(1)

State funding meeting the criteria of Article 107(1) of the Treaty constitutes State aid and requires notification to the Commission under Article 108(3) of the Treaty. However, according to Article 109 of the Treaty, the Council may determine categories of aid that are exempted from that notification requirement. In accordance with Article 108(4) of the Treaty, the Commission may adopt regulations relating to those categories of State aid.

(2)

Council Regulation (EC) 2022/2586 empowers the Commission to declare that aid for the coordination of transport as referred to in Article 93 of the Treaty may, under certain conditions, be exempted from the notification requirement.

(3)

Aid to rail, inland waterways and multimodal transport is deemed compatible with the Treaty if it meets the needs of transport coordination or if it represents reimbursement for the discharge of certain obligations inherent in the concept of a public service in line with Article 93 of the Treaty.

(4)

To achieve the EU’s climate neutrality targets proposed by the Commission in 2019 and set out in the European Green Deal (2), a fundamental green and digital transformation of transport in the EU is needed. As part of the Commission’s 2020 sustainable and smart mobility strategy (3), the EU called on Member States to take measures making all transport modes more sustainable and promote a shift to more sustainable modes of transport.

(5)

Article 11 of the Treaty underlines the Union's commitment to environmental protection and sustainability, emphasising the integration of environmental requirements into the definition and implementation of its policies and activities. The Commission recognises the importance of sustainable practices in transport.

(6)

Based on the Commission’s experience in applying Article 93 of the Treaty, certain categories of State aid that meet the needs of transport coordination do not give rise to any significant distortion to competition and trade between Member States provided that they meet certain clear compatibility criteria set out on the basis of the extensive decisional practise.

(7)

This Regulation should apply to State aid measures granted to undertakings in the rail, inland waterways and multimodal transport sectors.

(8)

Aid that fulfils all the conditions laid down in this Regulation, both general and specific to the relevant categories of aid, should be exempted from the notification obligation laid down in Article 108(3) of the Treaty.

(9)

State aid within the meaning of Article 107(1) of the Treaty not covered by this Regulation remains subject to the notification requirement of Article 108(3) of the Treaty. This Regulation is without prejudice to the possibility for Member States to notify aid that has objectives that correspond to objectives covered by this Regulation.

(10)

This Regulation should allow for greater simplification and boost transparency, effective evaluation and checks of compliance with State aid rules at national and EU levels, while preserving the institutional powers of the Commission and Member States. This is in line with the Commission’s Communication on EU State Aid Modernisation (4) and the outcome of the fitness check carried out by the Commission in 2020 (5) highlighting the need to reduce administrative burdens and ensure efficient public spending.

(11)

The general conditions for the application of this Regulation are laid down on the basis of a set of common principles that ensure the aid: (i) serves the purpose of transport coordination; (ii) has a clear incentive effect; (iii) is necessary, appropriate and proportionate; (iv) is granted in full transparency and subject to a control mechanism and regular evaluation; and (v) does not affect competition and trade to an extent that jeopardises the general interests of the EU.

(12)

In order to ensure that the aid is necessary and acts as an incentive to further develop activities or projects, this Regulation should not apply to aid for activities in which the beneficiary would in any case engage even in the absence of the aid. Aid should only be exempted from notification under this Regulation if the work on the aided project or activity starts after the beneficiary has submitted a written application for the aid.

(13)

As regards any ad hoc investment aid covered by this Regulation granted to a beneficiary that is a large enterprise, the Member State should ensure that, in addition to complying with the conditions relating to incentive effect which apply to beneficiaries who are SMEs, the beneficiary has analysed, as evidenced by its internal documentation, the viability of the aided investment with aid and without aid. In such cases, the Member State should verify that such documentation confirms that the aid will result in a material increase in the scope of the investment supported by the aid, in a material increase in the total amount spent by the beneficiary on such investment, and/or in a material increase in the speed of completion of the investment.

