemic. This is provided for in Article 107 (2) (b) TFEU.
  • State aid rules based on Article 107 (3) (c) TFEU allow Member States to help businesses cope with liquidity shortages and in need of assistance urgent rescue.
  • This can be complemented by various additional measures, such as the de minimis Regulation and the General Block Exemption Regulation, which can also be put in place immediately by Member States, without intervention by the Commission.

In the event of a particularly serious economic situation, such as the one currently facing all Member States due to the coronavirus epidemic, EU state aid rules allow Member States to grant aid for remedy a serious disruption in their economy. This is provided for in Article 107 (3) (b) of the TFEU of the Treaty on the Functioning of the European Union.

On March 19, 2020, the Commission adopted a Temporary framework for state aid on the basis of Article 107 (3) (b) TFEU to allow Member States to use the full flexibility provided by State aid rules to support the economy in the context of the coronavirus epidemic. The temporary framework, as amended on April 3, May 8, June 29, October 13 2020 and January 28, 2021, provides for the following types of aid, which may be granted by Member States: (i) direct grants, equity injections, selective tax advantages and advance payments; (ii) State guarantees for loans taken out by companies; (iii) subsidized public loans to enterprises, including subordinated loans; iv) Safeguards for banks channeling state aid to the real economy; (v) Short-term public export credit insurance; (vi) support for research and development (R&D) related to coronaviruses; (vii) Support for the construction and scaling of testing facilities; (viii) Support for the production of relevant products to fight against the coronavirus epidemic; (ix) Targeted support in the form of deferral of tax payments and / or suspensions of social security contributions; (x) Targeted support in the form of wage subsidies for employees; (xi) Targeted support in the form of equity and / or hybrid instruments; (xii) Coverage of uncovered fixed costs for companies facing a drop in turnover in the context of the coronavirus epidemic.

The temporary framework will be in place until the end of December 2021. In the interests of legal certainty, the Commission will assess before this date whether it should be extended.

The non-confidential version of the decision will be made available under file number SA.62784 in the State aid register on the Commission competition website once all privacy concerns have been resolved. New publications of State aid decisions on the Internet and in the Official Journal are listed in the Weekly e-News contest.

You will find more information on the temporary framework and other measures taken by the Commission to deal with the economic impact of the coronavirus pandemic here.


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