Invitation to submit comments on the draft general block exemption of the Commission in the State aid area
Date: 2007-09-08
Institutions: European Commission
Subjects: State aid, aid system, competition law, control of State aid, drafting of EU law, exchange of information

C 210/14

EN

Official Journal of the European Union

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Invitation to submit comments on the draft general block exemption of the Commission in the
State aid area

(2007/C 210/10)

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

European Commission
Directorate-General for Competition
Consultation on general block exemption (HT 364)
State aid Registry
B-1049 Brussels
Fax (32-2) 296 12 42
E-mail: stateaidgreffe@ec.europa.eu

The text will also be available on the following website:

http://ec.europa.eu/comm/competition/state_aid/reform/reform.cfm

DRAFT COMMISSION REGULATION (EC) No …/…

of … 2007

on the application of Articles 87 and 88 of the EC Treaty declaring certain categories of aid compa-
tible with the common market

THE COMMISSION OF THE EUROPEAN COMMUNITIES

(2)

Having regard to the Treaty establishing the European Com-
munity,

Having regard to Council Regulation (EC) 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 Article 1(a) and (b)
thereof,

Having published a draft of this Regulation (2),

After consulting the Advisory Committee on State Aid,

(3)

Whereas:

(1)

in accordance with Article 87 of

Regulation (EC) No 994/98 empowers the Commission
to declare,
the
Treaty that under certain conditions aid to small and
medium-sized enterprises
(‘SMEs’), aid in favour of
research and development, aid in favour of environmental
protection, employment and training aid, and aid that
complies with the map approved by the Commission for
each Member State for the grant of regional aid is compa-
tible with the common market and not subject to the
notification requirement of Article 88(3) of the Treaty.

(1) OJ L 142, 14.5.1998, p. 1.
(2) OJ C 210, 8.9.2007, p. 14.

(3) OJ L 10, 13.1.2001, p. 33.
(4) OJ L 63, 28.2.2004, p. 22.
(5) OJ C 235, 21.8.2001, p. 3.
(6) OJ C 194, 18.8.2006, p. 2.
(7) OJ L 10, 13.1.2001, p. 20.
(8) OJ L 337, 13.12.2002, p. 3

The Commission has applied Articles 87 and 88 of the
Treaty in numerous decisions and gained sufficient
experience to define general compatibility criteria as
regards aid in favour of SMEs, in the form of investment
aid in and outside assisted areas,
in the form of risk
capital schemes and in the area of research and develop-
ment, in particular in the context of the implementation
of Commission Regulation (EC) No 70/2001 of
12 January 2001 on the application of Articles 87
the EC Treaty to State aid to small and
and 88 of
medium-sized enterprises (3),
implementation of
of
364/2004
Commission
25 February 2004 amending Regulation (EC) No 70/2001
as regards the extension of its scope to include aid for
research and development (4) and the implementation of
the Commission communication on State aid and risk
capital (5) and Community guidelines on State aid to
promote risk capital investments in small and medium-
sized enterprises (6).

the
(EC) No

Regulation

aid

and

and

development

The Commission has also gained sufficient experience in
the application of Articles 87 and 88 of the Treaty in the
fields of training aid, employment aid, environmental aid,
research
aid
with respect to both SMEs and large enterprises, in par-
implementation of
ticular
Commission Regulation (EC) No 68/2001 of 12 January
2001 on the application of Articles 87 and 88 of the EC
Treaty to training aid (7), Commission Regulation (EC)
No 2204/2002 of 12 December 2002 on the application
of Articles 87 and 88 of the EC Treaty to State aid for
employment (8), the Community framework for State aid

context of

regional

in the

the

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C 210/15

for research and development (9), the Community Frame-
work for State aid for research and development and
innovation (10), the Community guidelines on State aid
for environmental protection (11) and the Guidelines on
national regional aid (12).

(4)

(5)

In the light of this experience, it is necessary to adapt
some of
the conditions laid down in the regulations
mentioned above. For reasons of simplification and to
ensure more efficient monitoring of aid by the Commis-
sion, they should be replaced by a single Regulation.

This Regulation should exempt any aid that fulfils all the
this Regulation, and any aid
relevant conditions of
scheme, provided that any aid that could be granted
under such scheme fulfils all the relevant conditions of
this Regulation. In order to ensure more efficient moni-
toring of the aid individual aid granted under an aid
scheme and ad hoc individual aid granted outside any aid
scheme, but
to the exclusion of aid schemes, should
contain an express reference to this Regulation and to the
identification number attributed to any such measure by
the Commission. In order to monitor the implementation
of this Regulation, the Commission should also be in a
position to obtain all necessary information from
Member States concerning the measures implemented
under the benefit of this Regulation. A failure of the
Member State to provide information within a reasonable
deadline on these aid measures may therefore be consid-
ered as an indication that the conditions of this Regu-
lation are not being respected. A failure by a Member
State to provide information allowing for monitoring of
an aid measure may therefore lead the Commission to
decide that the Regulation, or the relevant part of the
Regulation, should be withdrawn as regards the Member
State concerned. As soon as the Member State has
provided correct and complete information, the Commis-
sion should allow the Regulation to be fully applicable
again.

(6)

State aid within the meaning of Article 87(1) of
the
Treaty not covered by this Regulation should remain
subject to the notification requirement of Article 88(3) of
the Treaty. This Regulation is without prejudice to the
possibility for Member States to notify aid the objectives
of which correspond to objectives covered by this Regu-
lation. Such aid will be assessed by the Commission in
particular on the basis of the conditions set out in this
Regulation and in accordance with the criteria laid down
in specific guidelines or frameworks adopted by the
the aid measure at stake falls
Commission wherever

(9) OJ C 45, 17.2.1996, p. 5.
(10) OJ C 323, 30.12.2006, p. 1.
(11) OJ C 37, 3.2.2001, p. 3.
(12) OJ C 54, 4.3.2006, p. 13.

(7)

(8)

(9)

within the scope of application of such specific instru-
ment.

This Regulation should not apply to export aid or aid
favouring domestic over imported products. In particular,
it should not apply to aid financing the establishment
and operation of a distribution network in other coun-
tries. Aid towards the cost of participating in trade fairs,
or of studies or consultancy services needed for the
launch of a new or existing product on a new market
does not normally constitute export aid.

This Regulation should apply across virtually all sectors.
In the sector of fisheries and aquaculture, this Regulation
should only exempt aid in the fields of research and
development, aid in the form of risk capital, training aid
and aid for disadvantaged and disabled workers.

