ANNEX

34.   CHAPTER ON SETTING THE REFERENCE AND DISCOUNT RATES (1)

34.1.   INTRODUCTION

(1)

The EFTA Surveillance Authority sets out in this Chapter the various calculation methods and the legal basis for the rate of interest used for recovery of unlawful aid in addition to the reference and discount rates to be used in situations other than for recovery, as for example for calculating the grant equivalent of investment aid (2).

34.2.   INTEREST RATE TO BE USED IN THE CASE OF RECOVERY

(2)

In the situation where unlawful aid has to be recovered by an EFTA State, the legal basis and the calculation method for the interest rate to be used is to be found in Article 9 of EFTA Surveillance Authority Decision No 195/04/COL (3).

(3)

However, as stated in Article 13 of Decision No 195/04/COL (4), as regards the execution by EFTA States of recovery orders notified before 15 July 2004 (the entry into force day of Decision No 195/04/COL), the rules of the previous Chapter 34 of the EFTA Surveillance Authority’s State Aid Guidelines on the interest rates to be applied when aid granted unlawfully is being recovered, remain in effect.

(4)

According to Article 10 of Decision No 195/04/COL (5), the current and relevant historical State aid recovery interest rates are to be published in the EEA Section of and the EEA Supplement to the Official Journal of the European Union and for information on the internet; www.eftasurv.int

34.3.   REFERENCE AND DISCOUNT RATES TO BE USED IN SITUATIONS OTHER THAN FOR RECOVERY

(5)

For the purposes of the monitoring of State aid as required by the EEA Agreement, the EFTA Surveillance Authority uses various parameters, including the reference and discount rates.

(6)

Those rates are used to measure the grant equivalent of aid that is disbursed in several instalments and to calculate the aid element resulting from interest subsidy schemes for loans. They are also used in implementing the de minimis rule (6).

(7)

The reference and discount rates are supposed to reflect the average level of interest rates charged, in the various EFTA States which are Contracting Parties to the EEA Agreement, on medium and long-term loans (five to ten years) backed by normal security.

(8)

As from 15 July 2004 the reference and discount rates are fixed as follows (7): — the indicative rate is defined as the five-year interbank swap rate, in the relevant currency, plus a premium of 0,75 points (75 basis points); — the reference and discount rates are deemed to be equal to the average of indicative rates recorded in the preceding September, October and November; — the reference and discount rates are adjusted again in the course of the year if they differ by more than 15 % from the average of the indicative rates recorded over the last known three months.

(9)

It should also be noted that: — the reference and discount rates thus determined are floor rates which may be increased in situations involving a particular risk (for example, an undertaking in difficulty, or where the security normally required by banks is not provided). In such cases, the premium may amount to 400 basis points or more if no private bank would have agreed to grant the relevant loan; — the EFTA Surveillance Authority reserves the right, if necessary for examining cases, to use a shorter base rate (for example Libor one-year rate) or a longer base rate (for example, the rate on ten-year bonds) than the five-year interbank swap rate; — in cases where the five-year interbank swap rate is not available, the base rate will be set at the level of the rate of yield on five-year (or ten-year) State bonds, plus a premium of 25 basis points; — in the absence of reliable or equivalent data or in exceptional circumstances the Authority may, in close co-operation with the EFTA State(s) concerned, fix a reference/discount rate, for one or more EFTA States, on the basis of a different method and on the basis of the information available to it.

(10)

Reference and discount rates will be made known by the EFTA Surveillance Authority on the Internet at the following address; www.eftasurv.int

34.4.   ADOPTION

(11)

The Chapter 34 will apply from the date of its adoption by the EFTA Surveillance Authority.

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(1)  This Chapter includes the Commission Notice on the method for setting the reference and discount rates (OJ C 273, 9.9.1997, p. 3), as adapted by Commission Notice on technical adaptions to the method for setting the reference and discount rates (OJ C 241, 26.8.1999, p. 9) and Commission Notice on a technical adjustment to the reference and discount rates for Greece (OJ C 66, 1.3.2001, p. 7), the latter two not being EEA relevant.

(2)  The previous Chapter 34 on reference and discount rates and interest rates to be applied for the recovery of unlawful aid was deleted by EFTA Surveillance Authority Decision No 195/04/COL of 14 July 2004 on the implementing provisions referred to under Article 27 in Part II of Protocol 3 to the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice (not yet published). Amended by Decision No 319/05/COL of 14 December 2005 (not yet published). Decision No 195/04/COL largely corresponds to Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of [ex] Article 93 of the EC Treaty [now Article 88] (OJ L 140, 30.4.2004, p. 1). The previous Chapter 34 incorporated in its part 1 (partially) the Commission Notice on the method for setting the reference and discount rates (see footnote 1) and in its part 2 the Commission Communication on interest rates in the case of recovery of unlawful State aid (OJ C 110, 8.5.2003, p. 21). Decision No 195/04/COL contains, inter alia, provisions on interest rates for the recovery of unlawful aid. However, it does not concern the method for setting the reference and discount rates for purposes other than recovery. In the Community, the reference and discount rates for purposes other than the recovery of unlawful state aid is still governed by the Commission notice on the method for setting the reference and discount rates (see footnote 1). Commission Communication of 30 April 2004 concerning the obsolescence of certain State aid policy documents (OJ C 115, 30.4.2004, p. 1) does not list the Commission Notice on the method for setting the reference and discount rates.

(3)  See footnote 2.

(4)  In conjunction with footnote 9 of the EFTA Surveillance Authority Decision No 195/04/COL (see footnote 2).

(5)  See footnote 2.

(6)  Commission Regulation (EC) No 69/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid (OJ L 10, 13.1.2001, p. 30), incorporated into Section 1e in Annex XV to the EEA Agreement by EEA Joint Committee Decision No 88/2002 (OJ L 266, 3.10.2002, p. 56 and EEA Supplement No 49, 3.10.2002, p. 42).

(7)  As this chapter only applies from 15 July 2004, the previous Chapter 34.1 remains in effect as regards calculation of reference/discount rates before that date.