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 Milestones

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

Brexit Preparedness: European Commission adopts final set of “no-deal” contingency measures for Erasmus+ students, social security coordination rules and the EU budget

The journey begins – 2021 is the European Year of Rail!

Three experts on why eradicating plastic pollution will help achieve gender equality

Informal meeting of heads of state or government, Sibiu, 09/05/2019

State aid: Commission opens in-depth investigation into public support for expansion of LG Chem’s electric vehicles battery plant in Poland

Rising number of young people excluded from jobs, education and training

Iran protests: Live ammunition reportedly used, says UN human rights office

In dreams and in love there are no impossibilities

Opening Remarks by H.E. Ambassador Yang Yanyi, Head of the Chinese Mission to the EU at the Chinese Fashion Night

EU Facility for Refugees in Turkey: €5.6 billion out of €6 billion now allocated in support of refugees

Forget 2009, this is the real credit crisis of our time

Is there a cure for corruption in Greece?

COVID-19 vaccination campaigns and their challenges

EU Visa Policy: Commission welcomes agreement to strengthen EU visa rules

How to unleash the potential of regions like São Paulo

A comprehensive strategy for Eurozone’s long term growth gains momentum

US-EU trade negotiations: pointless tariffs against real economic growth

A Sting Exclusive: “Paris is the moment for climate justice”, Swedish MEP Linnéa Engström claims from Brussels

The ECB proposes a swift solution for SMEs’ financing

Major UN aid operation for 650,000 gets underway across Syria-Jordan border

Latest leaked TTIP document confirms EU sovereignty may be under threat

Societies must unite against ‘global crisis of antisemitic hatred’, Guterres urges

How powering food storage could end hunger

What are antibody tests and can they get the world back to work?

Education should be like everything else. An on-demand service

A new European banking space is born this year

Smart city experts should be looking to emerging markets. Here’s why

JADE Spring Meeting 2016 highlights

European research priorities for 2021-2027 agreed with member states

Latest tragedy in the Mediterranean claims over 100 lives – UN refugee agency

Parliament demands ban on neo-fascist and neo-Nazi groups in the EU

Memoirs from a unique trip to China: “my new old dragon” (Part II)

We need to rethink cybersecurity for a post-pandemic world. Here’s how

COVID-19 amplifies inequality. Fight back with long-term thinking

How COVID-19 vaccine efforts could help defeat other diseases

Former Chilean President Bachelet put forward by UN chief as next High Commissioner for Human Rights

Young people are key to defusing unrest and restoring public trust

A third of young people polled by UN, report being a victim of online bullying

The reskilling revolution can transform the future of work for women

European Defence Fund: EU funds new joint research and industrial projects

Coronavirus Global Response: EU Humanitarian Air Bridge supports Venezuela

Search Engine neutrality in Europe in danger: Are 160.000 Google filtering requests good enough?

Why we need different generations in the workplace

Mexico: UN chief saddened by pipeline blast in which dozens were killed

Use space technology to build a better world for all, urges UN chief

UNICEF urges ‘transformative shift’ in family-friendly work policies to reap ‘huge’ benefits

EU cracks under the weight of its policy on the Ukraine-Russia nub

We need a global convention to end workplace sexual harassment

Climate Change : An Already Health Emergency

10 reasons to be optimistic for the future, from young change-makers

COVID-19 practices are constantly changing – this app helps emergency doctors cope

After the European Parliament elections – what happens next?

Scourge of slavery still claims 40 million victims worldwide, ‘must serve as a wakeup call’

Chernobyl nuclear disaster-affected areas spring to life, 33 years on

Why the UK government must do more to boost green revolution

UN chief praises Africa for keeping ‘hearts and borders open’ in refugee crisis

OK computer: why the machine age still needs humans

In Bali, UN chief Guterres outlines importance of international financial cooperation for sustainable development

TTIP 9th Round marked by American disappointment: Will some optimism save this trade agreement?

As Dubai switches on its first 5G, what is all the fuss about?

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