On 23 March 2022, the European Commission (the “Commission”) adopted a Temporary Crisis Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia (the “Framework”). In a similar fashion to the temporary framework that the Commission has adopted to address the COVID-19 outbreak (the “COVID-19 Temporary Framework”), and earlier, to deal with the 2008 financial crisis (the “Banking Framework”), the Framework is based on Article 107(3)(b) of the Treaty on the Functioning of the European Union (the “TFEU”), which allows State aid to be granted in order to remedy a serious disturbance in the economy, in this case caused by the Russian aggression against Ukraine and/or by the sanctions imposed or by the retaliatory counter measures taken in response. It sets out the conditions under which the Commission will assess such State aid. Measures that meet all the conditions set out in the Framework must be notified to the Commission and will be considered compatible with the Internal Market if all conditions are indeed met.

Continue Reading The Commission’s Temporary Crisis Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia

The European Commission (the “Commission”) formally adopted on 27 January 2022 its new Guidelines on State aid for climate, environmental protection and energy (CEEAG). The CEEAG replace the guidelines which were in force since 2014 (EEAG) and integrate the new objectives of the EU Green Deal of a reduction of 55% net greenhouse gas emissions compared to the 1990 levels by 2030 and of carbon neutrality by 2050. The Commission has estimated that achieving the new 2030 target would require EUR 390 billion of additional annual investment compared to the levels in 2011-2020, an investment that cannot be borne by the private sector alone, and would therefore require public investments.

Continue Reading The Commission adopts its new Climate, Energy and Environmental Aid Guidelines (CEEAG)

On 25 November 2021, the Commission adopted its revised Communication on the Criteria for the analysis of the compatibility with the internal market of State aid to promote the execution of important projects of common European interest (“IPCEI”). This is particularly relevant for companies who have breakthrough innovative projects and need to seek public support for their projects. For example, under the current Communication, the Commission approved public support to two major research and innovation projects of European interest along the battery value chain for electric vehicles (“summer” and “autumn” projects) and a project in microelectronics. Various other projects are being assessed, for instance on Next Generation Cloud Infrastructure and Services and on green hydrogen.

The revised communication sets out the criteria following which the Commission will approve IPCEI with the State aid rules as of 1 January 2022.

Continue Reading The Commission has revised its communication on the Criteria for the analysis of the compatibility with the internal market of State aid to promote the execution of important projects of common European interest (“IPCEI”)

What is happening and why?

On 30 June, the UK Government announced its draft Subsidy Control Bill (the “Bill”) which sets out the framework for how the UK will subsidise businesses post-Brexit.  The UK government has hailed the Bill as a major departure from the EU state aid rules.  In practice, the Bill provides a framework for implementing the UK’s international commitments on subsidy control, as set out in the Trade and Cooperation Agreement agreed with the European Union, and in other existing international trade obligations and World Trade Organisation (“WTO”) rules.

The Bill introduces a decentralised subsidy control framework outlining principles with which public authorities must comply when awarding subsidies.  One of the key aims of the Bill is to ensure that the subsidy control regime is not used to encourage a “race to the bottom” between different regions of the UK.

While there are some important differences as compared to the EU state aid regime, the fundamental principles are comparable and any subsidies given under the Northern Ireland Protocol will continue to be governed by EU rules.

Continue Reading The UK’s post-Brexit Subsidy Control regime — what to expect

Introduction

On 23 July 2021, the European Commission (“Commission”) adopted an extension of the scope of the General Block Exemption Regulation (“GBER”). The revised rules concern:

  • Aid for projects funded via certain EU centrally managed programmes under the new Multiannual Financial Framework; and
  • Certain State aid measures that support the green and digital transition and are also relevant for the recovery from the economic effects of the coronavirus pandemic.


Continue Reading Amended GBER simplifies State aid rules for projects supporting the recovery from the COVID-19 pandemic

On 19 September 2018, the European Commission (“Commission”) issued a press release declaring that Luxembourg did not provide illegal State aid to McDonald’s with regards to two tax rulings that resulted in double non-taxation of franchise profits in Luxembourg. The Commission’s three-year-long in-depth investigation established that Luxembourg had merely acted in compliance with its national tax laws and that the double non-taxation was the result of a mismatch between Luxembourg and US tax law, as opposed to a more favourable treatment given to McDonald’s compared to other companies in Luxembourg.

The Commission’s initial concerns

In December 2015, the Commission launched an investigation into McDonald’s Europe Franchising (“MEF”), a EU subsidiary of the US-based McDonald’s Corporation. At issue were two tax rulings regarding MEF, a tax resident of Luxembourg with one Swiss branch and one US branch, that received franchisee royalties from outlets in Europe, Ukraine and Russia.
Continue Reading The European Commission finds no illegal State aid was provided by Luxembourg’s non-taxation of McDonald’s