(14)

Automatic aid schemes in the form of tax advantages should continue to be subject to a specific condition concerning the incentive effect, in the light of the fact that the aid resulting from such aid schemes is granted automatically. That specific condition means that those aid schemes should only support projects or activities on which works start after the entry into force of those schemes. However, this condition should not apply in the case of successor aid schemes provided the activity was already covered by the predecessor schemes in the form of tax advantages. For the assessment of the incentive effect of successor aid schemes, the crucial moment is the moment when the tax measure was set out for the first time in the original scheme.

(15)

Operating aid to reduce the external costs of transport meeting the conditions of this Regulation should be considered to have an incentive effect if the aid is passed on to the users and therefore increases the demand for sustainable transport services and a modal shift. Publicity is aimed at increasing the awareness of the measures available to reduce the competitiveness gap between sustainable land transport modes and road-only or other competing more polluting modes of transport, and is hence considered to ensure that the aid is reflected in the price that users are asked to pay. In any event, operating aid to reduce the external costs of transport should not be granted where the more polluting mode of transport is not a viable alternative to the sustainable mode of transport. Whereas for passenger services there is always a more polluting commercially viable alternative to transport by rail or by inland waterways, in the freight sector, competitiveness depends on the distance covered by the transport operations. This does not apply to single wagon load operations, as such type of unimodal rail transport is less profitable than road-only transport irrespective of the distance covered, due to the costs of collecting and aggregating wagons of different customers.

(16)

For the purposes of transparency, equal treatment and effective monitoring, this Regulation should apply only to aid that may be calculated precisely in terms of its gross grant equivalent ex ante without the need to carry out a risk assessment (‘transparent aid’). For certain aid instruments, such as loans, guarantees, tax measures, risk finance measures and, in particular, repayable advances, this Regulation sets out the conditions under which they can be considered transparent. Capital injections should not be considered to be transparent aid. In the case of small and medium-sized enterprises (SMEs), the Commission Notice on the application of Articles 87 and 88 of the EC Treaty to State aid in the form of guarantees (6) indicates levels of annual premium above which a State guarantee would be deemed not to constitute aid.

(17)

With a view to ensuring that aid is proportionate and limited to the amount necessary, this Regulation sets maximum aid amounts in terms of aid intensities in relation to a set of eligible costs. Based on the Commission’s experience, the aid intensity is fixed at a level that minimises distortions of competition and trade caused by the aided activity while appropriately addressing the market failure or another obstacle to coordination of transport.

(18)

For the calculation of aid intensity, only eligible costs should be included. The identification of eligible costs should be supported by clear, specific and up-to-date documentary evidence. This Regulation does not exempt aid which exceeds the relevant aid intensity. All figures used should be taken before any deduction of tax or other charges. Aid payable in several instalments should be discounted to its value at the moment it is granted. The eligible costs should also be discounted to their value at the moment the aid is granted. The interest rate to be used for discounting purposes and for calculating the amount of aid where aid does not take the form of a direct grant should be the discount rate and the reference rate applicable at the time of the grant, respectively. Those rates are laid down in the Commission Communication on the revision of the method for setting the reference and discount rates (7).

(19)

The Commission should ensure that authorised aid does not affect competition and trade to an extent that jeopardises the general interests of the EU. Therefore, aid in favour of a beneficiary that is subject to an outstanding recovery order following a previous Commission decision declaring an aid illegal and incompatible with the internal market should be excluded from the scope of this Regulation.

(20)

Aid to undertakings in difficulty should be excluded from the scope of this Regulation, since such aid should be assessed under the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (8).

