October 24, 2020

Brussels will let the States contribute up to three million to cover the fixed costs of companies hit by the covid



The European Commission on Tuesday extended the temporary state aid framework adopted at the beginning of the pandemic, with which it allows governments to get involved in rescuing companies hit by the coronavirus. Thus, Brussels has decided to extend the time frame, at the current thresholds, until June 30, 2021, and the section intended to allow support for recapitalization, until September 30, 2021. Before June 30, 2021 By 2021, the Commission will review the timeframe and assess the need to extend or adapt it again.

The amendment also introduces a new measure that allows Member States to help companies that during the eligible period suffer a reduction in their turnover of at least 30% compared to the same period in 2019 due to the coronavirus pandemic.

The aid will contribute to part of the fixed costs of the beneficiaries that their income does not allow to cover, up to a maximum of 3 million euros per company. “By supporting these companies by temporarily contributing part of their costs, the objective is to prevent their capital from deteriorating, to maintain their activity and to offer them a solid base to recover. This makes possible a more specific help to those companies that demonstrate a need” Brussels states.

On the other hand, the European Commission has adapted the requirements that recapitalization measures must meet in accordance with the time frame and, in particular, those related to the withdrawal of the State from the recapitalization of companies in which it was a shareholder before the recapitalization.

The modification allows the State to withdraw from the capital of these companies through an independent valuation, while recovering its previous participation and maintaining the safeguards that guarantee effective competition in the single market.

Margrethe Vestager, Executive Vice President for Competition Policy, said: “We extended the timeframe to meet the continuing needs of businesses, while protecting the EU single market. We are also introducing a new measure that allows Member States to support companies facing a significant loss of turnover by contributing part of their uncovered fixed costs. Finally, we introduce new possibilities for the State to withdraw from the capital of recapitalized companies, maintaining its previous participation in these companies and limiting distortions of competition. ”

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