State aid: Commission approves Luxembourg guarantee measure to further support economy in coronavirus outbreak

Luxembourg 2020_

(Polina Sushko, Unsplash)

This article is brought to you in association with the European Commission.


The European Commission has approved today another Luxembourg State aid scheme to support the Luxembourgish economy in the context of the coronavirus outbreak. The scheme was approved under the State aid Temporary Framework to support the economy in the context of the COVID-19 outbreak adopted by the Commission on 19 March 2020.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The Luxembourg scheme that we approved today enables the granting of guarantees on loans at favourable terms to help business cover immediate working capital and investment needs and continue their activities in these difficult times. We continue working closely with Member States to ensure that national support measures can be put in place in a timely, coordinated and effective way, in line with EU rules.”

The Luxembourg support measure

Following the approval of the Luxembourg measure adopted on 24 March 2020, Luxembourg notified to the Commission an additional support measure under the Temporary Framework in the form of guarantees on loans.

The scheme is open to all companies, except those active in the promotion, renting and sale of building as well as holding of investments. It enables the granting of guarantees on loans at favourable terms to help businesses cover immediate working capital and investment needs.

The Commission found that the Luxembourg measure is in line with the conditions set out in the Temporary Framework. In particular, (i) the underlying loan amount per company is linked to cover its liquidity needs for the foreseeable future, (ii) the guarantees will only be provided until the end of this year, (iii) the guarantees are limited to a maximum six-year duration, and (iv) companies pay guarantee premiums as set out in the Temporary Framework.

The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

On this basis, the Commission approved the measure under EU State aid rules.

Background

The Commission has adopted a Temporary Framework to enable Member States to use the full flexibility foreseen under State aid rules to support the economy in the context of the Coronavirus outbreak. The Temporary Framework provides for five types of aid, which can be granted by Member States:

(i)           Direct grants, selective tax advantages and advance payments: Member States will be able to set up schemes to grant up to €800,000 to a company to address its urgent liquidity needs.

(ii)         State guarantees for loans taken by companies from banks: Member States will be able to provide State guarantees to ensure banks keep providing loans to the customers who need them. These state guarantees can cover loans to help businesses cover immediate working capital and investment needs.

(iii)        Subsidised public loans to companies: Member States will be able to grant loans with favourable interest rates to companies. These loans can help businesses cover immediate working capital and investment needs.

(iv)        Safeguards for banks that channel State aid to the real economy: Some Member States plan to build on banks’ existing lending capacities, and use them as a channel for support to businesses – in particular to small and medium-sized companies. The Framework makes clear that such aid is considered as direct aid to the banks’ customers, not to the banks themselves, and gives guidance on how to ensure minimal distortion of competition between banks.

(v)         Short-term export credit insurance: The Framework introduced additional flexibility on how to demonstrate that certain countries are not-marketable risks, thereby enabling short-term export credit insurance to be provided by the State where needed. On 27 March, the Commission further expanded on that flexibility: following an urgent public consultation, the Commission decided to amend the Annex to temporarily remove all countries from the list of “marketable risk” under the Short-term export-credit insurance Communication. This will make public short-term export credit insurance more widely available in light of the current crisis linked to the coronavirus outbreak. Following the amendment, State insurers will in principle be able to step in and provide insurance for short-term export-credit risk for all countries, without the need for the Member State in question to demonstrate that the respective country is temporarily “non-marketable.” This amendment will be in place until 31 December 2020, with a possibility to review beforehand.

 

The Temporary Framework will be in place until the end of December 2020. With a view to ensuring legal certainty, the Commission will assess before that date if it needs to be extended.

The Temporary Framework complements the many other possibilities already available to Member States to mitigate the socio-economic impact of the Coronavirus outbreak, in line with EU State aid rules. On 13 March 2020, the Commission adopted a Communication on a Coordinated economic response to the COVID-19 outbreak setting out these possibilities. For example, Member States can make generally applicable changes in favour of businesses (e.g. deferring taxes, or subsidising short-time work across all sectors), which fall outside State Aid rules. They can also grant compensation to companies for damage suffered due to and directly caused by the Coronavirus outbreak.