In the agricultural sector,
in view of the special rules
which apply in the primary production of agricultural
products, this Regulation should only exempt aid in the
fields of research and development, aid in the form of
risk capital, training aid, environmental aid and aid for
disadvantaged and disabled workers.

(10)

In view of the similarities between the processing and
marketing of agricultural products and of non-agri-
cultural products this Regulation should apply to the
processing and marketing of
agricultural products,
provided that certain conditions are met.

should be

(11) Neither on-farm activities necessary for preparing a
product for the first sale, nor the first sale to resellers or
processors
considered as processing or
marketing for the purposes of this Regulation. The Court
of Justice of the European Communities has established
that, once the Community has legislated for the establish-
ment of a common organisation of the market in a given
sector of agriculture, Member States are under an obliga-
tion to refrain from taking any measure which might
undermine or create exceptions to it. This Regulation
should therefore not apply to aid, the amount of which is
fixed on the basis of price or quantity of products
purchased or put on the market, nor should it apply to
aid which is linked to an obligation to share it with
primary producers.

(12)

In view of Council Regulation (EC) No 1407/2002 of
23 July 2002 on State aid to the coal industry (13), this
Regulation should not apply to aid granted to undertak-
ings active in the coal sector with the exception of
training aid, research and development aid and environ-
mental aid.

(13) OJ L 205, 2.8.2002, p. 1.

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rather

(13) Where a regional aid scheme purports to realise regional
objectives, but is targeted at particular sectors of
the
economy, the objective and likely effects of the scheme
than horizontal. Therefore,
may be sectorial
regional aid schemes
specific sectors of
economic activity should not be covered by the exemp-
tion from notification. However, the tourism sector plays
an important role in national economies and in general
has a particularly positive effect on regional development.
Regional aid schemes aimed at tourism activities should
therefore be exempt from the notification requirement

targeted at

(EC) No

1628/2006

the Treaty to national

Commission Regulation
of
24 October 2006 on the application of Articles 87 and
regional aid (15). The
88 of
Commission will examine such notifications on the basis
of the Commission Notice on the application of Arti-
cles 87 and 88 of the EC Treaty to State aid in the form
of guarantees (16). In view of the difficulty in calculating
the grant equivalent of aid in the form of repayable
advances such aid should be covered by this Regulation
only if
the total amount of the repayable advance is
inferior to the applicable individual notification threshold
and the maximum aid intensities provided under this
Regulation.

(14) Aid granted to undertakings in difficulty within the
meaning of the Community guidelines on State aid for
rescuing and restructuring firms in difficulty (14) should
be assessed under those Guidelines in order to avoid
their circumvention. SMEs which are incorporated since
less than three years and whose business plan foresees
losses in those first three years shall not be considered as
being in difficulty for this period for the purposes of this
Regulation.

(15)

(16)

(17)

subject

The Commission has to ensure that authorised aid does
not alter trading conditions in a way contrary to the
general interest. Therefore, aid in favour of a beneficiary
which is
to an outstanding recovery order
following a previous Commission decision declaring an
aid illegal and incompatible with the common market,
should be excluded from the scope of this Regulation. As
a consequence, any individual ad hoc aid paid out to such
a beneficiary and any aid scheme not containing a provi-
sion explicitly excluding such beneficiaries
remains
subject to the notification requirements of Article 88(3)
of the Treaty. This provision shall not affect the legitimate
expectations of beneficiaries of aid schemes which are
not subject to outstanding recovery orders.

In order to ensure the consistent application of Com-
munity State aid rules, as well as for reasons of adminis-
trative simplification, the definitions of terms which are
relevant in context of different categories of aid covered
by this Regulation should be harmonised.

For the purposes of transparency, equal treatment and
effective monitoring, this Regulation should apply only
to aid which is transparent. Transparent aid is aid for
which it is possible to calculate precisely the gross grant
equivalent ex ante without a need to undertake a risk
assessment. Such precise calculation can, for instance, be
realised as regards grants,
interest rate subsidies and
capped tax exemptions.

(18) Aid comprised in guarantee schemes should be consid-
ered as transparent when the methodology to calculate
the gross grant equivalent has been approved following
notification of
this methodology to the Commission,
and, in the case of regional aid, also when the Commis-
sion has approved such methodology after adoption of

(19) Due to the higher risk of distortion of competition, large
amounts of aid should continue to be assessed by the
Commission on an individual basis. Thresholds should
therefore be set for each type of aid within the scope of
this Regulation, at a level which takes into account the
type of aid concerned and its likely effects on competi-
tion. Any aid granted above those thresholds remains
subject to the notification requirement of Article 88(3) of
the Treaty.

thresholds

(20) With a view to ensuring that aid is proportionate and
limited to the amount necessary,
should,
whenever possible, be expressed in terms of aid intensi-
ties in relation to a set of eligible costs. For the purpose
of calculating aid intensities, aid payable in several instal-
ments should be discounted to its value at the moment
of granting. The interest rate to be used for discounting
purposes and for calculating the aid amount in aid not
taking the form of a grant, should be the reference rate
applicable at the time of grant. Because it is based on a
form of aid for which eligible costs are difficult to iden-
tify, the threshold with regard to aid in the form of risk
capital should be formulated in terms of maximum aid
amounts.

(21)

(22)

The thresholds in terms of aid intensity or aid amount
should be fixed, in the light of the Commission's experi-
ence, at a level
that strikes the appropriate balance
between minimising distortions of competition in the
aided sector and tackling the market failure or cohesion
issue concerned. With respect
this
threshold should be set at a level taking into account the
allowable aid intensities under the regional aid maps.

to regional aid,

In order to determine whether the individual notification
thresholds and the maximal aid intensities laid down in
this Regulation are respected, the total amount of public
support for the aided activity or project should be taken
into account,
is
financed from local, regional, national or Community
sources.

regardless of whether

that support

(14) OJ C 244, 1.10.2004, p. 2.

(15) OJ L 302, 1.11.2006, p. 29.
(16) OJ C 71, 11.3.2000, p. 14.

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(23) Moreover,

this Regulation should specify the circum-
stances under which different categories of aid covered
by this Regulation may be cumulated. As regards cumula-
tion of aid covered by this Regulation with State aid not
covered by this Regulation, regard should be had to the
decision of
the Commission approving the aid not
covered by this Regulation, as well as the State aid rules
on which this decision is based. Special provisions should
apply in respect to cumulation of aid for disadvantaged
and disabled workers with other types of aid. This Regu-
lation should also make provision for cumulation of aid
measures with identifiable eligible costs and aid measures
without identifiable eligible costs.

