4 Key Questions


State aid rules only apply to State funded organisations involved in economic activity ('undertakings'). The publically funded organisation does not have to be profit-making if the activity carried out is one which has, or could have, commercial competitors. In some circumstances public and voluntary sector organisations, such as universities and charities, could be classified as undertakings.

There are 4 criteria or questions which need to be considered in order to establish whether a measure constitutes State aid. Where all 4 criteria are met, State aid is involved and the State aid rules apply. Where 1 or more of the criteria appears not to be met, then funding is unlikely to constitute State aid. We recommend that you check with the State Aid Unit within the appropriate Ministry where any doubt exists

1. Is the measure granted by the state or through state resources? As well as central government departments, this includes regional or local authorities and other public, or private sector, bodies designated or controlled by the state. State resources include tax exemptions, state owned assets and   funds not permanently belonging to the state but under state control, e.g. lottery funding.

2. Does it confer an advantage to an undertaking? A benefit to an undertaking, granted for free or on favourable (e.g. non-commercial) terms, could be State aid. This includes the direct transfer of resources, such as grants and soft loans, and also indirect assistance - for example, relief from charges that an undertaking normally has to bear, such as a tax exemption or the provision of services, loans, premises or assets at a favourable rate.

3. Is it selective, favouring certain undertakings? Aid that targets particular businesses, locations, types of firm e.g. SMEs or sectors is considered selective. A general measure affecting the whole of the state's economy e.g. nation-wide fiscal measures is not considered a State aid.

4. Does the measure distort or have the potential to distort competition? If it strengthens the position of the beneficiary relative to other competitors then this criteria is likely to be met. The potential to distort competition does not have to be substantial or significant, and this criterion may apply to small amounts of aid and firms with little market share. Most interventions have the potential to distort competition.


Commission for Protection of Competition
Sv. Kiril i Metodij br.54 (6th floor), 1000 Skopje, Republic of Macedonia
Tel: + 381 (0) 2 3298 666; Fax: + 381 (0) 2 3296 466