The non-confidential version of the decision will be made available under the case number SA.56805 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

More information on the temporary framework and other action the Commission has taken to address the economic impact of the Coronavirus pandemic can be found here.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Guterres holds ‘focused and frank’ informal discussions over future of Cyprus

Traditional knowledge at ‘core’ of indigenous heritage, and ‘must be protected’, says UN Forum

Europe and UN form bulwark against ‘might makes right’ worldview, EU foreign affairs chief tells Security Council

Can cybersecurity offer value for money?

Venezuela: MEPs call for free and fair elections in the crisis-torn country

Political solutions ‘prerequisite to sustainable peace’, Lacroix tells Security Council

These 11 EU states already meet their 2020 renewable energy targets

Global warming: our responsibility

Climate change: cutting the good by the root?

On youth unemployment: unemployment is even bleaker for youth with disabilities

Record-high number of civilian casualties in Afghanistan: UN Report

2020 Blue Economy Report: Blue sectors contribute to the recovery and pave way for EU Green Deal

Militias force nearly 2,000 to leave Libyan capital’s largest shelter for internally-displaced: UNHCR

Constitutional Committee breakthrough offers ‘sign of hope’ for long-suffering Syrians

This is what you need to know about the Iran nuclear deal

EU budget: Regional Development and Cohesion Policy beyond 2020

Me and China

What do refugees really need from those who want to help? A refugee explains

ECB tied in the anti-monetary German ideology

10 ways COVID-19 could reshape offices

This crisis cannot be confronted with statistics

Three ways to improve your corporate culture in the #MeToo era

Nepal faces a crisis as COVID-19 stems the flow of remittances

UN climate panel says ‘unprecedented changes’ needed to limit global warming to 1.5°C

Is Data Privacy really safe seen through Commissioner’s PRISM?

Does it pay for cities to be green?

Trade: EU and 16 WTO members agree to work together on an interim appeal arbitration arrangement

Reimagining the future for skills: What we learned from young people

Children are still dying in Yemen war, despite partial ceasefire, says UNICEF chief

British PM May’s Brexit proposal remains obscure while her government unravels

Brexit must not put UK university research at risk

Brazil identifies a clear pathway for aligning its transfer pricing framework with the OECD standard

Spirit unlimited

GSMA Announces First Keynote Speakers for 2019 “MWC Los Angeles, in Partnership with CTIA”

Why education and accountability are important for developing countries?

Assembly of European Regions @ European Business Summit 2014: The European regions on the path to recovery

Why it’s good to turn your colleagues into friends

TTIP’s 11th round starts in Miami but EU-US businesses see no sunny side

‘Don’t forget Madagascar’s children’, UN appeals for long-term help as emergency worsens

Could a Digital Silk Road solve the Belt and Road’s sustainability problem?

Which countries get the most sleep – and how much do we really need?

Yesterday’s “jokes” and sarcasm by Digital Single Market’s Vice President Ansip on EU member states’ right to protect their telco markets

The 5 biggest challenges cities will face in the future

From DIY editing to matchmaking by DNA: how human genomics is changing society

Mergers: Commission approves the acquisition of Flybe by Connect Airways, subject to conditions

Why forensic science is in crisis and how we can fix it

US and Mexico child deportations drive extreme violence and trauma: UNICEF

5 steps businesses can take to protect air quality after COVID-19

ILO’s Bureau for Employers´Activities to publish new study on women in business and management

DR Congo: Ebola claims over 1,000 lives, Guterres commits ‘whole’ UN system, to help ‘end the outbreak’

How can impact investors balance the green energy equation?

New UN initiative to support financial systems that ‘work better for everyone, everywhere’

Deal on faster exchange of non-EU nationals’ criminal records

How our global battle against coronavirus could help us fight climate change

5G will drive Industry 4.0 in the Middle East and Africa

Putting a price on carbon will help New York state achieve a clean energy future

The entire Australian state of New South Wales is in drought

How do you get people to trust self-driving vehicles? This company is giving them ‘virtual eyes’

Mali: Presidential elections critical to consolidate democracy, says UN peacekeeping chief

EP stands up for democracy in Hungary during COVID-19

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s