(24)

In order to ensure that the aid is necessary and acts as an
incentive to develop further activities or projects, this
Regulation should not apply to aid for activities in which
the beneficiary would already engage under market
conditions alone. As regards any aid covered by this
Regulation granted to SMEs, such incentive should be
considered present when, before the activities relating to
the implementation of the aided project or activities are
initiated, the SME has submitted an application to the
Member State. [As regards any aid covered by this regu-
lation granted to beneficiaries which are large enterprises,
the Member State should, in addition to the conditions
applying to SMEs, also verify that that the beneficiary has
analysed, in an internal document, the feasibility of the
aided project or activity with aid and without aid. This
analysis should be realised by the beneficiary ex ante on
the basis of quantitative and qualitative indicators. The
Member State should verify that analysis and keep such
documents in its records. Moreover, as the incentive
effect of ad hoc aid granted to large enterprises is consid-
ered to be difficult to establish, this form of aid should
be excluded from the scope of application of this Regu-
lation. The Commission will examine the existence of
such incentive effect in the context of the notification of
the aid concerned on the basis of the criteria established
in the applicable guidelines, frameworks or other Com-
munity instruments.]

(25)

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 form
to be used by Member States to provide the Commission
in pursuance of
with summary information whenever,
this Regulation, an aid scheme or ad hoc individual aid
are implemented. The summary information form shall
be used for the publication of the measure in the Official
Journal of the European Union and on the internet. The
summary information should be sent to the Commission
in electronic format making use of the established IT
application before the measure is implemented. The
Commission will attribute an identification number to
each aid measure which is communicated to it. The fact
that such number is attributed to an aid measure does
not imply that the Commission has examined whether
the aid fulfils the conditions of this Regulation. It creates

(26)

(27)

(28)

(29)

(30)

therefore no legitimate expectations for the Member State
or beneficiary as regards the compatibility of
the aid
measure with this Regulation.

For the same reasons, the Commission should establish
specific requirements as regards the form and the content
of the annual reports to be submitted to the Commission
by Member States. Moreover, it is appropriate to establish
rules concerning the records that Member States should
keep regarding the aid schemes and individual aid
exempted by this Regulation.

that
is necessary to establish further conditions
It
should be fulfilled by any aid scheme or individual aid
exempted by this Regulation. Indeed, having regard to
Articles 87(3)(a) and 87(3)(c) of
the Treaty, such aid
should be proportionate to the market failures or handi-
caps that have to be overcome in order to be in the Com-
munity interest. It is therefore appropriate to limit the
scope of this Regulation, as far as it concerns investment
aid to SMEs, environmental investment aid and regional
aid, to aid granted in relation to certain tangible and
intangible investments. In the light of Community over-
capacity and the specific problems of distortion of
competition in the road freight and air transport sectors
eligible investment costs for undertakings having their
main economic activity in these transport sectors should
include transport means and equipment. Special
not
provisions apply as regards the definition of
tangible
assets for the purpose of environmental aid.

Consistent with the principles governing the aid falling
within Article 87(1) of
the Treaty, aid should be
considered to be granted at the moment the legal right to
receive the aid is conferred on the beneficiary under the
applicable national legal regime.

In order not to favour the capital factor of an investment
over the labour factor, provision should be made for the
possibility of measuring aid to investment in favour of
SMEs and regional aid on the basis of either the costs of
the costs of employment directly
the investment or
created by an investment project.

Environmental aid in the form of tax reductions, aid for
disadvantaged or disabled workers, rregional aid or aid in
the form of risk capital granted to a beneficiary on an ad
hoc basis may have a major impact on competition in the
relevant market because it favours the beneficiary over
other undertakings which have not received such aid.
Because it is granted only to a single undertaking, ad hoc
aid is likely to have only a limited positive structural
effect on the environment, the employment of disabled
and disadvantaged workers regional cohesion or the risk
capital market
reason, aid schemes
providing environmental aid in the form of tax reduc-
tions regional aid or aid in the form of risk capital

failure. For

this

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should be exempted under this Regulation, whilst indivi-
dual ad hoc awards should be notified to the Commission.
This Regulation should however exempt ad hoc regional
aid when this ad hoc aid is used to supplement aid
granted on the basis of a regional aid scheme, with a
maximum limit for the ad hoc component of 50 % of the
total aid to be granted for the investment.

(34)

In contrast to regional aid, which may be granted in
assisted areas only, SME investment and employment aid
may be granted both in assisted and in non-assisted
areas. The Member States may thus provide, in assisted
areas,
investment aid as long as they respect either all
conditions applying to the section concerning regional
aid or all conditions applying to the section concerning
SME investment aid.

(31)

(32)

(33)

The provisions relating to SME investment and employ-
ment aid do not provide, as was the case in Regulation
(EC) No 70/2001, any possibility for
increasing the
maximum aid intensities by means of a regional bonus.
However, the maximum aid intensities provided in the
section concerning regional aid can be granted also to
SMEs as long as the conditions for granting regional aid
are fulfilled. Similarly, the provisions relating to environ-
mental investment aid do not provide any possibility for
increasing the maximum aid intensities by means of a
regional bonus. The maximum aid intensities provided
for under
the section concerning regional aid can
however also be applied to projects which have a positive
impact on the environment, as long as the conditions for
granting regional aid are fulfilled.

the development of

By addressing the handicaps of
the disadvantaged
regions, national regional aid promotes the economic,
social and territorial cohesion of Member States and the
Community as a whole. National regional aid is designed
the most disadvantaged
to assist
regions by supporting investment and job creation in a
sustainable context. It promotes the expansion, rationali-
zation, modernization
the
and
economic activities of undertakings located in the less
favoured regions, in particular by encouraging firms to
set up new establishments there.

diversification

of

an investment

In order to prevent large regional
investment projects
from being artificially divided into sub-projects, thereby
escaping the notification thresholds provided under this
Regulation, a large investment project should be consi-
dered to be a single investment project if the investment
is undertaken within a period of three years by the same
undertaking or undertakings and consists of fixed assets
combined in an economically indivisible way. To assess
whether
indivisible,
is
Member States should take into account the technical,
functional and strategic links and the immediate geogra-
phical proximity. The economic indivisibility should be
assessed independently from ownership. This means that
to establish whether a large investment project constitutes
a single investment project, the assessment should be the
same irrespective of whether the project is carried out by
one undertaking, by more than one undertaking sharing
the investment costs or by more undertakings bearing
the costs of separate investments within the same invest-
ment project (for example in the case of a joint venture).

