Brussels, 21/12/2005 (Agence Europe) - With the adoption, on Wednesday, of the new guidelines for regional aid for the period 2007-2013, the Commission redirected aid to the most disadvantaged regions of the EU while maintaining certain possibilities for the richest Member States. Neelie Kroes' resolve shown at the moment reflection was floated on reducing regional aid seemed radical, especially when she asserted last January that she wanted to finish with regional State aid in the richest EU countries (EUROPE 8875). These statements to the press had pushed some Member States to react, and France, Germany, the United Kingdom and Austria told the Commission of their reservation about some aspects of the provisions envisaged at the time (EUROPE 8879). Consultation with Member States made some adjustments foreseen in the initial project less abrupt, while respecting the aim of reducing and better targeting State aid in line with the wishes of the European Council. Thanks to a transition mechanism and a safety net to limit the “losses” compared to the 2000-2006 period, 43.1% de la population of the EU will remain covered by regional aid (32.5% of the EU15) compared to 52.2% at present.
The regions where GDP per capita is below 75% of the EU25 average may benefit from the highest rates of aid under Article 87§3a, as well as operating aid, which aims to reduce the enterprise's current spending. The level of aid authorised in the regions which meet the objective of Structural Fund convergence are divided into 3 categories depending on the level of regional GDP compared to Community GDP (between 60% and 75% of the Community average, between 45% and 60%, or below 45%) and are differentiated according to the size of the beneficiary enterprise. Thus, aid intensity authorised for large companies varies from 30 to 50%, that foreseen for average sized companies from 40 to 60% and that concerning small companies 50 to 70%. Eight Member States have a 100% coverage for their population (Estonia, Latvia, Lithuania, Hungary, Poland, Slovenia, Malta and Greece). The very outlying regions, whatever their relative GDP, will be considered as disadvantaged and will benefit from derogation from Article 87§3a, with possibly supplementary increases.
A transitional regime will be set in place for statistical effect regions, allowing them to continue to benefit from the lowest rates of aid granted on the basis of Article 83§3a (i.e. 30% for large companies, 40% for medium-sized companies and 50% for small companies). This system finally extends until 31 December 2010, with the possibility of being renewed if the situation in these regions deteriorates. In the contrary case, the regions will be automatically eligible as of 1 January 2011 to 20% aid for large companies, 30% for medium-sized companies and 40% for small companies under the derogation to Article 87§3a. These levels of derogatory support are more beneficial than those normally granted to regions under Article 87§3a, that is, regions eligible under the objective of competitiveness and employment as of 2007. These areas may in fact benefit from aid between 10% and 15% for large companies, between 20% and 25% for medium-sized companies and between 30 and 35% for small. The Commission has determined the maximum population coverage for each Member State, which must now place the eligible regions into their different zoning categories, according to flexible criteria and characteristics already specified for most in the proposal presented in July (EUROPE 9000).
In order to comply with a ruling from the Court of Justice, the Commission will, as foreseen, renounce the net subsidy equivalent (NSE) method of calculation. To the great disappointment of several Member States which see the risk of tax dumping between territories, it will henceforth calculate gross subsidy equivalent (GSE) support. According to some Member States, this change could be to the benefit of companies in Member States that have a low level of taxation.
The guidelines also authorise a new form of operating aid in the so-called convergence regions to combat depopulation in the regions that are more sparsely populated, and simplify the rules governing this kind of aid in the very remote regions. Furthermore, aid to the creation of businesses will be authorised throughout the assisted regions. The amounts envisaged initially were in both cases reduced by one million, and it will thus be possible to allocate a maximum of EUR 2 million for small businesses in eligible regions under Article 87§3a, and one million for those under Article 87§3a. Finally, the rules governing the major investment projects of over EUR 50 million are included in the guidelines for the first time. Any investment must at any rate make a real and sustainable contribution to regional development and be maintained in the region considered for a period of at least 5 years after its completion ( or 3 years for SMEs).