Information from the Commission - Draft Commission Regulation on the application of Articles 87 and 88 of the EC Treaty to training aid
Date: 2000-03-28
Institutions: European Commission
Subjects: State aid, aid system, application of EU law, vocational training

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Article 4

It shall remain in force for five years.

Entry into force and period of validity

1.
This Regulation shall enter into force on the twentieth
day following that of its publication in the Official Journal of the
European Communities.

2.
At the end of the period of validity of this Regulation, aid
schemes falling under this Regulation shall continue to benefit
from it during an adjustment period of six months.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, . . .

For the Commission

. . .

Member of the Commission

DRAFT COMMISSION REGULATION ON THE APPLICATION OF ARTICLES 87 AND 88 OF THE EC TREATY
TO TRAINING AID

(2000/C 89/07)

Invitation to submit comments on the draft Commission Regulation on the application of Articles 87 and
88 of the EC Traty to training aid.

Interested parties may submit their coments within one month of the date of publication of this draft
Regulation to:

European Commission
Directorate-General for Competition
Directorate G
Rue de la Loi/Wetstraat 200
B-1049 Brussels
Fax (32-2) 296 98 13.

Draft Commission Regulation on the application of Articles 87 and 88 of the EC Treaty to training
aid

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having published a draft of this Regulation (2),

Having regard to the Treaty establishing the European
Community,

Having consulted the Advisory Committee on State Aid,

Whereas:

Having regard to Council Regulation (EC) No 994/98 of 7 May
1998 on the application of Articles 92 and 93 of the Treaty
establishing the European Community to certain categories of
horizontal State aid (1), and in particular point (a)(iv) of Article
1(1) thereof,

(1) Regulation (EC) No 994/98 empowers the Commission to
declare, in accordance with Article 87 of the Treaty, that
under certain conditions training aid is compatible with
the common market and not subject to the notification
requirements of Article 88(3) of the Treaty.

(1) OJ L 142, 14.5.1998, p. 1.

(2) OJ C 89, 28.3.2000, p. 8.

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(2) The Commission has applied Articles 87 and 88 of the
Treaty to training aid in numerous decisions and has also
recently in the Community
stated its policy, most
framework on training aid (1).
the
Commission’s considerable experience in applying those
Articles to training aid, it is appropriate, with a view to
ensuring efficient supervision and simplifying adminis-
tration without weakening Commission monitoring, that
the Commission should make use of the powers conferred
by Regulation (EC) No 994/98.

light of

In the

(3) In order to establish a transparent and coherent policy for
all sectors, it is appropriate that the scope of this Regu-
lation be as broad as possible and include the agricultural
sector.

(4) This Regulation should exempt any individual aid that
meets all the relevant requirements of this Regulation,
and any aid scheme, provided that any aid that could be
granted under
relevant
such scheme meets all
requirements of
view to
ensuring efficient supervision and simplifying adminis-
tration without weakening Commission monitoring, aid
schemes and individual grants, outside any aid scheme,
should contain an express reference to this Regulation.

this Regulation. With a

the

(5) In order to eliminate differences that might give rise to
distortions of competition,
in order to facilitate coor-
dination betrween different Community and national
initiatives concerning small and medium-sized enterprises,
and for
clarity and legal
certainty, the definition of (cid:145)small and medium-sized enter-
prises(cid:146) used in this Regulation should be that laid down in
the Annex to Commission Recommendation 96/280/EC
of 3 April 1996 concerning the definition of small and
medium-sized enterprises (2).

reasons of administrative

loan, require the use of market

(6) In order to determine whether or not aid is compatible
with the common market pursuant to this Regulation, it is
necessary to take into consideration the aid intensity and
thus the aid amount expressed as a grant equivalent.
Calculation of
the grant equivalent of aid payable in
several instalments, and calculation of aid in the form of
a soft
interest rates
prevailing at
the time of grant. With a view to a
uniform, transparent and simple application of the State
aid rules, the market rates for the purposes of this Regu-
lation should be deemed to be the reference rates,
the loan is
provided that,
backed by normal
involve
abnormal
should be those,
which are periodically fixed by the Commission on the
basis of objective criteria and published in the Official
Journal of the European Communities and on the Internet.

in the case of a soft loan,

risk. The reference rates

security and does not

improves the competi-
which other firms may draw,
tiveness of European industry and plays an important
role in employment strategy. In view of the fact that enter-
prises in the Community generally under-invest in the
training of their workers, State aid might help to correct
this market imperfection and therefore can be considered
under certain conditions
to be compatible with the
common market and therefore exempted from prior
notification.

