Blümel: EU's Raise of State Aid is Necessary Step

More+Work & Careers ♦ Published: January 29, 2021; 12:15 ♦ (Vindobona)

The European Commission has extended its framework for state aid to support companies that are affected by Covid-19. In addition to the extension, the current thresholds have been raised, which was a highly necessary decision according to Austria's Finance Minister Gernot Blümel.

Austria's Finance Minister Gernot Blümel is relieved about the European Commission's decision to raise the thresholds for state aid to companies. / Picture: © BMF - Federal Ministry of Finance - Bundesministerium für Finanzen / Andy Wenzel / Flickr Attribution 2.0 Generic (CC BY 2.0)

The European Commission has decided, following consultation with Member States, to extend the Temporary Framework for State Aid to Support the Economy in the Covid-19 Pandemic until December 31, 2021 - and to raise the thresholds for aid to individual companies.

It also allows the conversion of certain repayable instruments into direct grants through the end of next year.

"In this way, we enable member states to make full use of the flexibility of state aid rules to support their economies, while limiting distortions to competition," said Vice President Margrethe Vestager, in charge of competition policy.

The current ceiling of EUR 800,000 (in Austria, for example, the fixed cost subsidy II is subject to this regime) is to be raised to EUR 1.8 million per company. The framework for loss compensation will also be raised.

"Already in April, Austria was the first country to call for an expansion of the aid framework and more flexibility. Our pressure and the alliance with other countries have worked. Now three quarters of a year after the start of the crisis, the EU Commission has finally recognized the seriousness of the situation," Austria's Finance Minister Gernot Blümel said.

He added:

"More and more SMEs are coming up against the existing ceilings and would now no longer have had access to aid from the state that is essential for survival. With the current extension, we can further help these companies, secure liquidity and save valuable jobs. We will now quickly make the appropriate adjustments at national level so that we can adapt the current aid programs to the new framework in the best possible way," said Finance Minister Gernot Blümel.

The European Commission's Temporary Framework was originally scheduled to expire on June 30, 2021, with the exception of recapitalization measures, which may be granted until September 30, 2021.

In light of the ongoing pandemic, the duration of all measures is now extended until December 31, 2021.

With regard to the thresholds for aid granted on the basis of the Temporary Framework, the previous maximum amounts per company will now be doubled.

The new amounts are EUR 225,000 per company operating in agriculture (previously EUR 100,000), EUR 270,000 per company operating in the fisheries and aquaculture sector (previously EUR 120,000), and EUR 1.8 million for companies operating in all other sectors (previously EUR 800,000).

As has been the case since March 2020, these amounts can be combined with de minimis aid of up to EUR 200,000 per company (up to EUR 30,000 per company operating in the fisheries and aquaculture sector and up to EUR 25,000 per company operating in the agriculture sector) over a period of three fiscal years.