EU to change state aid policy for companies
As the current regulation governing state aid will cease to apply at the end of this year, the European Commission has launched a public consultation process in preparation for the new EU budgetary arrangements for the next financial period. Developments will be followed closely as they are thought to have a direct impact on the level of permissible public aid that can be channelled to Maltese companies.
Earlier this year, the European Commission announced a major reform programme of its state aid policies. State aid refers to the financial support that is granted by governments to certain companies which can take the form of direct financial grants or tax incentives, subsidised interest rates on commercial loans or loan guarantees. The Commission is in the process of rolling out several proposals which seek to revise the different EU state aid legislation.
This is being carried out within the policy context of the state aid modernisation initiative published through a policy communication paper in May. The most important initiative to date, related to these developments, is the launch of the consultation process mainly addressed to the public authorities entrusted with the administration and notification of state aid requests at member state level.
This is based on the review of the Commission’s regulation applying to small aid amounts – the so-called “de minimis” regulation.
Under this regulation which has come into force, aid measures below €200,000 per company spread over a period of three fiscal years are outside the scope of EU state aid control and do not require prior Commission approval as the amounts involved are deemed to have no potential of distorting competition within the internal market.
The current regulation has now been applied for more than five years and will remain in force until December 31, 2013, when it ceases to be applicable. New regulation is soon needed to be put in place, in view of the new EU budgetary arrangements for the incoming financing period between 2014 and 2020.
The first step towards this legislative review is the public consultation which will focus on public authorities’ and stakeholders’ experience with the current regulation.
On the basis of the contributions received, the Commission will prepare a revised draft regulation on the premise that an assessment as to whether the €200,000 threshold remains appropriate or not.
For Maltese business, this consultation kickstarts an important process, as the outcome on the future format of the ‘de minimis’ regulation will have a direct impact on the level of permissible public aid that can be channelled to companies in pursuit of further investment and training of personnel.