|Government subsidy schemes are administered at national level. Under EU Law, public support schemes must be authorized by the EU Commission under the EU State aid rules before being put in place. The EU Commission has been acting very swiftly to clear Member State aid schemes since the COVID-19 outbreak.
For example, by adopting a specific Temporary Framework for State aid in March, the EU Commission acknowledged that “State aid is justified and can be declared compatible with the internal market on the basis of Article 107(3)(b) TFEU, for a limited period, to remedy the liquidity shortage faced by undertakings and ensure that the disruptions caused by the COVID-19 outbreak do not undermine their viability, especially of SMEs”.
Catering services and producers of agricultural foods can obtain goverment subsidies to aid their businesses
With specific reference to support provided to the catering service sector and to undertakings processing and marketing agricultural products, the Temporary Framework sets out that the following types of aid can be allowed without a specific authorization from the EU Commission:
“a) The overall aid does not exceed EUR 800 000 per undertaking. The aid may be granted in the form of direct grants, tax and payment advantages or other forms such as repayable advances, guarantees, loans and equity provided the total nominal value of such measures remains below the overall cap of EUR 800 000 per undertaking; all figures used must be gross, that is, before any deduction of tax or other charge;
b) The aid is granted on the basis of a scheme with an estimated budget;
c) Aid may not be granted to undertakings that were already in difficulty […] on 31 December 2019;
d) The aid is granted no later than 31 December 2020;
e) The aid granted to undertakings active in the processing and marketing of agricultural products is conditional on not being partly or entirely passed on to primary producers and is not fixed on the basis of the price or quantity of products purchased from primary producers or put on the market by the undertakings concerned.”
Government subsidies and grants for the agricultural and fisheries sectors
As far as support to undertakings active in the primary agricultural production and in the fishery sector, the following applies by way of derogation from the first condition above and in addition to the conditions (b) to (e) above:
“a) the overall aid does not exceed EUR 120 000 per undertaking active in the fishery and aquaculture sector or EUR 100 000 per undertaking active in the primary production of agricultural products; the aid may be granted in the form of direct grants, tax and payment advantages or other forms such as repayable advances, guarantees, loans and equity provided the total nominal value of such measures does not exceed the overall cap of EUR 120 000 or EUR 100 000 per undertaking; all figures used must be gross, that is, before any deduction of tax or other charge;
b) aid to undertakings active in the primary production of agricultural products must not be fixed on the basis of the price or quantity of products put on the market;
c) aid to undertakings active in the fishery and aquaculture sector does not concern any of the categories of aid referred to in Article 1, paragraph (1) (a) to (k), of Commission Regulation (EU) No 717/2014.”
As an example of how the EU Commission applies such rules please see the EU Commission decision of April 16th which cleared the Latvian direct grants schemes.