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European Commission extends State aid to accelerate R&D activities on COVID19

The Commission is extending the Temporary Framework to allow Member States to accelerate research, testing and production of coronavirus-related products. The support covers R&D activities, testing infrastructures, and productive investments initiated since 1 February

The European Commission has adopted an amendment extending the Temporary Framework adopted on 19th March 2020 so that Member States can accelerate research, testing and production of products related to the coronavirus in order to protect jobs and continue to support the economy during this outbreak. The modified Temporary Framework complements the many other possibilities already available to Member States to mitigate the socio-economic impact of the coronavirus outbreak, in line with EU state aid rules.

Executive Vice-President Margrethe Vestager, responsible for competition policy, said: “Today’s amendment to the Temporary Framework will further enable Member States to support companies that develop and manufacture much needed products to fight the coronavirus, such as vaccines, medicines, medical devices, disinfectants and protective equipment. We need to act in a coordinated manner. So additional support may be granted to cross-border projects between Member States and to timely delivery of products. In addition, we have extended the temporary framework to give Member States further possibilities to ease liquidity constraints faced by companies and save jobsin sectors and regions that are hit particularly hard by this crisis.” 

Aid for R&D activities, testing infrastructures and productive investments

The amendment submitted extends the Temporary Framework by providing for the following aid:

1. Support for research and development in the field of coronavirus (R&D):

In order to address the current health crisis, Member States may provide support in the form of direct grants, reimbursable advances or tax benefits for R&D on coronaviruses and other relevant anti-viral measures. A bonus may be granted for cross-border cooperation projects between Member States.

Thus, for R&D projects, this Temporary Framework allows Member States to provide aid in the form of direct grants, reimbursable advances or tax benefits covering up to 100% of eligible costs for fundamental research (as was already the case today) and 80% of eligible costs for industry research or experimental development (as opposed to 50-70% under the existing rules until now).  Aid for coronavirus-related R&D can only be approved if the beneficiaries undertake to grant non-exclusive licences on non-discriminatory market conditions to third parties in the European Economic Area. This will ensure that developments in medical treatment and containment in response to coronavirus benefit all European citizens.

2. Support for the construction and upgrading of testing laboratories: 

Member States may provide aid in the form of direct grants, tax benefits, repayable advances and guarantees of non-loss in order to support investments for the construction or improvement of infrastructures necessary for the development and testing of products useful in dealing with a coronavirus outbreak until their first industrial deployment. These include products such as medicines (including vaccines) and treatments; medical devices and appliances (including respirators and protective clothing, as well as diagnostic tools); disinfectants; data collection and processing tools useful in combating the spread of the virus. In order to stimulate cooperation and support rapid action, enterprises may benefit from a bonus where their investment is supported by more than one Member State and where the investment is made within two months of the granting of the aid.

For support for the construction and upgrading of testing laboratories, Member States may grant aid in the form of direct subsidies, reimbursable advances or tax benefits covering up to 75% of eligible costs.

3. Support for the manufacture of products to combat the outbreak of coronavirus 

Member States may provide aid in the form of direct grants, tax benefits, repayable advances and guarantees of non-loss in order to support investments for the rapid manufacture of products to combat an outbreak of a coronavirus.

In addition, the aid for the production of products relevant to COVID-19 allows Member States to provide aid in the form of direct grants, reimbursable advances or tax benefits covering up to 80% of the eligible costs necessary for the production and testing of these products. 

Other measures

1. Specific support in the form of tax deferrals or suspension of social security contributions: In order to reduce further the liquidity constraints faced by enterprises due to the coronavirus crisis and to preserve employment, Member States may grant specific tax and social security contribution deferrals in the sectors, regions or types of enterprises most affected by the outbreak.

2. Specific support in the form of wage subsidies for workers: To help limit the impact of the coronavirus crisis on workers, Member States may contribute to the wage costs of those enterprises in sectors or regions most affected by the outbreak of coronavirus and which would otherwise have to lay off staff.

Minimising risks to enterprises

The amendment to the Temporary Framework also extends the existing types of aid that Member States may grant to enterprises in need. For example, Member States will now be able to grant zero-interest loans and guarantees on loans covering 100 % of the risk, or to provide capital up to a nominal value of EUR 800 000 per undertaking. This can also be combined with de minimis aid (so that aid per undertaking can be up to EUR 1 million) and with other types of aid. It should be particularly useful in responding rapidly to the urgent liquidity needs of small and medium-sized enterprises.

State aid rules allow Member States to take rapid and effective action to help citizens and businesses, in particular SMEs, facing economic difficulties as a result of the COVID-19 outbreak. It is up to the Member States to establish and seek authorisation for their respective support measures, the overall message from the Commission remains that it will be ready to remove these measures as quickly as possible. Companies potentially eligible for support should continue to follow these developments to ensure that they meet the criteria to benefit from these possible support measures.

Source.