economically

(35)

(36)

Sustainable development is one of the main pillars in the
Lisbon Strategy for Growth and Jobs,
together with
competitiveness and security of energy supplies. Sustain-
able development is based, amongst others, on a high
level of protection and improvement of the quality of the
environment. Promoting environmental sustainability and
combating climate change leads as well
to increasing
security of supply and ensuring the competitiveness of
European economies and the availability of affordable
energy. The area of environmental protection is often
confronted with market failures in the form of negative
externalities. Under normal market conditions, undertak-
ings may not necessarily have an incentive to reduce
their pollution since such reduction may increase their
costs. When undertakings are not obliged to internalise
the costs of pollution, society as a whole bears these
costs. This internalisation of environmental costs can be
ensured by imposing environmental regulation or taxes.
The lack of full harmonization of environmental stan-
dards at Community level creates an uneven playing field.
Furthermore, an even higher
level of environmental
protection can be achieved by the initiatives to go
beyond the mandatory Community standards, which may
harm the competitive position of
the undertakings
concerned.

In view of the sufficient experience gathered in the appli-
the Community guidelines on State aid for
cation of
environmental protection,
investment aid for environ-
mental protection improving on Community standards
or in the absence of Community standards (for example
in the case of retrofitting existing vehicles), aid for early
adaptation to future Community standards by SMEs,
in energy saving,
environmental aid for
in high efficiency
environmental aid for
to
investments
cogeneration,
promote renewable energy sources and environmental
aid in the form of tax reductions should be exempt from
the notification requirement.
In particular, aid for the
acquisition of new transport vehicles complying with
adopted Community standards is permissible before their
entry into force when the new standards, once manda-
tory, do not apply retroactively to already purchased vehi-
cles.

environmental aid for

investment
investment

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(37) A correct calculation of the extra investment or produc-
tion costs to achieve environmental protection is essential
to determine whether or not aid is compatible with
Article 87(3) of the Treaty. Such calculation should take
place on the basis of a comparable reference investment
not providing the environmental benefits concerned,
with the same capacity in terms of effective production.
In view of the difficulties which may arise, in particular,
with respect to the deduction of benefits deriving from
extra investment, provision should be made for a simpli-
fied method of calculation of the extra investment costs.
Therefore, and with the exception of environmental aid
for investment in energy saving measures, these costs
should, for the purpose of applying this Regulation, be
calculated without taking into account operating benefits,
cost
savings or additional ancillary production and
without taking into account operating costs engendered
the investment. The maximum aid
during the life of
intensities provided for the different types of environ-
mental investment aid concerned have been determined
accordingly.

(38) As regards environmental aid for investment in cogenera-
tion and environmental aid for investments to promote
renewable energy sources, the extra costs should, for the
purpose of the application of this Regulation, be calcu-
lated without taking into account other support measures
granted for the same eligible costs, with the exception of
other environmental investment aid.

(39)

(40)

different

Community

In order to eliminate differences that might give rise to
distortions of competition and to facilitate coordination
between
national
initiatives concerning SMEs, as well as for reasons of
administrative clarity and legal certainty, the definition of
SME used for the purpose of this Regulation should be
based on the definition in Commission Recommendation
2003/361/EC of 6 May 2003 concerning the definition
of small and medium sized enterprises (17).

and

SMEs

leading

failures,

to these

SMEs play a decisive role in job creation and, more gene-
rally, act as a factor of social stability and economic
drive. However, their development may be limited by
market
suffering
from typical handicaps. SMEs often have difficulties in
obtaining capital, risk capital or loans, given the risk-
averse nature of certain financial markets and the limited
collateral that they may be able to offer. Their limited
resources may also restrict their access to information,
notably regarding new technology and potential markets.
In order to facilitate the development of the economic
activities of SMEs,
this Regulation should therefore
exempt certain categories of aid when they are granted in
it is justified to exempt
favour of SMEs. Consequently,
such aid from prior notification and to consider that, for

(17) OJ L 124, 20.5.2003, p. 36.

the purposes of application of this Regulation, when a
beneficiary fulfils the conditions of the SME definition
provided in annex to this Regulation, that SME can be
presumed, when the aid amount does not exceed the
applicable notification threshold,
to be limited in its
development by the typical SME handicaps prompted by
market failures.

(41) Having regard to the differences between small enter-
prises and medium-sized enterprises, different basic aid
intensities and different bonuses should be set for small
enterprises and for medium-sized enterprises. Market fail-
ures affecting SMEs in general, amongst others as regards
access to finance, result in even greater obstacles to the
compared to
development of
medium-sized enterprises.

enterprises

small

as

(42) On the basis of the experience gained in applying the
Communication on State aid and risk capital (18), there
appear to be a number of specific risk capital market
failures in the Community in respect of certain types of
investments at certain stages of undertakings' develop-
ment. These market
from an imperfect
failures result
matching of supply and demand of risk capital. As a
result, the level of risk capital provided in the market
may be too restricted, and undertakings do not obtain
funding despite having a valuable business model and
growth prospects. The main source of market failure rele-
vant to risk capital markets, which particularly affects
access to capital by SMEs and which may justify public
intervention, relates to imperfect or asymmetric informa-
tion. Consequently, risk capital schemes taking the form
of investment funds in which a sufficient proportion of
the funds are considered as private equity should be
exempt from the notification requirement under certain
conditions. This regulation will not affect the EIF and EIB
status as defined in the Community guidelines on risk
capital.

(43) Aid for research and development can contribute to
strengthening competitiveness and
economic growth,
boosting employment. On the basis of
its experience
with the application of Regulation (EC) No 364/2004,
the Community framework for State aid for research and
development (19), the Community Framework for State
aid for research and development and innovation (20), it
appears that given the available research and develop-
ment capabilities of both SMEs and large enterprises,
market failures may prevent the market from reaching
the optimal output and lead to an inefficient outcome.
Such inefficient outcomes generally relate to positive
externalities/knowledge spill-overs, public goods/knowl-
edge spill-overs,
imperfect and asymmetric information
and coordination and network failures.

