Extended state aid Temporary Framework and approval of aid to the Danish Travel Guarantee Fund

Extension of the Temporary Framework

The European Commission adopted on 19 March 2020 a Temporary Framework enabling Member States to initiate State aid measures in the context of the COVID-19 outbreak. Read our previous newsletter about the Temporary Framework.

On 3 April 2020, the Commission decided to extend the framework. The amended Temporary Framework complements the many other possibilities already available to Member States to mitigate the economic impact of the COVID-19 outbreak, in line with EU State aid rules. The aid can be combined e.g. with the ordinary de minimis aid, etc.

The amendment expands on the existing types of support that Member States can give to companies in need – for instance zero-interest loans, guarantees on loans covering 100% of the risk, or equity of up to € 800 000 per company – and introduces five additional types of aid measures that Member States can initiate:

1. Support for coronavirus related research and development (R&D): Member States can grant aid in the form of direct grants, repayable advances or tax advantages for COVID-19 research and development. Furthermore, a bonus may be granted for cross-border cooperation projects between Member States.
2. Support for the construction and upscaling of testing facilities: Member States can grant aid in the form of direct grants, tax advantages, repayable advances and no-loss guarantees to support investments enabling the construction or upscaling of infrastructures needed to develop and test products useful to tackle the outbreak. These include medicinal products (including vaccines) and treatments; medical devices and equipment (including ventilators and protective clothing). To encourage cross-border investments and speedy implementation, companies can benefit from a bonus.
3. Support for the production of products relevant to tackle the COVID-19 outbreak: Member States can grant aid in the form of direct grants, tax advantages, repayable advances and no-loss guarantees to support investments enabling the rapid production of coronavirus-relevant products. Companies may also in this case benefit from a bonus to encourage cross-border activities and speedy implementation of the project.
4. Targeted support in the form of deferral of tax payments and/or suspension of social security contributions: Member States can allow targeted deferrals of payment of taxes and of social security contributions in those sectors, regions or for types of companies that are hit the hardest by the outbreak.
5. Targeted support in the form of wage subsidies for employees: Member States can contribute to the wage costs of those companies in sectors or regions that have suffered most from the outbreak and would otherwise have had to lay off personnel.
    

Read the European Commission's press release.

Read the amendment.

Update 12 May 2020: The Commission extends the Temporary Framework once again
On 8 May 2020, the European Commission decided to extend the Temporary Framework once again.

Read our newsletter about the extension of the Temporary Framework of 8 May 2020.

Aid measure in support of the Danish Travel Guarantee Fund - an example of approval of Danish State aid under the Temporary Framework

The European Commission has also approved a Danish aid measure in support of the Travel Guarantee Fund based on the Temporary Framework, which was already in force before the extension, (and in line with article 107(3)(b) of the TFEU)). The aid approved is a state loan facility of up to DKK 1.5 billion intended to support the Travel Guarantee Fund, which in certain circumstances provides reimbursement to travellers in case of travel cancellations. In particular, the loan is to cover travel packages that have been cancelled due to the COVID-19 outbreak and the subsequent travel restrictions.

The loan aims (i) to ensure that sufficient liquidity remains available for travel organisers to counter the damage inflicted in the package travel market, (ii) to preserve the continuity of economic activity during and after the outbreak, and (iii) to ensure the quickest possible settlement of related refunds or reimbursements to travellers.

The Commission has found that the Danish measure is in line with the conditions set out in the Temporary Framework. The reason is that the loan amount is designed to cover the Fund's liquidity needs for the foreseeable future, as the loan facility contract will be effective until the end of this year and the maturity of the loan will be six years. Furthermore, the Danish state will ensure that the loan to the Fund will be fully dedicated to the reimbursement of package travel contracts that have been cancelled due to the COVID-19 outbreak. The measure will thus provide certainty to affected consumers whose trips are cancelled as a consequence of the outbreak. The Commission has therefore concluded that the loan facility will contribute to managing the economic impact of the COVID-19 outbreak. Also, the loan facility has been deemed necessary and appropriate to remedy a serious disturbance in Denmark's economy.

Read the Commission's press release about the approval.