(21)

This Regulation consolidates the extensive experience acquired by the Commission in the assessment of operating aid designed to reduce the external costs of transport. Such aid should be quantified on the basis of the external costs avoided by adopting a greener transport solution compared to a competing, more polluting mode of transport, such as road-only transport. Aid can take the form of a reduction in the charges railway undertakings pay to use rail network infrastructure compared to the charges road operators pay to use road infrastructure. Operating aid to reduce the external costs of transport should be covered by this Regulation only where distortions to competition and trade are limited and subject to well-defined conditions. This is the case where the external costs avoided are calculated in accordance with the rules and methodology set out in the Commission’s Handbook on the external costs of transport (9) and the aid intensity remains under certain thresholds. This ensures that it is strictly limited to compensation for the external costs associated with using a more sustainable mode of transport.

(22)

Furthermore, operating aid to support railway undertakings or transport organisers when launching new commercial connections should only be covered by this Regulation where distortions of competition and trade are limited and subject to well-defined conditions. This is the case of (i) new commercial rail freight and inland waterways freight connections; and (ii) new commercial rail passenger connections for scheduled passenger services between transport terminals located either in different Member States (‘cross-border rail passenger services’) or more than 400 kilometres from each other (‘long-distance rail passenger services’). The aid amount is calculated in relation to the operating losses incurred by the beneficiary during the first 5 years of operation of the new commercial connection and the aid intensity remains under a certain threshold.

(23)

Investment in rail and inland waterways unimodal and multimodal transport facilities and in private sidings across the EU is essential to ensure connectivity and the sustainable functioning of the economy and cohesion among Member States. Such investments support the priorities of the Commission’s 2020 sustainable and smart mobility strategy (10) which prioritises the development of multimodal transport facilities. This Regulation covers investment aid for the construction, upgrade and renewal of rail facilities, inland waterways facilities, rail and inland waterways multimodal transport facilities and private sidings. For the sake of clarity, this Regulation also does apply to State aid for those multimodal transport facilities which are located in maritime ports and have rail or inland waterways connections. Based on the Commission’s experience in assessing that type of aid, this Regulation aims to reduce the administrative burden caused by the notification of straightforward State aid measures and enable the Commission to focus on the potentially most distortive cases. The conditions for the exemption of investment aid to rail facilities, inland waterways facilities, rail and inland waterways multimodal transport facilities and private sidings from the notification requirement should limit distortions of competition and trade that would undermine a level playing field in the internal market, in particular by ensuring the proportionality of the aid.

(24)

Investment aid for the acquisition of vehicles for rail or inland waterways transport and certain categories of equipment used in transhipment services incidental to sustainable multimodal transport (i.e. Intermodal Loading Units and cranes on board of vessels) should be covered by this Regulation only where distortions of competition and trade are limited. For the acquisition of vehicles for rail or inland waterways transport, that is the case where the aid takes the form of a guarantee to the vehicle’s buyer subject to well-defined conditions. For the acquisition of certain types of equipment for sustainable multimodal transport, that is the case for aid schemes covering cranes on board of vessels and Intermodal Loading Units and where the aid intensity remains under well-defined thresholds.

(25)

In line with the Union’s transport and digital policies, further efforts are required to enable communication between different transport information systems, coordination of transport networks and cross-border competition and improve transport safety in the EU. This is necessary because of transport networks’ different standards and the lack of technical harmonisation, incompatible tools and systems for data collection and sharing and data sovereignty concerns. Furthermore, the Commission has learned from its experience in assessing the measures for interoperability support notified to it under the Guidelines adopted by the Commission in 2008 on State aid for railway undertakings (11). This experience shows that acute market failures exist because of coordination failures and of the first-mover disadvantage, where the benefits linked to adopting a specific technology or standard go beyond the commercial interest of transport operators.

(26)

This is the case, for example, with train and traffic control systems such as the European Railway Traffic Management System (ERTMS). The ERTMS is a single European signalling and speed control system that ensures interoperability of the national railway systems, reducing the purchasing and maintenance costs of the signalling systems and increasing the speed of trains, the capacity of infrastructure and the level of safety in rail transport. ERTMS is comprised of the European Train Control System (ETCS), i.e. a cab-signalling system that incorporates automatic train protection, the Railway Mobile Radio (RMR), Automated Train Operation (ATO) and operating rules. In view of the limited negative effects on competition and trade that aid for interoperability has, and considering the experience acquired, such aid should be covered by this Regulation under well-defined conditions and where the vehicle for rail or inland waterways transport concerned remains registered in the relevant national register and/or in a relevant European vehicle register for 5 years after the implementation of the investment.

