Guidelines on regional State aid

KEY POINTS

The Commission, under Article 107(3)(a) and (c) of the Treaty on the Functioning of the European Union (TFEU), may allow State aid to:

• promote the economic development of areas where the standard of living is abnormally low or there is serious underemployment, and to promote the development of the European Union’s (EU) outermost regions (Article 349 TFEU);
• facilitate the development of certain economic areas in the EU.

EU Member States, under Article 108(3) TFEU, must notify all regional aid to the Commission, except aid automatically allowed by Article 1 of Council Regulation (EU) 2015/1588 (see summary).

Scope

The guidelines apply to all economic sectors except:

• aid granted to steel, lignite and coal;
• activities with their own specific State aid rules (fisheries and aquaculture, agriculture, transport, broadband and energy).

Eligible costs

The following costs are eligible.

• Investment aid:
  • costs in tangible and intangible assets;
  • estimated wage costs over 2 years of jobs created by the initial investment;
  • a combination of the above, provided this is less than the higher of the two individual categories.
• Operating aid:
  • costs must be predefined and fully attributable to the problems being addressed;
  • compensation for quantified additional operating costs in the EU’s outermost regions due to factors such as remoteness, small size and difficult terrain or climate.

Objectives and criteria

Aid must:

• contribute to regional development and cohesion through the following means:
  • promoting the economic development of areas with an abnormally low standard of living or serious underemployment (known as ‘a’ areas) and outermost regions with structural, economic and social challenges
  • facilitating the development of certain economic activities or areas (known as ‘c’ areas) where the aid will not unduly distort competition;
• meet each of the following criteria:
  • change the behaviour of the recipient, which would not have happened otherwise (incentive effect)
  • bring material improvement, which the market itself could not achieve (need for state intervention)
  • be appropriate to meet the policy objective (appropriateness of the aid measure)
  • be limited to the minimum needed to stimulate the additional investment or activity (proportionality of the aid)
  • outweigh any negative effects on competition and trade between Member States (avoidance of undue negative effects)
  • allow Member States, the Commission, businesses and the public easy access to all relevant acts and information (transparency).

Transparency

Transparency is ensured by requiring Member States to publish on a Commission or comprehensive national website:

• the full text of individual aid decisions or approved scheme;
• information on each individual award over €100,000.

Evaluations

Evaluations:

• are carried out for schemes
  • where potential distortion of competition and trade is particularly high
  • with a State aid budget or accounted expenditure over €150 million in a single year or €750 million in total;
• may be required for schemes with large aid budgets or novel characteristics, or when significant market, technology or regulatory changes are expected.

Eligible areas

The guidelines set out the criteria the Commission applies to determine ‘a’ and ‘c’ areas (under Article 107(3)(a) and (c) TFEU respectively).

These:

• must be identified on a regional aid map, and notified to and approved by the Commission, before regional aid can be given to recipients in those areas;
• must cover 48% of the EU-27 population — under the 2014-2020 regional State aid guidelines for the EU-28, the figure was 47%;
• will be reviewed by the Commission in 2023, taking into account the latest available statistics.

Reporting

Member States must:

• submit annual reports to the Commission;
• maintain detailed records for 10 years from the date aid is awarded, containing all information necessary to ensure that eligible costs and maximum aid intensity conditions have been respected.