(8) In order

to ensure that State aid is

limited to the
minimum necessary to obtain the Community objective
which market forces alone would not make possible, the
exempted aid should be
permissible
training provided,
modulated according to the type of
location.
the size of the enterprise and its geographical

intensities of

(9) General training provides transferable qualifications and
substantially improves the employability of
the trained
worker. Aid for this purpose has less distortive effects
on competition, so that higher intensities of aid can be
considered compatible with the common market and
exempted from prior notification. Specific training, on
the other hand, which mainly benefits the enterprise,
involves a greater risk of distorsion of competition so
the intensity of aid which can be considered
that
compatible and exempted from prior notification should
be much lower.

(10) In view of the handicaps with which SMEs are confronted
and the higher relative costs that they have to bear when
they invest in the training of their workers, the intensities
of aid exempted by this Regulation should be increased for
SMEs.

the
(11) In assisted areas under Article 87(3)(a) and (c) of
Treaty, training has a relatively greater external
impact,
since there is a substantial under-investment in training
in those regions and a higher unemployment
rate.
Consequently,
the intensities of aid exempted by this
Regulation should be increased for those areas.

(12) The characteristics of training in the maritime transport

sector justify a specific approach for that sector.

(13) It is appropriate that large amounts of aid remain subject
to an individual assessment by the Commission before
they are put
into effect. Accordingly, aid amounts
exceeding a fixed amount, which should be set at
exemption
EUR 1 000 000,
provided for in this Regulation and remain subject
to
the requirements of Article 88(3) of the Treaty.

excluded from the

are

(7) Training usually has positive external effects for society as
a whole since it increases the pool of skilled workers from

(1) OJ C 343, 11.11.1998, p. 10.
(2) OJ L 107, 30.4.1996, p. 4.

(14) Whereas this Regulation should not exempt aid cumulated
with other State aid,
including aid granted by national,
regional and local authorities, or Community assistance,
when such cumulation exceeds the thresholds fixed in this
Regulation.

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(15) Whereas,

in which Member States

in order to ensure transparency and effective
monitoring in accordance with Article 3 of Regulation
(EC) No 994/98, it is appropriate to establish a standard
should provide the
format
in
Commission with summary information whenever,
pursuance of this Regulation, an aid scheme is imple-
mented or an individual aid outside such schemes is
granted, with a view to publication in the Official Journal
of the European Communities. For the same reasons, it is
appropriate to establish rules concerning the records that
Member States should keep regarding the aid exempted by
this Regulation. For the purposes of the annual reports to
be submitted to the Commission by Member States, it is
appropriate for the Commission to establish its specific
requirements, including, in view of the wide availability
of the necessary technology, information in computerised
form.

(16) Having regard to the Commission’s experience and in
particular
is generally
the frequency with which it
necessary to revise State aid policy, it is appropriate to
limit the period of application of this Regulation to five
years. Should this Regulation expire without being
extended, aid schemes already exempted by this Regu-
lations should continue to be exempted for six months
in accordance with Article 4 of Regulation (EC) No
994/98,

HAS ADOPTED THIS REGULATION:

Article 1

Scope

to special Community regulations or
Without prejudice
directives under
the EC Treaty governing the granting of
training aid in specific sectors, this Regulation applies to aid
in all sectors, including the activities relating to the production,
processing and marketing of products listed in Annex I of the
Treaty.

Article 2

Definitions

For the purpose of this Regulation:

(a) (cid:145)aid(cid:146) shall mean any measure fulfilling all the criteria laid

down in Article 87(1) of the Treaty;

providing qualifications which are not or only to a limited
extent transferable to other firms or fields of work;

(e) (cid:145)general

training(cid:146)

shall mean training involving tuition
which is not applicable only or principally to the
employee’s present or future position in the assisted firm,
but which provides qualifications that are largely trans-
ferable to other
fields of work and thereby
substantially improve the employability of the employee.
Training shall be considered (cid:145)general(cid:146) if, for example:

firms or

(cid:151) it is jointly organised by different independent enter-
prises, or if employees of different enterprises may
avail themselves of the training,

(cid:151) it is recognised, certified or validated by public auth-
orities or bodies or by other bodies or institutions on
which a Member State or the Community has conferred
the necessary powers;

(f)

(cid:145)aid intensity(cid:146) shall mean the aid amount expressed as a
percentage of the project’s eligible costs. All figures used
shall be taken before any deduction for direct taxation.
Where aid is awarded in a form other than a grant, the
aid amount shall be the grant equivalent of the aid. Aid
payable in several
instalments shall be discounted to its
value at the time of granting. The interest rate to be used
for discounting purposes and for calculating the aid amount
in a soft loan shall be the reference rate applicable at the
time of grant.

