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Regional Aid Maps Approved For Czech Republic, Ireland And Lithuania

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

26 October 2006


The European Commission on Tuesday approved the regional aid maps covering the period 2007-2013 for the Czech Republic, Ireland and Lithuania, under EC Treaty state aid rules.

These decisions form part of a wider exercise to review regional aid systems in all Member States in accordance with the new Regional Aid Guidelines adopted in December 2005. The new guidelines aim at re-focussing regional aid on the most deprived regions of the enlarged EU, while allowing them to improve competitiveness and to provide for a smooth transition.

A regional aid map defines the regions of a Member State eligible for national regional investment aid for large enterprises under EC Treaty state aid rules and establishes the maximum permitted levels of such aid in the eligible regions.

With regard to the Czech Republic, the Commission announced that:

"Article 87(3)(a) of the EC Treaty foresees the possibility to grant state aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment. The Regional Aid Guidelines define this type of regions as having a GDP below 75% of the Community average."

"In line with these principles, 88.6% of the population of the Czech Republic will continue to be eligible for regional investment aid at maximum aid intensities which vary between of 30% and 40% of the investment cost according to the criteria set out in the guidelines. A part of the City of Prague with 7.7% of the Czech population will continue to be eligible for a transitional period of two years at a maximum aid intensity of 10% of the eligible costs."

Turning its focus to Lithuania, the EC explained that:

"Article 87(3)(a) of the EC Treaty foresees the possibility to grant state aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment. The Regional Aid Guidelines define this type of regions as having a GDP below 75% of the Community average. In line with these principles, the whole territory of Lithuania will continue to be eligible for regional investment aid at a maximum aid intensity of 50% of the eligible costs."

Finally, with regard to the Republic of Ireland, the Commission stated that:

"Article 87(3)(c) of the EC-Treaty foresees the possibility to grant state aid to facilitate the development of certain economic activities or of certain economic areas where such aid does note adversely affect trading conditions to an extent contrary to the common interest. The regional aid guidelines define this type of regions as areas of a Member State which are disadvantaged in relation to the national average."

"As these regions are less disadvantaged than areas covered by Article 87(3)(a), both the geographical scope and the aid intensity are strictly limited. In line with these principles, 50% of Ireland’s population remain eligible for regional investment aid at a maximum aid intensity of 30%, 15% or 10% of the eligible costs. A further 25% of the population will continue to be eligible for a transitional period of two years at a maximum aid intensity of 10% of the eligible costs."

Competition Commissioner Neelie Kroes observed that:

“The approved regional aid maps support our cohesion policy and contribute to the State Aid Action Plan’s objective of less and better targeted aid. The Czech Republic, Ireland and Lithuania will now be able to organise a smooth transition from their current regional aid system towards their regional development strategies for 2007-2013.”


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