European Commission prolongs temporary framework for State aid until June 2021

EU. The European Commission decided on Tuesday 13 October 2020 to continue the temporary framework for state aid. Adopted on 19 March 2020, this exception to the rule allows EU governments to support the economy in the context of the Covid-19 pandemic, and was due to end on 31 December 2020. It is extended for six months, until 30 June 2021 with an extension of the scope. Support for recapitalisation, which was due to end on 30 June 2021, is extended for a further three months, until 30 September 2021.

"We are extending the temporary framework to meet the continuing needs of companies, while protecting the EU single market. We are also introducing a new measure allowing Member States to support companies facing significant turnover losses by contributing to part of their uncovered fixed costs. Finally, we are introducing new possibilities for the state to withdraw from the capital of recapitalised companies while maintaining its previous shareholding in these companies and limiting distortions of competition", says Margrethe Vestager, Executive Vice-President of the European Commission in charge of competition policy.

The amendment also includes a new measure allowing Member States to support companies facing a decline in turnover of at least 30%, due to the pandemic, during the eligible period compared to the same period in 2019. Governments will be able to contribute up to €3m per company to cover fixed costs not covered by their revenues. This measure will limit the use of equity capital and encourage the maintenance of commercial activity.

Before 30 June 2021, the European Commission "will review the temporary framework and assess the need to extend it or adapt it further", says a press release.