The European Commission will phase out the State aid COVID Temporary Framework, adopted on 19 March 2020 and last amended on 18 November 2021, enabling Member States to remedy a serious disturbance in the economy in the context of the coronavirus pandemic. The State aid COVID Temporary Framework will not be extended beyond the current expiry date, which is 30 June 2022 for most of the tools provided. The existing phase-out and transition plan will not change, including the possibility for Member States to provide specific investment and solvency support measures until 31 December 2022 and 31 December 2023 respectively, as already announced in November last year.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Since the very beginning of the pandemic, the State aid COVID Temporary Framework has enabled Member States to provide timely, targeted and proportionate support to businesses in need, while preserving the level playing field in the Single Market and maintaining horizontal conditions applicable to everyone.
Today, after over two years, we are finally seeing an overall improvement of the sanitary crisis in Europe, with numbers of COVID-19 infections under control and a relatively high vaccination rate. With the progressive lifting of restrictive measures, the European economy has started taking the first steps towards recovery from the sanitary crisis. As the Commission has stated in its Communication on the next steps in response to the COVID-19 pandemic: this relaxation of rules is a great relief also for our economies – but does not mean that we should not continue to stay vigilant.
The State aid COVID Temporary Framework was adopted on 19 March 2020 and first amended on 3 April 2020 to increase possibilities for public support to research, testing and production of products relevant to fight the coronavirus outbreak, to protect jobs and to further support the economy. On 8 May 2020, the Commission adopted a second amendment extending the scope of the COVID Temporary Framework to recapitalisation and subordinated debt measures. On 29 June 2020, the Commission adopted a third amendment extending the scope of the COVID Temporary Framework to further support micro, small and start-up companies and incentivise private investments. On 13 October 2020, the Commission prolonged the COVID Temporary Framework until 30 June 2021 (with the exception of recapitalisation measures that could be granted until 30 September 2021) and enabled Member States to cover part of the uncovered fixed costs of companies affected by the crisis. On 28 January 2021, the Commission adopted a fifth amendment expanding the scope of the COVID Temporary Framework by increasing the ceilings set out in it and by allowing, until the end of 2022, the conversion of certain repayable instruments into direct grants. On 18 November 2021, the Commission prolonged the COVID Temporary Framework until 30 June 2022 and introduced two new measures to create direct incentives for forward-looking private investment and solvency support measures, for an additional limited period.
Member States can use all elements of the Temporary Framework until 30 June 2022. After this date, Member States may still convert loans into limited amounts of aid in the form of direct grants, applying the conditions of the Temporary Framework and if provided for in their national schemes. Such a conversion may be used under strict conditions to write off loans or parts of them to the benefit of borrowers that are not in a position to repay. Equally, Member States may also have in place schemes that allow to restructure loans, for example extending their duration or lowering applicable interest rates, within specific limits. Furthermore, investment support towards a sustainable recovery, will be possible until 31 December 2022, and solvency support until 31 December 2023.
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