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Publication - Advice and Guidance

European Structural and Investment Funds: State Aid rules

Published: 4 Sep 2017

Guidance on European State Aid rules and regulations.

State Aid

Applying for European Funds as part of your project?

The 2014-2020 European Funding Strategic Interventions involve the use of public funds. In most instances funds will be disbursed to organisations/undertakings involved in economic activity. That is, you are either engaged in providing goods or services to a market, or the support you are providing is going to an organisation that does. Either way you need to be aware of European State aid rules and regulations. This guidance is there to help you and you can always contact the Scottish Government State Aid Team stateaid@gov.scot.

European State Aid rules must be considered when providing public funding, and where appropriate, the necessary State aid cover through a notified scheme should be applied.

The legal basis for provision of European Structural Funds is through the legal powers Scottish Ministers have in the Scotland Act 1998.

For more information on state aid please visit the State Aid web pages.

SMART Strategic Intervention

The European Commission and Scottish Government agreed policy objectives for the European Funding streams for the 2014-2020 programmes.

SMART Objectives

  • increase business commercialisation and investment in RTDI, particularly in sectors identified through Smart Specialisation

  • enabling individuals and businesses throughout Scotland to access digital services and business opportunities

  • support SME internationalisation as a route to growth and increasing employment, particularly in Smart Specialisation sectors and regionally important sectors in fragile areas

  • support key growth sectors by promoting graduate and post-graduate skills relevant to those growth sectors and developing new curricula to meet their needs

  • support for key growth sectors by promoting relevant vocational skills at ISCED level 3 and above

  • increase the number of employers who offer vocational placements and opportunities

  • decrease the number of young unemployed who are NEET in SW Scotland;

  • reduce the number of young people not in employment, education or training (NEET) who are inactive and socially excluded in SW Scotland.

It is the responsibility of the funding recipients to ensure that they have adequate State aid cover and that they will be operating compliantly. Failure to do so could result in any funding paid to the beneficiary being recovered together with compound interest.

The European Structural Funds Division has taken the additional step of notifying General Block Exemption Schemes for each of the Strategic Interventions (SMART and INCLUSIVE). This is in addition to any current notified schemes that Lead Partners/fund beneficiaries may already have.

It is essential that when considering an award of European Funding the Lead Partner has considered the four State aid tests and holds documentation to justify either a no aid position or that the necessary State aid cover is documented, can be complied with and there will be a reporting structure concerning the annual public spending.

The articles covered under the General Block Exemption Regulation within this scheme are:

Art. 17 – Investment aid to SMEs

Art. 18 – Aid for consultancy in favour of SMEs

Art. 19 – Aid to SMEs for participation in fairs

Art. 20 – Aid for cooperation costs incurred by SMEs participating in European Territorial Cooperation projects

Art. 21 – Risk finance aid

Art. 22 – Aid for start – ups

Art. 24 – SME aid – aid for scouting costs

Art. 25-30 – Aid for RD&I

Art. 28 – Innovation aid for SMEs

Art. 31 – Training Aid

Art. 32 – Aid for the recruitment of disadvantaged workers in the form of wage subsidies

Art. 33 – Aid for the employments of workers with disabilities in the form of wage subsidies

Art. 34 – Aid for compensating the additional costs of employing workers with disabilities

Art. 35 – Aid for compensating the costs of assistance provided to disadvantaged workers

If the General block exemption scheme is being used, the grant recipient should consider the articles that relate to the activity being funded. It is important to note that funding should then comply with the intervention rates allowable in relation to the article. The lead funding body should ensure that state aid compliance is monitored as part of the continued monitoring of the project.

The full text of the articles including the monitoring and reporting requirements of this scheme is in the General Block Exemption regulations.

Budget

The estimated budget of the scheme is £70.3m per annum.

Duration

The scheme will operate from 8 September 2015 to 31 December 2020.

Further advice as necessary can be obtained by contacting the Scottish Government State Aid Unit at stateaid@gov.scot

Commission Case Number: SA.43048

Inclusive

The European Commission and Scottish Government agreed policy objectives for the European Funding streams for the 2014-2020 programmes.

Inclusive objectives:

  • promoting sustainable and quality employment and supporting labour mobility

  • promoting social inclusion, combating poverty and any discrimination

  • investing in education, training and vocational training for skills and lifelong learning

It is the responsibility of the funding recipients to ensure that they have adequate State aid cover and that they will be operating compliantly. Failure to do so could result in any funding paid to the beneficiary being recovered together with compound interest.

