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State Aid

Businesses and other organisations which receive a commercial advantage from state funds need to ensure that they comply with European Union state aid rules. The benefit concerned can take many forms including grants, subsidies, soft loans, tax concessions, waiving of payments that would otherwise be due etc.

Member States of the European Union are prohibited from providing any assistance which constitutes state aid unless it falls within a number of exemptions or has first been approved by the European Commission.

The consequences of unlawful state aid can be very serious for both the grantor and the recipient. The entity in receipt can be required to repay the value of the aid plus interest. The public funder may face claims from third parties who have incurred losses as result of the granting of the unlawful aid.

Typically, under the terms on which funding is provided, the recipient is required to confirm that the project is state aid compliant and possibly to provide a legal opinion in support.

We guide clients through the detailed requirements of any relevant exemptions provided for particular types of aid, such as regional aid, aid to SMEs and aid for research and development and innovation. Exemptions are also available for relatively small amounts of aid (known as de minimis aid).

If the proposed assistance constitutes state aid but does not fall within any exemptions, we will assist clients to assess and, where feasible, re-structure the project so that the public assistance is not state aid.

It is important that state aid issues are addressed early in the life of a project. If proposed state aid does not fall within the terms of one of the exemptions and it is not feasible to structure it in such a way that the funding does not constitute state aid, the approval of the European Commission will need to be sought. This may take 6-18 months (or longer). As aid may not be granted until that approval is received, the project’s timetable would need to take account of the delays that this may cause. We will assist clients in their notification of the matter to the European Commission for approval of the aid.

The breadth of our experience reflects the variety of sectors in which public funding may be provided, including research and development, culture, education, and tourism.

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