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As anticipated in this blog, the European Commission (“EC”) has already published the decision approving the second National Temporary Framework for State aid notified by Spain, following the approval of a first scheme in early April.
This new National Temporay Framework, also designed as an “umbrella” scheme, was notified by Spain after the entry into force of the amendments to the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak (“Temporary Framework”).
Under that amendment, the second framework scheme will enable Spanish public authorities to grant (i) aid for containing COVID-19; and (ii) aid for employment protection.
The EC’s decision also authorizes new forms of aid under the first Spanish National Temporary Framework scheme. In addition to the existing possibility of direct grants, repayable advances and tax advantages, aid can now be granted in the form of guarantees on loans, subsidized interest rates for loans and equity contributions up to €800,000 except in the primary agriculture sector (up to €100,000) and the fishery and aquaculture sectors (up to €120,000).
As with the previous scheme, the aid will be directed at the self-employed, SMEs and large companies in all sectors of the Spanish economy (with the express exclusion of credit institutions). Aid can be granted by central, regional and local authorities until the end of this year, except for tax advantages for the period between March 13 and December 31, 2020, which will be considered granted on the filing date. The aid to be granted under this new framework scheme will be approximately €3.5 billion.
Aid for containing COVID-19
Spanish authorities can provide public support in the form of (i) aid for COVID-19 relevant research and development (R&D); (ii) investment aid for testing and upscaling infrastructures; and (iii) investment aid for producing COVID-19 relevant products (including vaccines, active pharmaceutical ingredients, medical devices, hospital equipment, diagnostic tools and disinfectant).
These three types of aid can be granted in the form of direct grants, repayable advances and tax advantages. In addition, investment projects (points (ii) and (iii) above) may benefit from no-loss guarantees.
Aid for COVID-19 relevant research and development. Eligible costs are those necessary to carry out the project, including staff, equipment, diagnostic tools, data processing and clinical trials. The aid may cover all the costs for fundamental research and up to 80% of the costs for industrial research and experimental development. In these cases, the aid may be increased by an additional 15% if the research project is carried out in crossborder collaboration. In turn, the beneficiary will commit to granting non-exclusive licenses under non-discriminatory market conditions to third parties in the European Economic Area.
Aid for testing and upscaling infrastructures.Eligible costs are those necessary for setting up the testing and upscaling infrastructures to develop the required products to fight COVID-19. This type of aid, of less intensity, cannot exceed 75% of the eligible costs, but it can be increased by an additional 15% if the investment is completed within two months or if the support comes from more than one Member State.
The projects must be completed within six months from the date aid is granted. Otherwise, 25% of the amount must be reimbursed per month of delay, unless the delay is not attributable to the beneficiary.
Aid for producing COVID-19 relevant products
These projects are subject to the same deadlines and penalties indicated in the previous paragraph. Eligible costs are those necessary in order to manufacture COVID-19 relevant products up to 80%, which may also be increased by an additional 15% in the two cases mentioned above.
Aid for employment protection
Deferrals of tax and social security contributions. As an exception to the above categories of aid, in this and the following case, the authorities can restrict the potential beneficiaries based on geographical criteria, the sector of activity or the company’s size. This category allows for granting interest-free periods or expedited tax refunds.
Wages subsidies. Wage subsidies will be granted for a maximum period of 12 months after the application for aid, although they can also be granted retroactively for wage costs incurred following the declaration of the state of emergency on March 14. The monthly subsidy will not exceed 80% of the monthly gross salary (including employers’ social security contributions) of the benefiting employee. The aid will be subject to the condition that the benefiting employees remain continuously employed throughout the entire period for which the aid is granted. There are no restrictions regarding the maximum number of employees that a company can include in the application for aid.
Cumulation of aid
Where the same company receives aid granted under different mechanisms (e.g., the first and second National Temporary Frameworks), the overall maximum amount cannot exceed €800,000, with the exception of de minimis aid, in which case the limit may be increased to €1 million.
Unlike investment aid, aid for R&D projects can be combined with other support for the same eligible costs within the overall cap.
Wage subsidies can be combined with other employment support measures, if it does not lead to overcompensation of the wage costs borne by the employer.
Authors: Irene Moreno-Tapia and Pablo García Vázquez
This post is also available in: Español