EU State Aid Rules

State Aid is a term that refers to forms of State-controlled financial resources, given to Undertakings on a discretionary basis, with the potential to distort competition and affect trade between Member States of the European Union.

The State Aid Framework is the EU’s internal subsidy control system

In general, State Aid is prohibited under the Treaty on the Functioning of the EU (TFEU) because of its anti-competitive effects. For example, without State Aid control Member States might engage in wasteful subsidy races, which are non-sustainable, or perfectly healthy companies might be put out of business because their competitors received unfair state subsidies.

However, various categories of schemes are considered compatible, as their positive effects are considered to outweigh their negative impact. The State Aid Framework performs a balancing act of economic policy to prevent distortion of fair competition, while also achieving worthy policy objectives, such as Regional Development, Environmental Protection or to promotion of Research and Development and Innovation (RDI) in Industry.

The notion of State Aid

Not all public subsidies to industry necessarily meet the legal definition for State Aid. To assess for State Aid the following five key questions need to be asked, if the answer to ALL is yes then State Aid is present.

Article 107(1) of the TFEU sets out criteria, all of which must be met for a State Aid to be present.

Is the beneficiary an “Undertaking”?

An Undertaking is an entity, performing economic activity by placing goods or service on the market regardless of their legal status and the way in which they are financed.

Is the aid granted by the state or through state resources?

As well as government departments, this includes bodies that use resources that belong to the state or are controlled by the state. State resources can include grants, interest and tax relief, guarantees, government holdings of all or part of a company, or the provision of goods and services on preferential terms. The majority of time the answer to this question will be yes.

Does the aid confer an advantage?

An advantage is an economic benefit, whether direct or indirect, that could not be obtained in the absence of State intervention. However, whenever the financial situation of an undertaking is improved as a result of State intervention on terms differing from normal market conditions, an advantage is present. To assess this, the financial situation of the undertaking following the measure should be compared with its financial situation if the measure had not been taken. Since only the effect of the measure on the undertaking matters, it is irrelevant whether the advantage is compulsory for the undertaking in that it could not avoid or refuse it.

Is the aid selective, favouring certain undertakings?

Aid that targets particular businesses, locations, types of firm, for example, SMEs or sectors is considered selective. A general measure affecting the whole of the state's economy, for example, nation-wide fiscal measures is not considered a State Aid.

Does the aid have the potential to distort trade or affect competition?

The potential to distort competition does not have to be substantial or significant, and this criterion may apply to small amounts of aid and firms with little market share. Most interventions have the potential to distort competition.

It is sufficient that a product or service is subject to trade between member states, even if the aid beneficiary itself does not export to the EU to have an effect on trade.

All of these criteria must be met cumulatively to meet the definition of State Aid. If one or more than one of these conditions is not met, then the matter is not State Aid, and does not fall within the State Aid legal framework.

For more information on the notion of State Aid, visit EUR-Lex - 52016XC0719(05) - EN - EUR-Lex (europa.eu).

Public bodies

If you are a public body and you consider that your spending measure may involve State Aid, please consult the De Minimis or GBER guidelines for more information and contact the State Aid Unit at stateaidireland@enterprise.gov.ie.

Think State Aid first!

It is crucial that public bodies fully consider the State Aid implications of a proposal at the earliest stage possible. This allows the measure to be designed or tweaked to fit within the State Aid Rules, and thus avoid potential serious problems later.

The European Commission can, and has, forced Member States to recoup any State Aid that has been given illegally. If the Commission takes a negative decision in the context of aid that has already been paid out, the Commission requires the Member State to recover the aid from the recipient, with interest.

DETE’S State Aid Unit provide advice to public authorities on the compliance of their programmes with the State Aid rules to ensure that the measure is compatible and legal.

To ensure there are no time delays we would ask that you contact the State Aid unit as soon as possible in this regard. We can provide an analysis of schemes to ensure State Aid is not present or provide you with alternative solutions should State Aid be identified.

What are the options if your proposal might involve State Aid?

• consider changing or adapting proposals to omit the element of State Aid
• design the proposal so that it fits within the terms of one of the already existing Irish State Aid schemes which the European Commission has approved
• design the scheme so that it fits within the De Minimis Regulation (EU) 2023/2831
• design the proposed aid to so that it fits one of the areas within the consolidated General Block Exemption Regulation (GBER)
• design the proposal so that it fits within the terms of other non-GBER guidelines, frameworks, notices and communications which the Commission uses when deciding whether proposed State aid may be compatible with the Treaty (this option requires you to obtain advance approval from the Commission)

In order to ensure compliance, Member States must notify the Commission of proposed State Aid in advance with the exception of those that fall within De Minimis, GBER or under pre-existing schemes. If none of the above conditions are satisfied, you will need to get specific advance approval from the Commission.

