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Commission allows more subsidies for SMEs

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Published 13 December 2006 - Updated 21 May 2007
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State aid
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The Commission has adopted a Regulation doubling the level of government subsidies that small businesses may receive without breaking EU rules on state aid.

The new Regulation will make a number of changes, aimed at facilitating the development of small and medium enterprises, which represent 99% of all European businesses and 70% of EU GDP. 

  • State aid up to €200,000 granted over a period of three years will no longer require the Commission’s prior approval. This will make it easier for companies to access subsidies while allowing the Commission to focus its attention on monitoring the most distortive cases. 
  • Governments will also be allowed to offer loan guarantees worth up to €1.5 million to small enterprises without undergoing regulatory scrutiny. 
  • De minimis state aid will now also be available to the road transport sector and for the manufacturing of agricultural products. 
  • These exemptions will only apply to “transparent” types of aid - where it is possible to calculate the precise amount of aid in advance. 
Positions: 

Competition Commissioner Neelie Kroes said: "This new Regulation will allow member states and the Commission to save time and resources and, at the same time, prevent distortions of competition." 

The Commission has said that the aim of the State Aid Action Plan is to reduce overall aid levels, while ensuring that it is better targeted towards promoting Lisbon objectives. This, it says, is "one of the reasons for not increasing the de minimis ceiling significantly, since such an increase could lead to random spending by member states, rather than to targeted subsidising of crucial activities". 

Christopher Leitl, president of SME Union, a small-business task force of the European People’s Party, welcomed the new Regulation, saying: "That means less bureaucracy. Regional and national authorities can now give small enterprises the money they need to modernise or expand their company easily and quickly," but he added that SME Union would continue to fight for higher ceilings: "The next logical step has to be a limit of €300,000," he added. 

Hans-Werner Müller, secretary-general of the European SMEs’ employers organisation UEAPME welcomed the increased flexibility for loans and aid cumulation, saying that he was "satisfied with the final outcome which we hope will yield benefits for European small businesses". 

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Background: 

According to current regulation on so-called de minimis state aid, financial support not exceeding €100,000 over a period of three years in favour of a given company is deemed to have “no substantial effect on competition and trade between member states”, and therefore not to constitute state aid. 

The Regulation, adopted by the Commission on 12 December 2006, will raise this ceiling as of 1 January 2007, as part of a wider package of state-aid reforms, known as the State Aid Action Plan, launched in June 2005. 

This five-year plan aims to simplify state-aid rules in order to reduce bureaucracy, but also to reduce the amount of aid that member states pay in support of their companies and industries and better to target such subsidies towards measures that truly contribute to the Lisbon objectives of boosting economic growth and creating jobs. 

According to the state-aid scoreboard, published on 11 December 2006, although member states have failed to reduce their state aid levels in the past year, they have made significant progress in better focusing the aid on innovation, environment and other projects of common interest. 

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