State aid – Temporary Framework in response to COVID-19 extended until 30 June 2021

Published on 15 October 2020
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Margrethe Vestager

The European Commission have published a Communication on 13 October 2020 (C(2020) 7127 final) that extends the duration of the State aid Temporary Framework to respond to the COVID-19 outbreak by six months until 30 June 2021. The Temporary Framework introduced additional measures to support companies to meet their fixed costs and to clarify the operation of the existing rules. In announcing the extension, Executive Vice-President Margrethe Vestager, in charge of competition policy, said, “The Temporary Framework has supported Member States in their efforts to deal with the effects of the crisis. Today, we prolong the Temporary Framework to cater for the continued needs of businesses, while protecting the EU's Single Market. We also introduce a new measure to enable Member States to support companies facing significant turnover losses by contributing to part of their uncovered fixed costs. Finally, we introduce new possibilities for the State to exit from recapitalised companies while maintaining its previous stake in those companies and limiting distortions to competition."

Prolongation of the Temporary Framework

The Temporary Framework was initially set to expire on 31 December 2020, except for recapitalisation measures that could be granted until 30 June 2021. Today's amendment prolongs at current thresholds the provisions of the Temporary Framework for an additional six months until 30 June 2021, except the recapitalisation measures which are prolonged for three months until 30 September 2021. The objective is to enable Member States to support businesses in the context of the COVID-19 crisis, especially where the need or ability to use the Temporary Framework has not fully materialised so far, while protecting the level playing field. Before 30 June 2021, the Commission will review and examine the need to further prolong or adapt the Temporary Framework.

Support for uncovered fixed costs of companies

Today's amendment also introduces a new measure to enable Member States to support companies facing a decline in turnover during the eligible period of at least 30% compared to the same period of 2019 due to the coronavirus outbreak. The support will contribute to a part of the beneficiaries' fixed costs that are not covered by their revenues, up to a maximum amount of EUR 3 million per undertaking. Supporting these companies by contributing to part of their costs on a temporary basis aims at preventing the deterioration of their capital, maintaining their business activity and providing them with a strong platform to recover. This allows more targeted aid to companies that demonstrably need it.