(18) OJ C 194, 18.8.2006, p. 2.
(19) OJ C 45, 17.2.1996, p. 5.
(20) OJ C 323, 30.12.2006, p. 1.

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(44) Aid for research and development for SMEs is of particu-
lar importance, because one of the structural disadvan-
tages of SMEs lies in the difficulty they may experience in
gaining access to new technological developments, tech-
nology transfers or highly qualified personnel. Therefore,
aid for research and development projects, aid for tech-
nical feasibility studies and aid to cover industrial prop-
erty rights costs for SMEs should be exempt from the
requirement of prior notification, under certain condi-
tions.

their workers, especially when this
the training of
training is general
in nature and does not lead to an
immediate and concrete advantage for the undertaking
this market
concerned, State aid can help to correct
failure. Therefore such aid should be exempt, under
certain conditions, from prior notification. In view of the
particular handicaps with which SMEs are confronted
and the higher relative costs that they have to bear when
they invest in training, the intensities of aid exempted by
this Regulation should be increased for SMEs.

(45) As regards project aid for research and development, the
aided part of the research project must completely fall
within the categories of fundamental research, industrial
research or experimental development. When a project
encompasses different tasks, each task must be qualified
as falling under the categories of fundamental research,
industrial research or experimental development or as
not falling under any of those categories at all. This quali-
fication need not necessarily follow a chronological
approach, moving sequentially over time from funda-
mental research to activities closer to the market. Accord-
ingly, a task which is carried out at a late stage of a
project may be qualified as industrial research. Similarly,
it is not excluded that an activity carried out at an earlier
stage of the project may constitute experimental develop-
ment.

(46)

(47)

(48)

In the agricultural sector, on the basis of the experience
gained in particular when applying the Commission
communication amending the Community framework
for State aid for research and development (21), certain
aid for research and development should be exempted if
conditions similar to those provided in the specific provi-
sions laid down for the agricultural sector in the Com-
munity framework for State aid for research and develop-
ment and innovation are fulfilled. If those specific condi-
tions are not fulfilled, aid may be exempted if it fulfils the
conditions set out in the general provisions related to
research and development in this regulation.

The promotion of training and the recruitment of disad-
vantaged and disabled workers and compensation of
additional costs for the employment of disabled workers
constitute a central objective of the economic and social
policies of the Community and of its Member States.

Training usually has positive externalities for society as a
whole since it increases the pool of skilled workers from
which other firms may draw, improves the competitive-
ness of Community industry and plays an important role
in the Community
strategy. Training,
employment
including e-learning, is also essential for the constitution,
the acquisition and the diffusion of knowledge, a public
good of primary importance. In view of the fact that
undertakings in the Community generally under-invest in

(21) OJ C 48, 13.2.1998, p. 2.

(49) A distinction can be drawn between general and specific
training. The permissible aid intensities should differ
according to the type of training provided and the size of
the undertaking. General training provides transferable
qualifications and substantially improves the employ-
ability of the trained worker. Aid for this purpose has
less distortive effects on competition, meaning that
higher intensities of aid can be exempted from prior noti-
fication. Specific training, which mainly benefits the
undertaking,
risk of distortion of
competition and the intensity of aid which can be
exempted from prior notification should therefore be
much lower. Training shall be considered to be general in
nature also when it relates to environmental manage-
ment, eco-innovation or corporate social responsibility
and thereby increases the capacity of the beneficiary to
contribute to general objectives in the environment field.

involves a greater

(50)

Certain categories of disabled or disadvantaged workers
still experience particular difficulty in entering the labour
market. For this reason there is a justification for public
authorities to apply measures providing incentives to
undertakings to increase their levels of employment, in
particular of workers from these disadvantaged cate-
gories. Employment costs form part of the normal oper-
ating costs of any undertaking. It is therefore particularly
important that aid for the employment of disabled and
disadvantaged workers should have a positive effect on
employment levels of these categories of workers and
should not merely enable undertakings
to reduce
costs which they would otherwise have to bear. Conse-
quently, such aid should be exempt from prior notifica-
tion when it is likely to assist these categories of workers
in re-entering the job market or, as regards disabled
workers, re-entering and staying in the job market.

(51)

It is appropriate to lay down transitional provisions for
aid which was granted before the entry into force of this
Regulation and was not notified in breach of the obliga-
tion in Article 88(3) of the Treaty. With the repeal of

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the

existing

Regulation (EC) No 1628/2006 on the application of
Articles 87 and 88 of the EC Treaty to national regional
aid,
as
exempted, will be allowed to continue being implemented
under the conditions foreseen by that Regulation, in line
with Article 9, paragraph 2,
last indent, of that Regu-
lation.

investment

schemes,

regional

(52)

In the light of the Commission's experience in this area,
and in particular the frequency with which it is generally
necessary to revise State aid policy, it is appropriate to
limit the period of application of this Regulation. Should
this Regulation expire without being extended, aid
schemes already exempted by this Regulation should
continue to be exempted for a further period of six
months, in order to give Member States time to adapt.

(53)

The following regulations should be repealed: Regulation
(EC) No 70/2001, Regulation (EC) No 68/2001, Regu-
lation (EC) No 2204/2002 and Regulation (EC)
No 1628/2006,

HAS ADOPTED THIS REGULATION:

CHAPTER I

COMMON PROVISIONS

Article 1

Scope

1.

This Regulation shall apply to the following types of aid:

(a) regional investment and employment aid;

(b) SME investment and employment aid;

(c) aid for environmental protection;

(d) aid for consultancy and SME participation in fairs;

(e) aid in the form of risk capital;

(f) aid for research and development;

(g) training aid;

(h) aid for disadvantaged or disabled workers.

2.

It shall not apply to:

(a) aid granted to undertakings active in the fishery and
aquaculture sectors, as covered by Council Regulation (EC)
No 104/2000 (22), except for training aid, aid in the form of
risk capital, aid for research and development and aid for
disadvantaged and disabled workers;

(b) aid granted to undertakings active in the primary produc-
tion of agricultural products as listed in Annex I to the
Treaty, except for training aid, aid in the form of risk capital,
aid for research and development, environmental aid, and
aid for disadvantaged and disabled workers;

(c) aid granted to undertakings active in the processing and
marketing of agricultural products as listed in Annex I to
the Treaty, in the following cases:

(i) when the amount of the aid is fixed on the basis of the
price or quantity of such products purchased from
primary producers or put on the market by the under-
takings concerned; or

(ii) when the aid is conditional on being partly or entirely

passed on to primary producers;

(d) aid granted to undertakings active in the coal sector with
the exception of training aid, research and development aid
and environmental aid;

(e) aid granted to undertakings active in the steel sector, with
the exception of environmental aid, training aid and aid for
disadvantaged and disabled workers;

(f) regional aid granted to undertakings active in the ship-

building sector;

(g) regional aid granted to undertakings active in the synthetic

fibres (23) sector.

