State Aid during Covid-19

July 8th, 2020

Brexit notwithstanding, the UK remains subject to the EU State Aid regime administered by the EU Commission. On 19 March 2020 the Commission adopted a “ Temporary Framework “ for State Aid measures to support the economy during Covid-19 (the TF). The TF was amended on 3 April and 8 May 2020. A feature of the TF was that aid was not available for undertakings already in financial difficulty by 31 December 2019.

This condition has now been relaxed by the third amendment to the TF. This amendment relates to micro and small companies. They are undertakings with less than 50 employees and less than 10 million euros of annual turnover and/or annual balance sheet. It is recognised that they have been particularly affected by the current liquidity crisis and face difficulties in accessing finance.

Aid to all micro and small undertakings is now to be included under the TF, even if they were in financial difficulty on 31 December 2019, provided that they (1) are not subject to collective insolvency procedure, (2) have not received rescue aid which has not been repaid, and (3) have not received restructuring aid. Support for innovative start-ups can be increased.

Detailed amendments to the TF are also made.

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