Article 3

Preliminary conditions for exemption

fulfilling all

Individual aid outside any scheme,

1.
the
conditions of this Regulation, shall be compatible with the
common market within the meaning of Article 87(3) of the
Treaty and shall be exempt from the notification requirement
of Article 88(3) of the Treaty provided that it contains an
express reference to this Regulation, by citing its full title and
publication reference in the Official
the European
Communities.

Journal of

(2)
Aid schemes fulfilling all the conditions of this Regu-
lation shall be compatible with the common market within
the Treaty and shall be
the meaning of Article 87(3) of
exempt from the notification requirement of Article 88(3) of
the Treaty provided that:

(b) (cid:145)small and medium-sized enterprises(cid:146) shall mean enterprises

(a) any aid that could be awarded under such scheme fulfils all

as defined in Annex I;

the conditions of this Regulation;

(c) (cid:145)large enterprises(cid:146) shall mean enterprises not coming under

(b) the scheme provides that all aid awarded under it must also

the definition of SME as defined in Annex I;

fulfil all the conditions of this Regulation;

(d) (cid:145)specific training(cid:146)

directly and principally applicable
present or

shall mean training involving tuition
employee’s
future position in the assisted firm and

to the

(c) the scheme contains an express reference to this Regulation,
title and publication reference in the

by citing its full
Official Journal of the European Communities.

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Article 4

(e) cost of guidance and counselling services with regard to the

Exempted training aid

training project;

Aid schemes and individual aid for training must fulfil the

1.
conditions laid down in paragraphs 2 to 6.

(f)

2. Where the aid is granted for specific training, its intensity
shall not exceed 25 % for large enterprises and 35 % for small
and medium-sized enterprises.

These intensities shall be increased by five percentage points
for enterprises in areas which qualify for regional aid pursuant
to Article 87(3)(c) of the Treaty and by 10 percentage points
for enterprises in areas which qualify for regional aid pursuant
to Article 87(3)(a) of the Treaty.

3. Where the aid is granted for general training, its intensity
shall not exceed 50 % for large enterprises and 70 % for small
and medium-sized enterprises.

These intensities shall be increased by five percentage points
for enterprises in areas which qualify for regional aid pursuant
to Article 87(3)(c) of the Treaty and by 10 percentage points
for enterprises in areas which qualify for regional aid pursuant
to Article 87(3)(a) of the Treaty.

4.
In cases where the aid project involves both specific and
general training components which cannot be separated for the
calculation of the aid intensity, and in cases where the specific
or general character of the training aid project cannot be estab-
lished, the intensities applicable to specific training pursuant to
paragraph 2 shall apply.

trainees’ personnel costs up to the amount of the total of
the other eligible costs referred to in (a) to (e). Only the
hours during which the trainees actually participate in the
training, after deduction of any productive hours or of their
equivalent, may be taken into account.

The eligible costs shall be supported by documentary evidence,
which shall be transparent and itemised.

Article 5

Large individual aid grants

The exemption provided for in Article 4 shall not apply if the
amount of aid granted for a single training aid project exceeds
EUR 1 000 000.

Article 6

Cumulation

1.
The aid ceilings fixed in Articles 4 and 5 shall apply
regardless of whether the support for the project is financed
entirely from State resources or is partly financed by the
Community.

Aid exempted by this Regulation shall not be cumulated
2.
with other State aid within the meaning of Article 87(1) of the
Treaty, or with other Community funding, if such cumulation
would result in an aid intensity exceeding that fixed by this
Regulation.

5. Where the aid is granted in the maritime transport sector,
it may reach an intensity of 100 % regardless of whether the
training project concerns specific or general training, provided
that the following conditions are met:

Article 7

Transparency and monitoring

(cid:151) the trainee shall not be an active member of the crew but

shall be supernumerary on board; and

(cid:151) the training shall be carried out on board ships entered on

Community registers.

