The European Commission decided, on Thursday 28 January, to extend until 31 December 2021 the Temporary Framework for State Aid measures (adopted on 19 March 2020) to support the economy in the context of the coronavirus outbreak.
In addition, the scope of the Temporary Framework is expanded by increasing the ceilings set out in it and by allowing the conversion of certain repayable instruments into direct grants. EU countries have been consulted on this prolongation (see EUROPE 12639/3).
Margrethe Vestager, Executive Vice-President responsible for Competition Policy, said that the Commission had “increased the ceilings of certain measures set out in the Temporary Framework and provided incentives to use repayable instruments, by enabling the conversion of certain loans and other repayable instruments into direct grants later on”.
The Temporary Framework was set to expire on 30 June 2021, except for recapitalisation measures (valid until 30 September 2021). In view of the persistence of the outbreak, the Commission has prolonged all measures set out in the Temporary Framework, including recapitalisation measures, until 31 December 2021.
Increased aid ceilings. The previous ceilings per company are doubled (taking into account the availability of de minimis support). The new ceilings are set at €225,000 per company active in the primary production of agricultural products (previously €100,000), €270,000 per company active in the fishery and aquaculture sector (previously €120,000) and €1.8 million per company active in all other sectors (previously €800,000). This aid can be combined with de minimis aid of up to €200,000 per company (up to €30,000 per company operating in the fishery and aquaculture sector and up to €25,000 per company operating in the agricultural sector) over a period of three financial years, subject to complying with the requirements of the relevant de minimis.
For companies especially hit by the coronavirus crisis, with turnover losses of at least 30% during the eligible period compared to the same period of 2019, the State can contribute to the part of the fixed costs of companies that are not covered by their revenues, in an amount up to €10 million per company (previously €3 million).
Conversion into direct grants. The Commission will also enable Member States to convert, until 31 December 2022, repayable instruments (e.g. guarantees, loans, repayable advances) granted under the Temporary Framework into other forms of aid, such as direct grants, provided certain conditions are met.
In principle, such conversion may not exceed the new ceilings for limited amounts of aid (€225,000 per company active in the primary production of agricultural products, €270,000 per company active in the fishery and aquaculture sector, and €1.8 million per company active in all other sectors).
The aim is to provide incentives for Member States to choose, in the first place, repayable instruments as a form of aid.
Finally, taking into account the continued general lack of sufficient private capacity to cover all economically justifiable risks for exports to countries from the list of marketable risk countries, the amendment provides for an extension until 31 December 2021 (currently until 30 June 2021) of the temporary removal of all countries from the list of ‘marketable risk’ countries under the short-term export-credit insurance Communication.
Link to the new text amended on 28 January: https://bit.ly/2YmMfQD (Original version in French by Lionel Changeur)