Frequently Asked Questions

        * * *

1.   What happens when an undertaking receives aid from more than one public source ?

2.   Can support be given for export activities?

3.   Can aid be given for the operating costs of an undertaking?

4.   What do aid intensity limit and cash grant equivalent mean?

5.   What is the difference between gross grant equivalent (GGE) and net grant equivalent (NGE)?

6.   What reporting requirements are there for state aid schemes?

7.   Is support to charities and universities exempt from state aid rules?

8.   What is the Commission’s definition of an SME?

9.   What exchange rate should be used?


What happens when an undertaking receives aid from more than one public source?

If an undertaking receives state aid from more than one source towards the same eligible costs, the total amount of state aid must be cumulated and remain within the relevant aid intensity ceiling. This rule applies to all sources of state aid.
Top
Can support be given for export activities?

No - following the World Trade Organisation (WTO) Agreement on Subsidies and Countervailing Measures, aid for export activities is prohibited. Export aid is defined as aid to export-related activities, namely aid directly linked to the quantities exported, to the establishment and operation of a distribution network or to other current expenditure linked to the export activity Aid favouring domestic over imported goods is also prohibited under the WTO agreement.

Top

Can aid be given for the operating costs of an undertaking?

Operating aid is generally prohibited under the
state aid regulations e.g. any support for running costs, ongoing expenditure and working capital. The Commission considers that a company which needs support to meet its operating costs cannot be considered competitive and should not be propped up by state aid.

There are several exceptions to this:-

De minimis funding may be used to provide operating aid - up to Euros 200,000 over a 3 year fiscal period (and taking into account any de minimis funding received in the previous 3 years).

Where a company is in clear financial difficulties and unlikely
to survive in the short to medium term, there limited scope to provide aid to keep the company temporarily afloat - whilst a viable restructuring plan is formulated. Strict conditions apply.


Limited operating aid may also be provided for the treatment of industrial waste under specific circumstances.

Commercial rate loans do not count as state aid, and so provide an alternative option for supporting operating costs.

Top

What do ‘aid intensity limit’ and ‘cash grant equivalent’ mean?

Particular aid intensity limits are specified for each approved scheme. These determine the maximum level of aid that can be given under the rules that apply to a project, and are expressed as a percentage of the total costs eligible for support. In the case of grants it
is relatively easy to translate this into the amount of money that can be provided; for soft loans and guarantees however the aid element will have to be calculated e.g. for loans this would be the difference between the soft and commercial interest rates. This aid element is called the
cash grant equivalent   the Commission website has details on how to work this out for soft loans and other measures.

Top

What is the difference between gross grant equivalent (GGE) and net grant equivalent (NGE)?

The gross grant equivalent is simply the aid element of a measure expressed before company taxes are deducted, while with net grant equivalent, all relevant company taxes
have been deducted.

Top

What reporting requirements are there for State aid schemes ?

All public bodies must submit annual reports to the Commission, via the CPU, for each aid
scheme they are authorised to operate. These should cover the financial year and show:

 - actual payments
 - expenditure committed
 - the number of companies aided
 - the number of jobs created or maintained

More detailed information is required for aid given under one of the block exemptions   see Annex III of the regulations.

In some instances public bodies have cover to give the same kind of aid under both a block exemption and a separately approved scheme, in which case the aid must be reported under one or the other to ensure that it is not double counted.

Top

Is support to charities and universities exempt from State aid rules ?

Not necessarily. If they are involved in any commercial activities then State aid issues will need to be considered. Even where the organisation is not-for-profit, State aid rules may well apply.
Top

What is the Commission’s definition of an SME?

A new Commission definition of what constitutes an SME came into force on 1 January 2005.

The Commission considers a company to be an SME according to the following circumstances -

Medium sized enterprises are those that :
- have fewer than 250 employees
- have an annual turnover not exceeding EUR 50 million 
   or
  annual balance sheet total not exceeding EUR 43 million
- are independent*

Small enterprises are those that :
- have fewer than 50 employees
- have an annual turnover not exceeding EUR 10 million
   or
  annual balance sheet total not exceeding EUR 10 million
- are independent*

Micro enterprises are those that :
- have fewer than 10 employees
- have an annual turnover not exceeding EUR 2 million
   or
  annual balance sheet total not exceeding EUR 2 million
- are independent*

*Independent enterprise   no more than 25% of the capital or voting rights are owned by one or more enterprises which fall outside the SME definition. This threshold may be exceeded when an enterprise is held by a public investment corporation, venture capital
company or other institutional investors, provided they exercise no control.

Top

What exchange rate is used when determining the value of a de minimis award ?

The official Commission exchange rate applicable on the date the offer of de minimis funding is made (date of written offer) should be used. The rate is updated monthly
http://ec.europa.eu/budget/contracts_grants/info_contracts/inforeuro/inforeuro_en.cfm

 

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