6.

The eligible costs of a training aid project shall be:

(a) trainers’ personnel costs;

(b) trainers’ and trainees’ travel expenses;

(c) other current expenses such as materials and supplies;

(d) depreciation of tools and equipment, to the extent that they

are used exclusively for the training project;

1.
On implementation of an aid scheme, or grant of indi-
vidual aid outside any scheme, exempted by this Regulation,
Member States shall, within 10 working days, forward to the
Commission, with a view to its publication in the Official
the
Journal of
information regarding such aid scheme or
individual aid
according to the model laid down in Annex II.

the European Communities, a summary of

2. Member States shall maintain detailed records regarding
the aid schemes exempted by this Regulation, the individual aid
granted under those schemes, and the individual aid exempted
by this Regulation that
is granted outside any existing aid
scheme. Such records shall contain all information necessary
to establish that the conditions for exemption, as laid down in
this Regulation, are fulfilled. Member States shall keep a record
regarding an individual aid for 10 years from the date on which
it was granted, and regarding an aid scheme, for 10 years from
the date on which the last individual aid was granted under
such scheme. On written request, the Member State concerned
shall provide the Commission, within a period of 20 working
days or such longer period as may be fixed in the request, with
all the information which the Commission considers necessary

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to assess whether the conditions of this Regulation have been
complied with.

Article 8

Entry into force and period of validity

3. Member States shall compile a report on the application
of this Regulation in respect of each whole or part calendar
year during which this Regulation applies,
in the form laid
down in Annex III, also in computerised form. Member
States shall provide the Commission with such report no
later than three months after the expiry of
the period to
which the report relates. For aid awarded to projects of
allegedly general
in particular
the
include documentary evidence regarding the designation of
the training involved as (cid:145)general(cid:146).

training,

report

shall

1.
This Regulation shall enter into force on the twenthieth
day following that of its publication in the Official Journal of the
European Communities.

It shall remain in force for five years.

At the end of the period of validity of this Regulation, aid
remain

2.
schemes
this Regulation shall
exempted during an adjustment period of six months.

exempted under

This Regualtion shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, . . .

For the Commission

. . .

Member of the Commission

ANNEX I

Definition of small and medium-sized enterprises

(extract from the Commission recommendation of 3 April 1996 concerning the definition of small and medium-sized
enterprises (OJ L 107, 30.4.1996, p. 4))

1.

Small and medium-sized enterprises, hereinafter referred to as (cid:145)SMEs(cid:146), are defined as enterprises which:

Article 1

(cid:151) have fewer than 250 employees, and

(cid:151) have either,

(cid:151) an annual turnover not exceeding ECU 40 million, or

(cid:151) an annual balance-sheet total not exceeding ECU 27 million,

(cid:151) conform to the criterion of independence as defined in paragraph 3.

2. Where it is necessary to distinguish between small and medium-sized enterprises, the (cid:145)small enterprise(cid:146) is defined
as an enterprise which:

(cid:151) has fewer than 50 employees and

(cid:151) have either,

(cid:151) an annual turnover not exceeding ECU 7 million, or

(cid:151) an annual balance-sheet total not exceeding ECU 5 million,

(cid:151) conforms to the criterion of independence as defined in paragraph 3.

Independent enterprises are those which are not owned as to 25 % or more of the capital or the voting rights by
3.
one enterprise, or jointly by several enterprises, falling outside the definitions of an SME or a small enterprises
whichever may apply. This threshold may be exceeded in the following two cases:

(cid:151) if the enterprise is held by public investment corporations, venture capital companies or institutional investors,

provided no control is exercised either individually or jointly;

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(cid:151) if the capital is spread in such a way that it is not possible to determine by whom it is held and if the enterprise
declares that it can legitimately presume that it is not owned as to 25 % or more by one enterprise, or jointly by
several enterprises, falling outside the definitions of an SME or a small enterprise, whichever may apply.

4.
In calculating the thresholds referred to in paragraphs 1 and 2, it is therefore necessary to cumulate the relevant
figures for the beneficiary enterprise and for all the enterprises that it directly or indirectly controls through possession
of 25 % or more of the capital or of the voting rights.

