New approval of State aid for the Fehmarn Belt Fixed Link project


The European Commission has approved the Danish financing of the coast-to-coast fixed link across the Fehmarn Belt between Denmark and Germany. The approval comes after the Commission’s review of Denmark’s financing to Femern A/S in support of the fixed link.
Commission decision of 20 March 2020 in case SA.39078


In what will be the single-biggest construction project ever in Denmark, the Fehmarn Belt Fixed Link project will install an immersed tunnel connecting Rødby on the Danish island of Lolland with the city of Puttgarden in Germany. The project is the result of an intergovernmental agreement between Denmark and Germany, under the terms of which Denmark will be the sole owner of the tunnel and responsible for the financing of it, along with the financing of the Danish road and rail connections (the Danish land works). The financing of the Danish land works had already been approved as required under State aid rules and therefore was not a part of this case. 

But the financing of the tunnel itself had yet to be approved. While the Commission had already in 2015 approved the proposed model for financing of the project as a whole, the General Court - in annulment proceedings brought by two ferry operators - overturned that decision in part, on procedural grounds, in December 2018. The General Court did not, however, annul the approval of the aid granted to the land works, but did find that the Commission ought to have examined in more detail Denmark’s financing of the tunnel construction. The case was therefore referred back to the Commission for renewed consideration.

For details on the General Court’s decision, please see our previous news article.

Decision by the Commission

After the referral, the Commission undertook an in-depth examination into the financing that Denmark had offered Femern A/S, the company behind the immersed tunnel connecting Denmark and Germany. According to the Commission, both the capital contribution, the state loan guarantees and the state loan constitute state aid which qualifies as investment aid.

The Commission assessed the aid measure in accordance with the Notice on Important Projects of Common European Interest (IPCEI) and was satisfied that the compatibility criteria in the Notice were met.

Following discussions between the Danish authorities and the Commission, the financing structure was changed. Thus, the state guarantees and the state loan were capped at EUR 9.3bn of the debt and limited to cover no more than up to a maximum of the first 16 years of operation. With these changes, the Commission found the measures to be proportionate and necessary and was satisfied that the positive effects of the project outweighed its potentially distorting effects. The Commission also concluded that certain tax measures did not qualify as State aid under EU State aid rules.

The Commission’s new decision, thus, is based on a more in-depth review of the circumstances than had been the case in the first approval in 2015.

Read the Commission’s decision.