“De Minimis” aid

Small amounts of aid granted to one undertaking, that is, less than €300,000 in any rolling 3-year period, are considered to be so small as to have no appreciable effect on competition or trade and, under the De Minimis Regulation (EU) 2023/2831 rule, these are exempt from the general ban on State aid.

However, De Minimis payments to one undertaking under a number of measures or schemes have to cumulatively observe the €300,000 limit, and Member States are required to closely monitor de minimis payments to ensure that the limit is not breached.

Ireland like several other EU member states does not maintain a national register of De Minimis aid granted under Regulation 2023/2831. Each Irish Granting Authority keep records of De Minimis aid they grant, and these must be maintained for ten years, for supply to the Commission if requested.

Department of Agriculture, Food and the Marine maintains a register of agricultural De Minimis aid granted under Regulation no. 1408/2013 (specifically for primary agriculture purposes with a lower ceiling of €20,000 over three fiscal years).

When De Minimis aid is granted, the Granting Authority must explicitly inform the recipient of the amount and character of De Minimis aid, refer to the De Minimis Regulation No 2023/2831 and obtain from the enterprise a full declaration of any other De Minimis aid they have already received, over the previous three fiscal years. The Grantor may then grant new De Minimis aid once they are satisfied it will not result in the recipient breaching the €300,000 ceiling.

It is recommended that the below text be included in correspondence with applications for De Minimis aid:

The aid being sought is provided under the European Commission Regulation on De Minimis Aid. Small amounts of State aid, up to 300,000 Euros in any three-year period to any one enterprise, are regarded as too small to significantly affect trade or competition in the common market. Such amounts are regarded as falling outside the category of State aid that is banned by the EC Treaty and can be awarded without notification to or clearance by the European Commission. A Member State is required to have a mechanism to track such aid (called 'De Minimis aid') and to ensure that the combined amount of De Minimis aid payments from all sources to one enterprise in any three-year period respects the 300,000 Euro ceiling. Please provide details of all other De Minimis aid which has been granted to your company within the past three years. It should be noted that a false declaration by a company resulting in the threshold of 300,000 Euro being exceeded could later give rise to the aid being recovered with interest.

A declaration as follows should be signed by the applicant:

I wish to apply for [insert name of grant/aid sought] under the De Minimis Regulation (EU) 2023/2831 of 13 December 2023. I confirm that:

the company has been granted only the following de minimis aid within the past three years (details to be supplied)

Signed for Company: Date:

This does not mean that all funding under the €300,000 ceiling should be counted as De Minimis. In fact, in order to avoid the risk of the threshold being exceeded, it is generally more prudent to give the aid in the form under the General Block Exemption Regulation where possible. This has the advantage that the recipient undertaking is not ‘using up’ some or all of its De Minimis limit and may potentially be able to receive other De Minimis aid, from other sources.

De Minimis aid can be given for most purposes, including operating aid. However, De Minimis aid cannot be given for export related activities (except attendance at trade fairs), agriculture and fisheries or aid favouring domestic over imported products.

Separate De Minimis regulations apply for aid for agricultural activities. Please contact the Department of Agriculture, Food and the Marine for details.

If you intend to grant/avail of De Minimis aid please consult the De Minimis Regulation (EU) 2023/2831 surrounding conditionality to be adhered to.

General Block Exemption Regulation (GBER)

The GBER allows Member States to bring certain State aid schemes into place without prior notification to the EU Commission, provided that they are within the parameters set out in the GBER.

These include but are not limited to:

• Regional aid
• Aid to SMEs
• Aid for European Territorial Cooperation
• Aid for access to finance for SMEs
• Aid for research and development and innovation
• Training aid
• Aid for disadvantaged workers and for workers with disabilities
• Aid for environmental protection
• Aid to make good the damage caused by certain natural disasters
• Social aid for transport for residents of remote regions
• Aid for broadband infrastructures
• Aid for culture and heritage conservation
• Aid for sport and multifunctional recreational infrastructures
• Aid for local infrastructures
• Aid for regional airports
• Aid for ports
• Aid involved in financial products supported by the InvestEU Fund

You are required to send the Commission a summary information sheet about the aid measure via the State Aid Notification Interactive (SANI) system within 20 working days following the scheme coming into place. A copy of the information sheet may be found at Annex II of General Block Exemption Regulation.