This Regulation shall not apply to regional aid schemes
4.
which are targeted at specific sectors of economic activity within
manufacturing or services. Schemes aimed at tourism activities
are not considered as targeted at specific sectors.

This Regulation shall not apply to ad hoc individual aid
in

as provided for

enterprises,

except

5.
granted to large
Article 11(1).

(a) aid to export-related activities, namely aid directly linked to
the quantities exported, to the establishment and operation
of a distribution network or to other current costs linked to
the export activity;

(b) aid contingent upon the use of domestic over imported

goods.

6.

This Regulation shall not apply to the following aid:

(a) aid schemes which do not explicitly exclude the payment of
individual aid in favour of an undertaking which is subject
to an outstanding recovery order
following a previous
Commission decision declaring an aid illegal and incompa-
tible with the common market;

This Regulation shall apply to aid in all sectors of the

3.
economy with the exception of the following:

(22) OJ L 17, 21.1.2000, p. 22.
(23) NACE code XXX.

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(b) ad hoc individual aid in favour of an undertaking which is
subject
following a
to an outstanding recovery order
previous Commission decision declaring an aid illegal and
incompatible with the common market;

10.

‘intangible assets’ means assets entailed in by transfer of
technology by the acquisition of patent rights,
licences,
know-how or unpatented technical knowledge;

(c) aid to undertakings in difficulty.

Article 2

Definitions

For the purposes of this Regulation the following definitions
shall apply:

1.

‘aid’ means any measure fulfilling all the criteria laid down
in Article 87(1) of the Treaty;

2.

‘aid scheme’ means any act on the basis of which, without
further implementing measures being required,
individual
aid awards may be made to undertakings defined within
the act in a general and abstract manner and any act on the
basis of which aid which is not linked to a specific project
may be awarded to one or several undertakings for an inde-
finite period of time and/or for an indefinite amount;

3.

‘ad hoc individual aid’ means individual aid not awarded on
the basis of an aid scheme;

4.

‘aid intensity’ means the aid amount expressed as a percen-
tage of the eligible costs;

5.

‘transparent aid’ means aid in respect of which it is possible
to calculate precisely the gross grant equivalent ex ante
without need to undertake a risk assessment;

11.

‘large investment project’ means an investment in capital
assets with eligible costs above EUR 50 million, calculated
at prices and exchange rates on the date when the aid is
granted;

12.

‘number of employees’ means the number of annual labour
units (ALU), namely the number of persons employed full
time in one year, part-time and seasonal work being ALU
fractions;

13.

‘employment directly created by an investment project’
means employment concerning the activity to which the
investment relates, including employment created following
an increase in the utilisation rate of the capacity created by
the investment;

14.

‘wage cost’ means the total amount actually payable by the
the employment
beneficiary of
concerned, comprising:

the aid in respect of

(a) the gross wage, before tax; and

(b) the compulsory contributions, such as social security

charges;

15.

‘SME investment and employment aid’ means aid fulfilling
the conditions provided in Article 12;

16.

includes the types of aid foreseen in the
‘investment aid’
following articles: Article 11 concerning regional
invest-
ment and employment aid; Article 12 concerning SME
investment and employment aid and Articles 14 to 18
concerning investment aid for environmental protection;

6.

‘small and medium-sized enterprises’ or ‘SME’ shall mean
undertakings fulfilling the criteria laid down in Annex I;

17.

‘disadvantaged worker’ means any person who belongs to
any of the following categories:

7.

‘large enterprises’ shall mean undertakings not fulfilling the
criteria laid down in Annex I;

(a) any person who has not been in regular paid employ-

ment for the previous 6 months;

8.

‘assisted areas’ means regions eligible for regional aid, as
the
determined in the approved regional aid map for
Member State concerned for the period 2007-2013;

(b) any person who has not attained an upper secondary

educational or vocational qualification (ISCED 3);

9.

‘tangible assets’ means assets relating to land, buildings and
plant, machinery and equipment. In the transport sector,
except
for the road freight and air transport, transport
means and transport equipment shall be considered as
eligible assets except as regards regional aid;

(c) any person over the age of 50 years;

(d) any person living as a single adult with one or more

dependents;

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(e) any woman working in a sector or profession charac-
terised by a gender imbalance which is 25 % more
significant than the average national gender imbalance;

(f) any person who is a member of an ethnic minority
within a Member State and who requires development
of his or her linguistic, vocational training or work
experience profile to enhance prospects of gaining
access to stable employment;

18.

‘disabled worker’ means any person:

(a) recognised as disabled under national law; or

(b) having a recognised limitation which results
physical, mental or psychological impairment;

from

19.

‘sheltered employment’ means employment in an establish-
ment where at least 50 % of workers are disabled;

20.

‘supported employment’ means employment of disabled
workers in an establishment which offers personal assis-
tance or support, but is not a ‘sheltered employment’ envir-
onment;

21.

‘agricultural product’ means:

(a) the products listed in Annex I of the Treaty, except
fishery and aquaculture products covered by Regulation
(EC) No 104/2000;

(b) products falling under CN codes 4502, 4503 and 4504

(cork products);

(c) products intended to imitate or substitute milk and
milk products, as referred to in Article 3(2) of Council
Regulation (EEC) No 1898/87 (24);

22.

‘processing of agricultural products’ means any operation
on an agricultural product resulting in a product which is
also an agricultural product, except on farm activities neces-
sary for preparing an animal or plant product for the first
sale;

23.

‘marketing of agricultural products’ means holding or
display with a view to sale, offering for sale, delivery or any
other manner of placing on the market, except the first sale
by a primary producer to resellers or processors and any
activity preparing a product for such first sale; a sale by a
primary producer to final consumers shall be considered as
marketing if it takes place in separate premises reserved for
that purpose;

24.

‘tourism activities’ means the following business activities in
terms of NACE Rev. 1.1:

(a) NACE 55: Hotels and restaurants;

(b) NACE 63.3: Activities of travel agencies & tour opera-

tors, tourist assistance activities;

(c) NACE 92: Recreational, cultural and sporting activities;

25.

