According to Article 107 in the EU Treaty (TFEU):
Any aid granted by a Member State or through State resources in any form whatsoever which distorts or threaten to distort competition by favouring certain undertakings or the production of certain goods shall, in so far it affects trade between Member states, be incompatible with the internal market.
In general, every support to a project is potentially seen as State Aid as the programme prioritises activities and actors on the market in the fields of innovation, entrepreneurship and SMEs. All applications will be assessed by the Joint Secretariat in relation to State Aid. It is presumed that Norway in relation to State Aid will follow national rules and principles and that these to a great extend are aligned with the EU legislation.
The assessed project implies:
Projects assessed as state aid and where it is not possible to give support using De minimis or GBER is therefore not eligible for support from the programme at all.
In general, it is recommended to contact the Joint Secretariat in an early stage of the application process to discuss the different opportunities and restrictions.
The first step is to consider if any of the potential beneficiaries carry out an economic activity or not? If not, State aid is not involved.
If economic activity is carried out, there are five questions that all must be answered with a yes if a measure shall be labelled as State Aid. A crucial concept for all questions is the understanding of an undertaking. In the state aid context, an undertaking is an entity engaged in economic activity, despite the entity’s legal status (public, private, association, university etc.). Economic activity can be defined as offering goods or services on a market, which also include goods or services which, in principle, could be carried out by a private operator to make profits. The categorisation as State Aid or No State Aid concerning aid to economic activities depends very much on the outcome of question 2, 4 and 5 as the answers to question 1 and 3 are always or mostly yes.
The answer is always yes in the case of support from Interreg.
In general, an advantage is the economic benefit that an undertaking would not gain under normal marked conditions. The objective of the intervention is not relevant in this context. What counts is whether the financial situation of an undertaking is improved. This will also be the case if the aid is transferred via the actual beneficiary to participating SMEs.
The answer is very often yes because the Interreg programmes cover a certain geographical area and therefore are selective.
When it is assumed that the state grants a financial advantage to an undertaking in a liberalised sector where there is, or could be, competition, the grant could distort or threaten to distort the competition.
This depends on the character of the activity. In the case where an economic activity is granted by a Interreg programme, it might impact the trade across national borders.
So, a first conclusion is that only those activities that are not economic activities can be labelled as “No State aid” activities. For those activities that are economic activities the De minimis or the General Block Exemption rules might be suitable, see below.
According to Commission Regulation 1407 (2013) Article 3, aid measures shall in general be exempt from the State Aid Regulation if they fulfil the following requirements:
The EUR 200.000 ceiling applies to all sorts of grant whether it come from national or EU- sources. Besides grants, other sorts of aid as loans and guaranties shall be taken into consideration. All figures used shall be gross and before any deduction of tax or other charge. The 3-year period shall be understood as the fiscal year concerned plus the previous two fiscal years. There are limitations concerning agriculture, fishery and aquaculture and exclusion of export aid (see below).
In general, an undertaking is as mentioned above an entity engaged in an economic activity, regardless of its legal status and the way in which it is financed. It depends on the character of activities and not the formal status of the partners. Also, public bodies or non- profit organisations may be covered by the term undertaking.
In general, all entities belonging to the same company group are one single undertaking. For example, universities can be considered as one single undertaking even the individual university department often will act as the formal partner and carry out all the activities. In such a case the EUR 200.000 ceiling shall be respected by the university. Article 2 in Regulation 1407 explains more in detail how the term single undertaking should be understood. A crucial element in the understanding of the term single undertaking is the question about control and other functional, economic and organic links.
In the case where an entity carries out both economic and non-economic activities is to be regarded as an undertaking only with regard to the former.
The De minimis ceiling applies per Member State meaning that a single undertaking may receive amounts up to the minimis ceiling several times, provided that it is from different Member States.
When the De minimis rules are used the Managing Authority shall inform the undertaking about the amount and that the De minimis Regulation is used so the undertaking can keep track how much it has been allocated from which Member State.
The undertaking shall on the other hand fill out a declaration about any other De minimis aid received during the past 3 years. A template for the declaration is available on the Programme website. The Joint Secretariat will ask for the declarations if needed once the application has been assessed regarding the state aid questions.
The GBER (Commission Regulation (EU) 651/2014, with amendments), defines categories of aid that are exempted from the State aid notification requirement. That means that it under certain condition is eligible for the Programme to grant such activities. Not all these categories are relevant for the Programme and only aid for European territorial cooperations will be explained below.
The Interreg Aurora programme can make use of GBER Article 20 or 20 a) that regards aid for costs incurred by undertakings participating in European Territorial Cooperation projects.
How to give a sufficient description in the application concerning State aid issues
Firstly, it is important that the partner description gives sufficient information about the partner’s activities, which also include information about economic activities. It is not sufficient only to state whether a partner is public or private; public as well as non-profit organisations may in the State aid context be labelled as entities that to some extend undertake economic activities.
Secondly, it is important to be aware that the State Aid rules cover beneficiaries on all levels, not only the project partners but also the “end beneficiaries”, for example where the project provides support and other services to SMEs. Therefore, it is important that the target groups are described precisely in the application form. Indicate who would benefit from the outputs of the project and consider whether this might involve indirect aid. For example, the provision of free or subsidised training to SMEs would involve indirect aid.
Thirdly, it is important that the activities and not at least the outputs are well defined and described in the application. Activities and outputs in relation to SMEs that may be exempted from the State rules can, for example, be development of joint business strategies or management structures, the provision of common services or services to facilitate cooperation, coordinated activities such as research or marketing, the support of networks and clusters, the improvement of accessibility and communication, and the use of joint instruments to encourage entrepreneurship and trade with SMEs. Other activities that may be exempted are consulting, training, and exchange of knowledge and experiences or it may be development of websites, data banks, market research and handbooks. A condition for exemption is that the support given to SMEs in the format of open source, meaning that in principle all SMEs will have access or that the support from the project to the SMEs is given on market conditions meaning that the SMEs have to pay the market price for the service. Also be aware that aid to export-related activities (aid directly linked to quantities exported) is not covered by any of the exemptions, neither de minimis nor the General Block Exemption Rules.
Finally, the Programme cannot support undertakings in difficulty. An undertaking is in difficulty when it will almost certainly be condemned to going out of business in the short or medium term. This can be the case when more than half of its subscribed share capital has disappeared because of accumulated losses or in cases where the undertaking is subject to collective insolvency proceedings. The Lead Partner is required to obtain the necessary information about the SME/private partners in relation to the application. If an undertaking comes into difficulty during the project period, or if incorrect information has been provided in connection with the application, the Managing Authority is entitled to close the project or part of the project and to demand repayments of amounts already paid to the Lead Partner.
The use of GBER and de minimis
The Finnish national co-financing will be granted as basis of GBER, regardless which form of state aid (de minimis or GBER) the Interreg Aurora programme applies in their EU-funding decision. This will have some implications to the amount of the Finnish co-financing. In these particular cases the full amount of co-financing (70% of the non-EU funded portion) is not possible, as the combined aid cannot exceed 80% if state aid rules are applied.