Member Article

Certain Member States already have adopted exceptional aid measures (such as Slovenia, Denmark and Germany) and many more will follow, but public support for undertakings still must comply with the EU State aid rules.

However, in these exceptional times, the European Commission is determined to provide the necessary support to the Member States in this regard, and will consider using flexibility in its State aid rules.

In its coordinated economic response to the COVID-19 Outbreak of 13 March 2020, the European Commission gives an overview of the support measures that can be granted in compliance with the existing State aid rules:

• Measures which are applicable to all undertakings such as wage subsidies and suspension of payments of corporate and value added taxes or social contributions. As there is no selectivity, these measures will not constitute State aid and can be granted without any intervention of the Commission.

• Financial support to consumers, e.g. for cancelled services or tickets that are not reimbursed by the operators. Since State aid can only exist for aid granted to an undertaking, this financial support can also be put in place without the need for approval by the European Commission.

• Aid measures enabling Member States to meet acute liquidity needs and to support undertakings facing bankruptcy due to the Corona crisis, can be approved by the European Commission based on Article 107 (3)(c) TFEU which provides the possibility to grant aid to facilitate the development of certain economic activities or of certain economic areas.

• Article 107 (2) b) TFEU provides the possibility for Member States to grant aid to make good the damage caused by natural disasters or exceptional occurrences. The Covid outbreak is considered as such an exceptional occurrence. Measures that could be covered are measures to compensate companies in sectors that have been particularly hard hit (transport, tourism and hospitality) and measures to compensate organizers of cancelled events (concerts, festivals, sport events, commercial fairs,…) for the damages they suffered.
  
  

In Belgium for example, this could include the compensations announced by Flemish Minister of Economy Hilde Crevits for shops, bar and restaurants that, under the latest containment measures taken by the Federal Government, have to close completely or during the weekend.

• In case of particularly severe economic situations, such as the one currently faced by Italy and Spain (but probably also by several other Member States in the near future), EU State aid rules allow Member States to grant additional support to remedy a serious disturbance to their economy. This is foreseen under article 107(3)(b) TFEU (a legal basis which was introduced after the mad cow disease and during the financial and economic crisis of 2008).

• Finally, a variety of additional measures such as de minimis aid of maximum 200.000 EUR over a 3 year period, or aid measures that are exempted from notification by the General Block Exemption Regulation of 17 June 2014 (such as investment and operating aid in favor of SMEs) remain also possible.
  
  

It is important to add that financial support from the EU or Member States granted to health services or other services of general interest to overcome the Corona crisis fall outside the State aid control, as they do not constitute economic activities.

Under the current framework, obtaining approval from the European Commission for the granting of State aid can often take several months. As this would be catastrophic in the current circumstances, the European Commission has communicated that is has taken the necessary measures to ensure a swift approval procedure.

That this actually happened clearly follows from the European Commission’s very fast approval of the 12 million EUR Danish aid scheme to compensate the damages caused by cancellations of large public events due to the outbreak of the Corona virus. The European Commission assessed the measure under article 107(2)(b) TFEU and approved it on 12 March 2020 within 24 hours of the notification. 

The Commission has set up a dedicated mailbox and telephone number to assist Member States with any queries they have. To further facilitate swift Member State action, the Commission stands ready to provide templates based on precedent decisions.

It has also prepared a draft proposal for a State aid Temporary Framework based on Article 107 (3) (b) TFEU to support the economy in the context of the Covid-19 outbreak which was sent on March 17 to the Member States for consultation. The new Temporary Framework foresees the possibility for Member States to:

• set up schemes to grant aid in the form of direct grants or tax advantages up to 500.000 EUR to an undertaking to address its urgent liquidity needs;

• give subsidised State guarantees on bank loans,

• enable public and private loans with subsidised interest rates.
  
  

Finally, the new Temporary Framework will recognise the important role of the banking sector to deal with the economic effects of the COVID-19 outbreak, namely to channel aid to final customers, in particular small and medium-sized enterprises.

Only undertakings that entered into difficulty after 31 December 2019 would be eligible for aid under this temporary framework.

It is the Commission’s aim to have the new Temporary Framework in place in the next few days.

ALTIUS will keep you informed about the latest development in this area and is at your disposal for any question you might have.

Do not hesitate to contact Hanne Baeyens  or Carmen Verdonck for further information.

The above information is merely intended as comment on relevant issues of Belgian law and is not intended as legal advice. Before taking action or relying on the comments and the information given, please seek specific advice on the matters that are of concern to you.