European Union: COVID-19 State aid update – State aid Temporary Framework prolonged and additional aid for recovery possible (6th Amendment) -…

In brief

On 18 November 2021, the European Commission ("Commission") further prolonged the Temporary Framework for COVID-19 State aid ("Temporary Framework") until 30 June 2022. This 6th Amendment has also added investment support measures and solvency support measures to support economic recovery and increase certain aid ceilings.

Background: In March 2020, the European Commission adopted the Temporary Framework to support the economy in the context of the COVID-19 outbreak, which allows EU Member States to have State aid approved quickly by the Commission. It has since been amended six times: First, increasing possibilities for public support to research, test and produce products relevant to fight the COVID-19 outbreak. Second, to enable recapitalization and subordinated debt measures; and third, to further support micro, small and start-up companies and to incentivize private investments. A fourth amendment extended the coverage of the Temporary Framework again and prolonged its application into 2021. The fifth amendment prolonged the application of the Temporary Framework to the end of 2021, increased aid amounts that the Commission would approve and allowed for the conversion of limited amounts of repayable Temporary Framework aid to grants.

Key takeaways

The 6th Amendment prolongs the application of the Temporary Framework until 30 June 2022. In addition, it adds two new categories of support measures for which EU Member States can obtain quick Commission State aid approval:

In more detail

Prolongation

The Temporary Framework, which was set to expire on 31 December 2021, has now been prolonged until 30 June 2022 (except as noted otherwise). It remains subject to further extension if necessary.

Executive Vice President Margrethe Vestager noted that "[t]he limited prolongation gives the opportunity for a progressive and coordinated phase-out of crisis measures, without creating cliff-edge effects, and reflects the projected strong recovery of the European economy overall."

Two new categories of support measures

The 6th Amendment includes two new categories of support measures that EU Member States may adopt to help companies recover:

These investment support measures can be granted by Member States until 31 December 2022.

Provided appropriate justifications are made by the Member State, the Commission may accept alternative selection and remuneration methods, higher aid amounts per company, or extend the application to investments to larger companies.

Aid under these solvency schemes can be granted until 31 December 2023.

Other notable amendments

In addition to the prolongation of the Temporary Framework and the two new categories of State aid measures added, the 6th Amendment:

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European Union: COVID-19 State aid update - State aid Temporary Framework prolonged and additional aid for recovery possible (6th Amendment) -...