‘repayable advance’ means a loan for a project which is paid
in one or more instalments and the conditions for the
reimbursement of which depend on the outcome of the
research and development project;

26.

‘risk capital’ means
finance provided through equity
and quasi-equity financing to undertakings during their
early-growth stages (seed, start-up and expansion phases);

27.

‘steel sector’ means the sectors covered by Annex I of the
guidelines on national regional aid for 2007-2013 (25);

Article 3

Conditions for exemption

1.
Aid schemes fulfilling all the conditions of chapter I of
this Regulation, as well as the relevant provisions of chapter II
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 any individual aid awarded under such
scheme fulfils all the conditions of this Regulation, and the
scheme contains an express reference to this Regulation by
citing its title and publication reference in the Official Journal of
the European Union.

2.
Individual aid granted under a scheme referred to in para-
graph 1 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 the aid fulfils all the conditions of chapter I of this
Regulation, as well as the relevant provisions of chapter II of
this Regulation, and that the individual aid measure contains an
express reference to this Regulation, by citing its title and publi-
cation reference in the Official Journal of the European Union and
an express reference to the Commission identification number
provided for in Article 9(1).

Ad hoc

individual aid fulfilling all

3.
the conditions of
chapter I of this Regulation, as well as the relevant provisions of
chapter II 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 the aid contains an
express reference to this Regulation, by citing its title and publi-
cation reference in the Official Journal of the European Union and
an express reference to the Commission identification number
provided for in Article 9(1).

(24) OJ L 182, 3.7.1987, p. 36.

(25) OJ C 54, 4.3.2006, p. 13.

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Article 4

Aid intensity and eligible costs

under this Regulation. If the threshold is expressed in terms of
aid intensity,
the repayable advance,
expressed as a percentage of the eligible costs, shall not exceed
the applicable aid intensity.

the total amount of

instalments shall be discounted to its value at

1.
For the purposes of calculating aid intensity, all figures
used shall be taken before any deduction of tax or other charge.
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
the
moment of granting. The interest rate to be used for discounting
purposes shall be the reference rate applicable at the time of
grant. In cases where aid is awarded by means of tax exemptions
or reductions on future taxes due, subject to the respect of a
certain aid intensity defined in gross
equivalent,
discounting of aid tranches takes place on the basis of the refer-
ence rates applicable at the various times the tax advantages
become effective.

grant

The eligible costs shall be supported by documentary

2.
evidence which shall be clear and itemised.

Article 5

Transparency of aid

1.

This Regulation shall apply only to transparent aid.

In particular, the following types of aid shall be considered to be
transparent:

(a) aid comprised in loans, where the gross grant equivalent has
been calculated on the basis of the reference rate prevailing
at the time of the grant and taking into account the exis-
tence of normal security and/or abnormal risk associated
with the loan;

(b) aid comprised in guarantee schemes, where the metho-
dology to calculate the gross grant equivalent has been
accepted following notification of this methodology to the
Commission in the context of the application of this Regu-
lation or Regulation (EC) No 1628/2006 and the approved
methodology explicitly addresses the type of guarantees and
the type of underlying transactions at stake;

(c) aid comprised in fiscal measures, where the measure
provides for a cap ensuring that the applicable threshold is
not exceeded.

Article 6

Individual notification thresholds

1.
This Regulation shall not apply to any individual aid,
whether granted ad hoc or on the basis of a scheme, the grant
equivalent of which exceeds the following thresholds:

(a) SME investment and employment aid: EUR 7,5 million per

undertaking per investment project;

(b) investment aid for environmental protection: EUR 5 million

per undertaking per investment project;

(c) aid for consultancy in favour of SMEs and aid for SME parti-
cipation in fairs: EUR 2 million per undertaking per project;

(d) research and development project aid and feasibility studies:

(i) if the project is predominantly fundamental research,
EUR 20 million per undertaking, per project/feasibility
study;

(ii) if

the project

is predominantly industrial

research,
EUR 10 million per undertaking, per project/feasibility
study;

(iii) for all other projects, EUR 7,5 million per undertaking,

per project/feasibility study;

(iv) if the project is a EUREKA project, twice the amounts

laid down in points (i), (ii) and (iii) respectively.

research or

‘predominantly’ of

A project shall be considered to consist ‘predominantly’ of
fundamental
industrial
research, if more than 50 % of the eligible project costs are
incurred through activities which fall within the category of
fundamental research, respectively industrial research.
In
the project
cases where the predominant character of
cannot be established, the lower threshold shall apply;

(e) aid

for

industrial property
EUR 5 million per undertaking per project;

rights

costs

for

SMEs:

The following types of aid shall not be considered to be

2.
transparent:

(f) training aid: EUR 2 million per training project;

(a) aid comprised in capital injections;

(g) aid

for

the

recruitment

of

disadvantaged workers:

EUR 5 million per undertaking per year;

(b) aid comprised in risk capital measures, with the exception

(h) aid for the employment of disabled workers in the form of

of aid fulfilling the conditions of Article 23.

wage costs: EUR 10 million per undertaking per year;

3.
Aid in the form of repayable advances shall only be
considered to be transparent aid if the total amount of the
repayable advance does not exceed the applicable thresholds

(i) aid for the employment of disabled workers compensating
for additional expenses: EUR 10 million per undertaking per
year.

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Regional aid awarded in favour of

2.
large investment
projects shall be notified to the Commission if the total amount
of aid from all sources exceeds 75 % of the maximum amount
of aid an investment with eligible costs of EUR 100 million
could receive, applying the standard aid threshold in force for
large enterprises in the approved regional aid map on the date
the aid is to be granted.

vant aid thresholds or maximum eligible amounts under this
Regulation will be reduced by 50 % in general and by 20 % for
target undertakings located in assisted areas. The reduction shall
not exceed the total amount of risk capital received. This reduc-
tion does not apply to aid for
research and development
exempted under Articles 25 to 27.

Article 7

Cumulation

Article 8

Incentive effect

1.
In determining whether the individual notification thresh-
olds laid down in Article 6 and the maximum aid intensities
laid down in Chapter II are respected, the total amount of public
support measures for the aided activity or project shall be taken
into account, regardless of whether that support is financed
from local, regional, national or Community sources.

This Regulation shall only exempt aid which has an incen-

1.
tive effect.