The following steps should be followed:

Contact stateaidireland@enterprise.gov.ie to get setup

There are two types of users: encoding user, limited to entering data only, and a signatory, can enter data and sign and submit the form. Make sure you have both users within your department/unit

Access the user guide within the SANI system

The SANI can also be used for prenotification and notification of a scheme that falls outside of the GBER/guidelines.

Departments are also obliged to publish the full text of each aid measure granted under the GBER, or a link providing access to the full text. Summary information on each aid measure exempted under the General Block Exemption Regulation is available in the Commission’s State Aid Register.

97% of Irelands State Aid comes under the GBER with the De minimis used for amounts under €300,000 over 3 fiscal years.

Specific Notification (not under GBER or De Minimis)

If a measure does not fit within the GBER, a pre-existing scheme or is not administered under De Minimis, it must be notified to the Commission via the SANI (please see steps above). This can be a lengthy process. More straightforward cases can be expected to be resolved within 6 to 9 months. More complex cases can be expected to take longer (thus the importance of availing of the GBER or a pre-existing Irish Scheme). Aid cannot be given until final approval has been received from the Commission.

Details of the various regulations can be found on State Aid legislation (europa.eu).

Notification process for non GBER Measures

It can be useful at this stage to search the Commission’s search facility for similar authorised schemes from other Member States. You can then replicate the terms of that scheme as much as possible, in order to increase the chances of the Commission approving the proposal.

Submitting a pre-notification (that is, a draft notification) to the Commission via the SANI.

The pre-notification is then submitted via the State Aid Notification Interactive (SANI) to the Commission. SANI is administered in Ireland by this Division. Please contact us for set up details.

In most cases, the Commission will respond with a request for further information and / or to arrange a discussion. There can be a series of rounds of questions and answers and refinement of the proposal until the Commission is satisfied that it can be approved. However, please note that there is no guarantee that the Commission will give State Aid approval to the proposal.

The Commission will then invite the Member State to submit the final notification via SANI, and final approval should normally be given within a further two months.

If you are planning on notifying a non GBER scheme please contact the State Aid Unit.

Services of General Economic Interest (SGEI)

In general, Services of General Economic Interest (SGEI) are services that the market does not provide or does not provide to the extent or at the quality that the State desires and are in the general (that is, of all citizens) interest and not the interest of a particular sector. For certain SGEI’s to operate, financial support from the public authorities may prove necessary. If so, State Aid issues may arise.

SGEI's tend to include such areas such as healthcare provision, social housing, provision of gas, electricity and telecoms, public service broadcasting and public transport, but this is not an exhaustive list. One example is State Aid SA.41702 (2016/NN) – Ireland Risk Equalisation Scheme. This is an SGEI.

There are specific State Aid provisions for SGEI.

All Irish schemes can be seen on the Commission website at Competition Policy (europa.eu). These can be searched using the scheme number or by member state in the advanced search facility.

Publication documents for schemes operated by DETE or our agencies can be found under State Aid publications.

Transparency Aid Module (TAM)

In line with the State Aid transparency rules, as of 1 July 2016, member states are required to notify, on a public website, beneficiaries of all individual aid awards above certain thresholds. This excludes De Mimimis aid. These should be notified on the TAM. Should you require access to the TAM please contact the State Aid Unit.

Each granting authority will submit their information onto the TAM for their own schemes or on behalf of their agencies schemes. DETE carries out this process on behalf of our agencies. Failure to accurately complete this requirement could put a beneficiary at risk of a recovery order (recovery of the state aid with interest) so it is vital that this is completed correctly. The requirement of publishing information on TAM will be outlined within the guidelines or regulations that underpin the scheme (GBER, ABER).

Information required for TAM

The case number associated with the scheme (usually SA.XXXX) – you can find this on the scheme document or the SANI or the Case register

Identity of beneficiary - usually their registered number

The type of beneficiary – Small, Medium, Large

Location of beneficiary

The beneficiaries sector

Aid instrument – grant, loan, guarantee

The aid objective – Regional Aid, Research, Development and Innovation, Sectorial Development

Date the aid was granted – the date when the beneficiary has a legal right to the funds (usually a letter of offer)

Currency of the award

Nominal amount – the total amount of aid. For loans or guarantees this will be different to the granted amount since the gross grant equivalent must be reported as an aid element

Aid element/granting amount – this is the aid element, including the gross grant equivalent for guarantees or loans

Granting authority name

Co-Financing – was there any other public funding?