(27)

To foster the competitiveness of transport by rail and inland waterways it is also necessary to promote the technical adaptation and modernisation of vehicles for rail or inland waterways transport and certain categories of equipment for sustainable multimodal transport. Support for such investments should be subject to conditions that limit distortions of competition and trade that would undermine a level playing field in the internal market. In particular, they should ensure the necessity and proportionality of the aid and include safeguards on the type of aid, the eligible beneficiaries and the eligible costs.

(28)

Aid to undertakings to adapt to future Union standards might result in achieving a high level of harmonisation and standardisation sooner. Aid should not be granted where investments bring undertakings into compliance with Union standards that have already been adopted. However, in cases where the relevant EU standard has already been adopted but is not yet in force, aid can have an incentive effect if it incentivises the investment to be implemented and finalised at least 12 months before the standard enters into force, if the standard does not apply retroactively. In order not to discourage Member States from setting mandatory national standards that are more stringent or ambitious than the corresponding EU standards, aid measures may have an incentive effect irrespective of the presence of such national standards. The same is true of aid granted in the presence of mandatory national standards adopted in the absence of EU standards.

(29)

Due to the higher risk of undue distortions of competition and trade, certain categories of aid should be assessed by the Commission upon notification when they cover high amounts of aid granted per project. Any aid granted above those thresholds should remain subject to the notification requirement of Article 108(3) of the Treaty. The thresholds set out in this Regulation should not be circumvented by artificially splitting up projects into several projects with similar characteristics, objectives or beneficiaries.

(30)

In view of the greater potential impact of large aid schemes on trade and competition, aid schemes with a budget exceeding a certain threshold in any given year or in total based on an absolute value should in principle be subject to State aid evaluation. The evaluation should aim at verifying whether the assumptions and conditions underlying the compatibility of the scheme have been achieved and the effectiveness of the aid measure in light of its general and specific objectives. It should also indicate the impact of the scheme on competition and trade. In order to ensure equal treatment, State aid evaluation should be carried out on the basis of an evaluation plan approved by the Commission. While such plans should usually be drawn up at the moment of the design of the scheme and approved in time for the scheme to enter into force, this might not be possible in all cases. Therefore, in order not to delay their entry into force, this Regulation should apply to such schemes for an initial maximum period of 6 months. The Commission may decide to extend this period upon approval of the evaluation plan. To that end, the evaluation plan should be notified to the Commission within 20 working days following the entry into force of the scheme. The Commission may also exceptionally decide that an evaluation is not necessary given the specific characteristics of the case.

(31)

The Commission should receive the required information from the Member State to be able to assess the evaluation plan. The Commission should also request additional information without undue delay. This will enable the Member State to provide the missing information so that the Commission can take a decision. Alterations of schemes subject to an evaluation, other than modifications which cannot affect the compatibility of the aid scheme within the scope of this Regulation or cannot significantly affect the content of the approved evaluation plan, should be assessed taking account of the outcome of such an evaluation and should be excluded from the scope of this Regulation. Alterations such as purely formal modifications or administrative modifications, including those carried out within the framework of the EU co-financed measures should not, in principle, be considered to significantly affect the content of the approved evaluation plan.

