The European Commission has approved a €200 million Irish scheme to support companies affected by the coronavirus outbreak.
The scheme, called 'Sustaining Enterprise Scheme', was approved under the State Aid Temporary Framework. Executive vice-president Margrethe Vestager, in charge of competition policy, said: “This €200 million scheme will enable Ireland to support companies operating in the manufacturing and in the internationally traded services sectors affected by the coronavirus outbreak. The measure will help ensure that these businesses can continue their activities during these difficult times."
Irish support measures
The public support, which will take the form of direct grants, repayable advances, equity injections, and subsidised loans, aims at ensuring that companies have sufficient liquidity to maintain their activities during and after the outbreak. The scheme, which applies to the whole territory of Ireland, will be open to companies of all sizes.
The support will not exceed the nominal amount of €800,000 per undertaking. In addition, aid under the scheme can be granted until December 31, 2020.
It provides for the following types of aid:
- Direct grants, equity injections, selective tax advantages and advance payments of up to €100,000 to a company active in the primary agricultural sector, €120,000 to a company active in the fishery and aquaculture sector and €800,000 to a company active in all other sectors to address its urgent liquidity needs. Member states can also give, up to the nominal value of €800,000 per company zero-interest loans or guarantees on loans covering 100% of the risk, except in the primary agriculture sector and in the fishery and aquaculture sector, where the limits of €100,000 and €120,000 per company respectively, apply.
- State guarantees for loans taken by companies to ensure banks keep providing loans to the customers who need them. These state guarantees can cover up to 90% of risk on loans to help businesses cover immediate working capital and investment needs.
- Subsidised public loans to companies with favourable interest rates to companies. These loans can help businesses cover immediate working capital and investment needs.
- Safeguards for banks that channel State aid to the real economy that such aid is considered as direct aid to the banks' customers, not to the banks themselves, and gives guidance on how to ensure minimal distortion of competition between banks.
- Public short-term export credit insurance for all countries, without the need for the Member State in question to demonstrate that the respective country is temporarily 'non-marketable'.
- Support for coronavirus related research and development (R&D) to address the current health crisis in the form of direct grants, repayable advances or tax advantages. A bonus may be granted for cross-border cooperation projects between member states.
- Support for the construction and upscaling of testing facilities to develop and test products (including vaccines, ventilators and protective clothing) useful to tackle the coronavirus outbreak, up to first industrial deployment. This can take the form of direct grants, tax advantages, repayable advances and no-loss guarantees. Companies may benefit from a bonus when their investment is supported by more than one Member State and when the investment is concluded within two months after the granting of the aid.
- Support for the production of products relevant to tackle the coronavirus outbreak in the form of direct grants, tax advantages, repayable advances and no-loss guarantees. Companies may benefit from a bonus when their investment is supported by more than one Member State and when the investment is concluded within two months after the granting of the aid.
- Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions for those sectors, regions or for types of companies that are hit the hardest by the outbreak.
- Targeted support in the form of wage subsidies for employees for those companies in sectors or regions that have suffered most from the coronavirus outbreak, and would otherwise have had to lay off personnel.
The Temporary Framework enables member states to combine all support measures with each other, except for loans and guarantees for the same loan and exceeding the thresholds foreseen by the Temporary Framework.
It also enables member states to combine all support measures granted under the Temporary Framework with existing possibilities to grant de minimis to a company of up to € 25,000 over three fiscal years for companies active in the primary agricultural sector, €30,000 over three fiscal years for companies active in the fishery and aquaculture sector and €200,000 over three fiscal years for companies active in all other sectors.
At the same time, member states have to commit to avoid undue cumulation of support measures for the same companies to limit support to meet their actual needs.
Complements other measures
Furthermore, the 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.
On March 13, 2020, the commission adopted a Communication on a Coordinated economic response to the COVID-19 outbreak setting out these possibilities.
For example, member states can make generally applicable changes in favour of businesses (e.g. deferring taxes, or subsidising short-time work across all sectors), which fall outside state aid rules. They can also grant compensation to companies for damage suffered due to and directly caused by the coronavirus outbreak.
The Temporary Framework will be in place until the end of the year. With a view to ensuring legal certainty, the commission will assess before that date if it needs to be extended.
More information on the temporary framework and other action the commission has taken to address the economic impact of the coronavirus pandemic can be found here.