5. Where it is necessary to distinguish micro-enterprises from other SMEs, these are defined as enterprises having
fewer than 10 employees.

6. Where, at the final balance-sheet date, an enterprise exceeds or falls below the employee thresholds of financial
ceilings, this is to result in its acquiring or losing the status of (cid:145)SME(cid:146), (cid:145)medium-sized enterprise(cid:146), (cid:145)small enterprise(cid:146) or
(cid:145)micro-enterprise(cid:146) only if the phenomenon is repeated over two consecutive financial years.

7.
The number or persons employed corresponds to the number of annual working units (AWU), that is so say, the
number of full-time workers employed during one year with part-time and seasonal workers being fractions of AWU.
The reference year to be considered is that of the last approved accounting period.

8.
The turnover and balance-sheet total thresholds are those of the last approved 12-month accounting period. In the
case of newly established enterprises whose accounts have not yet been approved, the thresholds to apply shall be
derived from a reliable estimate made in the course of the financial year.

Form of summary information to be provided whenever an aid scheme exempted by this Regulation is
implemented and whenever an individual aid exempted by this Regulation is granted outside any aid scheme

ANNEX II

Member State (Region):

Date of implementation (aid scheme) or grant (individual aid):

Name and address of responsible authority:

Title of aid scheme implemented or name of beneficiary granted individual aid:

Objective of aid (specific training/general training):

Legal basis:

Annual budget:

Maximum aid intensity:

Duration (1) in years and months:

Other information (optional):

(1) Time-limit until which aid may be granted on the basis of the scheme.

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ANNEX III

Form of periodic report to be provided to the Commission

Joint annual reporting format on existing State aid under the EC Treaty, subsidies under the WTO Agreement
on subsidies and countervailing measures (SCM Agreement)

EXPLANATORY NOTE

Member States are advised to use these formats for their reporting obligations to the Commission under Article 88(1) of
the EC Treaty and under group exemption regulations adopted on the basis of Council Regulation (EC) No 994/98. The
formats are adapted to the two requirements and should be used instead of the format which was sent to the Member
States by letter of 22 February 1994. As regards the notification obligations imposed by Article 25 ASCM, the agreed
WTO format should continue to be used. The reports should also be provided in computerised form.

Existing State aid and exempted aid schemes

The information exclusively reserved for the Commission on existing State aid and exempted aid schemes is contained in
Section A of the joint format. This section can be filled in in any official language of the Union.

WTO ASCM

The information required under Article 25 ASCM and which will be copied on behalf of the Member States to the WTO
is contained in the Section B of the joint format. This part has to be filled in in one of the official languages of the WTO
which are English, French and Spanish.

SECTION A: Information under Article 88(1) of the EC Treaty on the aid scheme (Information contained in this section
A will not be transmitted to the WTO and can be filled in in any official language of the European Union).

A.1. FORMAT OF DETAILED ANNUAL REPORT

(not applicable)

A.2. FORMAT OF SIMPLIFIED ANNUAL REPORT TO BE SUBMITTED FOR ALL EXISTING SCHEMES NOT REPORTED

UNDER A.1 AND FOR ALL EXEMPTED AID

For new aid schemes covered by the accelerated clearance procedure or schemes with an annual budget of not more
than EUR 5 million, give only the information requested in points 1, 2.1, 2.2.1 and 2.2.2 (very simplified report).

1.

2.

Name of scheme in original language

Expenditure under scheme

low interest loans,
Separate figures should be provided for each aid instrument in the scheme (e.g. grant,
guarantees). Provide figures on expenditure or commitments,
factors
relevant to the granting of aid (e.g. period of loan, interest subsidies, default rates on loans net of sums recovered,
default payments on guarantees net of premium income and sums recovered).

revenue losses and other

financial

For exempted general training aid, documentary evidence should be given regarding the qualification of the
training as general.

These expenditure figures should be provided on the following basis:

2.1.

For year n, provide expenditure forecasts or estimated revenue losses due to tax expenditure.

2.2.

For year n-1, indicate:

2.2.1. Expenditure committed, or estimated revenue losses due to tax expenditure, for new assisted projects and actual

payments for new and current projects

2.2.2. Number of new recipients and number of new projects assisted, together with estimated number of jobs created

or maintained.

2.2.3. (not applicable)

2.2.4. (not applicable)

3.

Changes (administrative or other) introduced during the year.