It is not intended that aid amounts for previous years can be reconciled at a later date. Departments must ensure that the information they are providing on this platform is correct.

The information should be published within 6 months from the granting of the aid. For aid in the form of tax advantage, the information will be published within 1 year from the date the tax declaration is due. The information will be available for at least 10 years from the date on which the aid was granted.

Granting Authorities should be aware that it is the actual beneficiary of the aid that should be published. When the aid is granted via a third party, the third party should collect the relevant information on payments to final beneficiaries and transmit it to the relevant Granting Authorities.

SARI

The SARI system informs the Scoreboard information which provides insights into aid expenditure made by member states. This does not include railways or crisis frameworks. YouTube videos on using the SARI are accessible through the system under the ‘?’ bubble below the user's name on the homepage. If you need access to this system, please contact Stateaidireland@enterprise.gov.ie. Granting authorities must input the required information before a date in May each year. Our unit will send a notification prior to the deadline to all departments that have schemes notified.

Regional Aid Map for Ireland

The Department of Enterprise, Trade and Employment's State Aid role falls under four broad categories:

• State Aid policy
• provision of specific guidance
• State Aid awareness and training
• compliance with State Aid procedures

The EU State Aid legal framework is continually evolving. The Department of Enterprise, Trade and Employment's State Aid Unit is the national point of contact at EU level on State Aid policy. The State Aid Unit engages with the Commission and other Member States in the ongoing development of the State Aid Framework. While overall competence for this area of EU law rests with the Commission, Member States can engage with the Commission to represent the national positions on the scope and conditions of the State Aid Framework.

It is the role of the State Aid Unit to ensure that Ireland’s national interest are represented in the ongoing engagement with the Commission and other Member States in the development of State Aid policy.

State Aid Modernisation

The most significant part of State Aid policy is the State Aid Modernisation (SAM) Programme. Since 2012, the SAM Programme has shaped the State Aid rules and ensured they remain appropriate and fit for purpose. The State Aid Unit represents Ireland in the SAM Programme and on the SAM Working Group.

More information on State Aid policy and the State Aid Modernisation Programme are available on the Commission’s website: State Aid Modernisation (europa.eu)

We are available to provide guidance on any queries or to assess compatibility of schemes with any government department who requires this service. We also have a good working relationship with the EU Commission and if needed can approach them to request guidance on any issues that fall outside of the current regulations. We would ask that you provide us with a document outlining how the proposed scheme would work well in advance of a ‘go live’ date. Remember, it is advantageous to consult us in the early stages of a scheme to ensure it is compliant, it is much more difficult to amend a scheme to fit one of the regulations.

Please note that if you intend to go down the route of a notified scheme (outside the scope of any of the guidelines or regulations) this is a lengthy and onerous process that could take up to a year. Please ensure these timeframes are factored into your scheme project plan.

We provide State Aid training throughout the year to granting authorities. This can be specifically targeted to new additions to the policy or an overview of State Aid for anyone new to the topic. These training sessions are free of cost. If you would like to attend one of these training sessions, please contact stateaidireland@enterprise.gov.ie

The State Aid Unit ensure compliance of the Department's Industrial Development schemes in line with EU State Aid rules and advise and assist other Departments to achieve the same in relation to their schemes.

Where needed, we notify aid schemes via the SANI to be implemented by the Department and its agencies to the EU Commission and obtains Commission decisions that the schemes are in accordance with the EU State Aid rules, notably Articles 107 to 109 of the Treaty on the Functioning of the European Union (Previously dealt with primarily by Articles 87 to 89 of the Treaty establishing the European Community). We also advise other Departments on achieving similar decisions in relation to their schemes. (Separate State Aid rules apply in respect of Agriculture, Fisheries, and most aspects of Transport; these fall within the responsibility of the Department of Agriculture, Food and Marine, the Department of Communications, Climate Action and Environment, the Department of Transport, and the Department Tourism, Culture, Arts, Gaeltacht, Sport and Media).

If you require access to the SANI please contact the unit to request this.

Contact the State Aid Unit

State Aid Unit,

Room 211,

Department of Enterprise, Trade and Employment,

23 Kildare Street,

Dublin 2,

D02 TD30.

Email: stateaidireland@enterprise.gov.ie