EC Presents New Rules On Subsidies

by Ulrika Lomas, for LawAndTax-News.com, Brussels

22 September 2006

The European Commission has this week presented a revised version of new draft ‘de minimis’ rules exempting small subsidies from the notification obligation under EC Treaty state aid rules.

The new version takes account of comments made during public consultation on an initial proposal presented in March 2006.

The Commission now proposes that subsidies of EUR200,000 or less will not constitute state aid. The exemption is limited to measures for which the inherent state aid amount can be calculated precisely in advance.

Guarantees will be covered, under the revised proposal, to the extent that the amount of the underlying loan does not exceed EUR1.7 million.

Member States and other stakeholders will now be given a second opportunity to comment on the proposal before it is definitively adopted by the Commission later this year.

Competition Commissioner Neelie Kroes announced that:

“We have listened carefully to the Member States’ and stakeholders’ views on our earlier draft and we now propose creating a safe harbour tailor-made for guarantee schemes for small and medium sized enterprises. This should allow Member States to boost the competitiveness of such companies without adversely affecting competition. However, in order to avoid abuses, non-transparent forms of aid must remain excluded from the Regulation.”

Under current rules on de minimis aid, financial support not exceeding EUR100,000 over a period of three years in favour of a given company is deemed to have no substantial effect on competition and trade between Member States, and therefore not to constitute state aid.

The increase of the ceiling to EUR200,000, up from EUR150,000 in the March 2006 proposal, takes into account economic developments since the de minimis ceiling was last increased, as well as likely developments between now and the expiry date of the new Regulation.

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