The European Commission (EC) has recently adopted an amendment that extends the State aid Temporary Framework (described in our last blog post here) by adding five further types of aid measures that Member States may implement:

• Support for COVID-19 related research and development (R&D) to address the current health crisis;

• Support for the construction and upgrading of testing facilities for products relevant to tackling the COVID-19 outbreak, such as vaccines, medical equipment and devices, protective material and disinfectants;

• Support for the production of those products;

• Targeted support in the form of deferral of tax payments and/or suspension of employers’ social security contributions; and

• Targeted support in the form of wage subsidies for employees.

With regard to aid for R&D and the testing and production of COVID-19 related products, companies can benefit from a bonus for cross-border cooperation projects, i.e., when their investment is supported by more than one Member State.

The Amendment also expands on the existing types of support that Member States can give to companies in need. For example, the Framework now enables Member States to give zero-interest loans, guarantees on loans covering 100% of the risk, or provide equity up to the nominal value of EUR 800,000 per company. This can be combined with de minimis aid to bring the aid per company to up to EUR 1 million and with other types of aid. This is particularly useful for SMEs that need to address urgent liquidity needs.

Moreover, the Amendment increases the flexibility on export credit insurance (already introduced by the original Framework) by having all countries listed in the annex of the Short-term export-credit insurance Communication (STEC) considered as temporarily non-marketable and by removing all countries from the list of “marketable risk” countries until 31 December 2020. As a result, state insurers will be able to step in and provide insurance for short-term export-credit risks for all countries, without the need for the Member State in question to demonstrate that the respective country is temporarily “non-marketable”.

The Amendment includes a number of safeguards, e.g., aid for COVID-19 related R&D can only be granted if beneficiaries commit to grant non-exclusive licenses on non-discriminatory terms to third parties in the European Economic Area.

The Amendment, like the original Framework, will remain in place until the end of December 2020.

Co-Authored by Henri De Ligne