(32)

To determine whether the notification thresholds and the maximum aid intensities laid down in this Regulation are respected, the total amount of State aid measures for the aided activity or project should be taken into account. This Regulation should specify the circumstances under which different categories of aid might be cumulated. Aid exempted under this Regulation and any other compatible aid exempted under other regulations or approved by the Commission may be cumulated as long as those measures concern different identifiable eligible costs. Where different sources of aid are related to the same – partly or fully overlapping – identifiable eligible costs, cumulation is allowed up to the highest aid intensity or aid amount applicable to that aid under this Regulation. This Regulation also should set out special rules for cumulation of aid measures with and without identifiable eligible costs and for cumulation with de minimis aid. De minimis aid is often not granted for or attributable to specific identifiable eligible costs. In such cases, it should be possible to freely cumulate de minimis aid with State aid exempted under this Regulation. However, where de minimis aid is granted for the same identifiable eligible costs as State aid exempted under this Regulation, cumulation is only allowed up to the maximum aid intensity as set out in Chapter II.

(33)

Funding that is centrally managed by the Union’s institutions, agencies, joint undertakings and other bodies, which is not directly or indirectly under Member States’s control, does not constitute State aid. Where such Union funding is combined with State aid, only the State aid should be considered for determining whether notification thresholds and maximum aid intensities are respected. This is provided that the total amount of public funding granted in relation to the same eligible costs does not exceed the most favourable funding rate laid down in the applicable rules of Union law.

(34)

The transparency of State aid is essential for the correct application of Treaty rules and leads to better compliance, greater accountability, peer reviews and ultimately more effective public spending. To ensure transparency, Member States should set up comprehensive State aid websites, at regional or national levels, setting out summary information about each aid measure exempted under this Regulation. Following the standard practice regarding the publication of information in Directive (EU) 2019/1024 of the European Parliament and of the Council (12), a standard format should be used that allows for the information to be searched, downloaded and easily published on the internet. Links to the State aid websites of all the Member States should be published on the Commission’s website. In accordance with Article 2(2) of Regulation (EU) 2022/2586, summary information on each aid measure exempted under this Regulation should be published on the Commission’s website.

(35)

State aid enforcement is highly dependent on the cooperation of Member States. Therefore, Member States should take all necessary measures to ensure compliance with this Regulation, including compliance of individual aid granted under block-exempted schemes with all relevant conditions.

(36)

To ensure effective monitoring of aid measures in accordance with Council Regulation (EU)2022/2586, it is appropriate to set out requirements regarding Member States’ reporting of aid measures that have been exempted pursuant to this Regulation. Moreover, it is appropriate to lay down rules on the records that Member States should keep on the aid exempted under this Regulation in light of the limitation period set out in Article 16 of Council Regulation (EU) 2015/1589 (13).

(37)

To strengthen the effectiveness of compatibility conditions set out in this Regulation, the Commission should be able to withdraw the benefit of the block exemption for the future in the event of failure to comply with these requirements. The Commission should be able to restrict the withdrawal of the benefit of the block exemption to certain types of aid, certain beneficiaries or aid measures adopted by certain authorities where non-compliance with this Regulation affects only a limited group of measures or certain authorities. Such a targeted withdrawal should provide a proportionate remedy directly linked to the identified non-compliance with this Regulation. Where an aid is not notified and does not fulfil all the conditions to be exempted from notification, it constitutes an unlawful aid, which the Commission will examine in the framework of the relevant procedure as set out in Regulation (EU) 2015/1589 for non-notified aid. In case of failure to meet compatibility conditions set out in Chapters I and II, the withdrawal of the benefit of the block exemption in respect for the future should not affect the fact that the past measures complying with this Regulation were block exempted.

(38)

To eliminate differences that might give rise to distortions of competition and trade and to facilitate coordination between different Union and national initiatives concerning SMEs, as well as for reasons of administrative clarity and legal certainty, the definition of an SME within the meaning of Annex I to this Regulation is based on the definition in Commission Recommendation 2003/361/EC (14).

(39)

State aid policy should be revised on the basis of the Commission’s experience in this area periodically. The period of application of this Regulation should therefore be limited. It is appropriate to lay down transitional provisions, including the rules applicable to exempted aid schemes at the end of the period of application of this Regulation. Such rules should give Member States time to adapt to any future regime,