The European Structural Funds Division has taken the additional step of notifying General Block Exemption Schemes for each of the Strategic Interventions (SMART and INCLUSIVE). This is in addition to any current notified schemes that Lead Partners/fund beneficiaries may already have.

It is essential that when considering an award of European Funding the Lead Partner has considered the four State aid tests and holds documentation to justify either a no aid position or that the necessary State aid cover is documented, can be complied with and there will be a reporting structure concerning the annual public spending.

The articles covered under the General Block Exemption Regulation within this scheme are:

Art. 17 – Investment aid to SMEs

Art. 18 – Aid for consultancy in favour of SMEs

Art. 19 – Aid to SMEs for participation in fairs

Art. 20 – Aid for cooperation costs incurred by SMEs participating in European Territorial Cooperation projects

Art. 22 – Aid for start – ups

Art. 28 – Innovation aid for SMEs

Art. 31 – Training Aid

Art. 33 – Aid for the employments of workers with disabilities in the form of wage subsidies

Art. 34 – Aid for compensating the additional costs of employing workers with disabilities

Art. 35 – Aid for compensating the costs of assistance provided to disadvantaged workers

Sustainable

The European Commission and Scottish Government agreed policy objectives for the European Funding streams for the 2014-2020 programmes.

Sustainable objectives:

  • support the transition to a low carbon economy and encourage investment in low carbon technology

  • scale up and accelerate the delivery of low carbon infrastructure across Scotland

  • increase the proportion of journeys made by public transport, walking and cycling

  • encourage innovative LCV approaches that link the deployment of LCV infrastructure and initiatives to local demand

  • promote research in, innovation in and adoption of low carbon technologies, moving us towards a resource efficient 'circular' economy

  • improve the quality, accessibility and quantity of green infrastructure in our major towns and cities

It is the responsibility of the funding recipients to ensure that they have adequate State aid cover and that they will be operating compliantly. Failure to do so could result in any funding paid to the beneficiary being recovered together with compound interest.

The European Structural Funds Division has taken the additional step of notifying General Block Exemption Schemes for each of the Strategic Interventions (SMART and INCLUSIVE). This is in addition to any current notified schemes that Lead Partners/fund beneficiaries may already have.

It is essential that when considering an award of European Funding the Lead Partner has considered the four State aid tests and holds documentation to justify either a no aid position or that the necessary State aid cover is documented, can be complied with and there will be a reporting structure concerning the annual public spending.

The articles covered under the General Block Exemption Regulation within this scheme are:

Art. 14 – Regional Investment Aid

Art. 17 – Investment aid to SMEs

Art. 18 – Aid for consultancy in favour of SMEs

Art. 22 – Aid for start – ups

Art. 25 (2)(b)– Aid for Research and Development Projects – Industrial Research

Art. 25 (2)(c)– Aid for Research and Development Projects – Experimental development

Art. 25 (2)(d)– Aid for Research and Development Projects – Feasibility Studies

Art. 28 – Innovation aid for SMEs

Art. 31 – Training Aid

Art. 36 –Investment aid enabling undertakings to go beyond Union standards for environmental protection or to increase the level of environmental protection in the absence of Union standards

Art. 38 – Investment aid for efficiency measures

Art. 41 – Investment aid for the promotion of energy from renewable sources

Art. 42 – Operating aid for the promotion of electricity from renewable sources

Art. 43 - Operating aid for the promotion of energy from renewable sources in small scale installations

Art. 56 – Investment aid for local infrastructure

If the General block exemption scheme is being used, the grant recipient should consider the articles that relate to the activity being funded. It is important to note that funding should then comply with the intervention rates allowable in relation to the article. The lead funding body should ensure that state aid compliance is monitored as part of the continued monitoring of the project.

The full text of the articles including the monitoring and reporting requirements of this scheme is in the General Block Exemption which is here.

Budget

The estimated budget of the scheme is £32.7m per annum.

Duration

The scheme will operate from 22 September 2015 to 31 December 2020.

Further advice as necessary can be obtained by contacting the Scottish Government State Aid Unit at stateaid@gov.scot

Commission Case Number: SA.43144

Published:
4 Sep 2017
European Structural and Investment Funds: State Aid rules