Aid shall be considered to have an incentive effect if it enables
the beneficiary to carry out activities or projects which it would
not have carried out as such in the absence of the aid.

2.
Aid exempted by this Regulation may be cumulated with
any other aid exempted under this Regulation as long as those
aid measures concern different identifiable eligible costs.

Regional aid shall be considered to have an incentive effect also
if, in the absence of the aid, the investment project would not
have been carried out in the assisted area concerned.

Aid exempted by this Regulation shall not be cumulated
3.
with any other aid exempted under
this Regulation or de
minimis aid fulfilling the conditions laid down in Commission
Regulation (EC) No 1998/2006 (26) or with other Community
funding in relation to the same — partly or fully overlapping —
eligible costs if such cumulation would result in exceeding the
highest aid intensity or aid amount applicable to this aid under
this Regulation.

4.
By way of derogation from paragraph 3, aid in favour of
disabled workers, as foreseen in Articles 32 and 33, may be
cumulated with aid exempted under this Regulation in relation
to the same eligible costs above the highest applicable threshold
under this Regulation, provided that such cumulation does not
result in an aid intensity exceeding 100 % of the wage costs
over any period for which the workers concerned are employed.

As regards the cumulation of aid measures exempted
5.
under this Regulation with identifiable eligible costs and aid
measures exempted under this Regulation without identifiable
eligible costs,
the conditions laid down in the second sub-
paragraph shall apply.

Where a target undertaking has received capital under a risk
capital measure within the scope of Article 23 and subsequently
applies, during the first three years after the first risk capital
investment, for aid within the scope of this Regulation, the rele-

2.
As regards aid to SMEs, covered by this Regulation, the
condition laid down in paragraph 1 shall be considered to be
fulfilled if, before work on the project or activity has started, the
beneficiary has submitted an application for the aid to the
Member State concerned.

As regards aid to large enterprises, covered by this Regu-
[3.
lation, the condition laid down in paragraph 1 shall be consid-
ered to be fulfilled if, in addition to fulfilling the condition laid
down in paragraph 2, the Member State has verified, before
granting the individual aid concerned,
that documentation
prepared by the beneficiary establishes the incentive effect of the
aid on the basis of one or more of the following criteria:

(a) the increased size of the project/activity due to the aid;

(b) the increased scope of the project/activity due to the aid;

(c) the increased total amount spent by the beneficiary on the

project/activity due to the aid.]

4.
The conditions laid down in paragraphs 2 [and 3] shall
not apply as regards fiscal measures establishing a legal right to
aid in accordance with objective criteria and without further
exercise of discretion by the Member State if
these fiscal
measures have been adopted before work on the aided project
or activity has started.

(26) OJ L 379, 28.12.2006, p. 5.

If the conditions of paragraphs 1 to 4 are not fulfilled, the

5.
entire aid measure will not be exempted under this Regulation.

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Article 9

tion making it possible to establish the precise amount of
eligible costs for the purpose of applying this Regulation.

Transparency and monitoring

At the latest 10 working days before granting individual
1.
aid Member States shall forward to the Commission a summary
of the information regarding such aid in electronic form, via the
established Commission IT application and in the form laid
down in [Annex III], with a view to its publication in the Official
Journal of the European Union and on the Commission's website.
Within five working days of receipt of
the
Commission shall send an acknowledgment of receipt to the
Member State with the identification number of the aid measure
concerned.

that summary,

Records regarding individual aid shall be maintained for 10 years
from the date on which the aid was granted. Records regarding
an aid scheme shall be maintained for 10 years from the date
on which the last aid was granted under such scheme.

The Commission shall regularly monitor aid measures of

7.
which it has been informed pursuant to paragraph 1.

8.
On written request, the Member State concerned shall
provide the Commission within the period fixed in the request,
with all the information which the Commission considers neces-
sary to monitor the application of this Regulation.

As soon as an aid scheme enters into force, or an ad hoc
2.
individual aid is granted on the basis of
this Regulation,
Member States shall publish on the internet the full text of such
aid measure, indicating the criteria and conditions under which
such aid is granted and the identity of the granting authority.
the website shall be communicated to the
The address of
Commission together with the summary of
the information
regarding the aid required pursuant to paragraph 1. It shall also
be contained in the annual report submitted pursuant to para-
graph 5.

the Commission shall

If such information is not provided within that period or a
commonly agreed period,
send a
reminder setting a new deadline for the submission of the infor-
mation. If, despite such reminder, the Member State concerned
does not provide the information requested, the Commission
may, after having provided the Member State concerned with
the possibility to make its views known, adopt a decision stating
that all future aid measures to which this Regulation applies are
to be notified to the Commission.

3. Member States shall refer to the identification number
provided by the Commission pursuant to paragraph 1 in each
aid granting measure addressed to a final beneficiary, with the
exception of aid taking the form of fiscal measures.

4. Whenever individual aid is granted under an existing aid
scheme for
research and development projects covered by
Article 25 and the individual aid exceeds EUR 3 million or
whenever individual regional aid is granted, on the basis of an
existing aid scheme for large investment projects, which is not
individually notifiable pursuant to Article 6, the Member States
shall, within 20 working days from the day on which the aid is
granted by the competent authority, provide the Commission
with the information requested in the standard form laid down
in Annex II, via the established IT application.

5.
In accordance with Chapter III of Council Regulation (EC)
No 794/2004 (27), Member States shall compile a report in elec-
tronic form on the application of this Regulation in respect of
each whole year or each part of the year during which this
Regulation applies.

Article 10

Specific conditions applicable to investment aid

In order to be considered an eligible cost for the purposes

1.
of this Regulation, investments shall consist of the following:

(a) an investment in tangible and/or intangible assets relating to
the setting-up of a new establishment, the extension of an
existing establishment, diversification of the output of an
into new additional products or a funda-
establishment
mental change in the overall production process of an
existing establishment; or

(b) the acquisition of the capital assets directly linked to an
establishment, where the establishment has closed or would
have closed had it not been purchased, and the assets are
bought by an independent investor.

The sole acquisition of the shares of an undertaking shall not
constitute investment.

6. Member States shall maintain detailed records regarding
any individual aid or aid scheme exempted under this Regu-
lation. Such records shall contain all information necessary to
establish that the conditions laid down in this Regulation, are
fulfilled, including information on the status of any undertaking
whose entitlement to aid or a bonus depends on its status as an
SME, information on the incentive effect of the aid and informa-

In order to be considered eligible costs for the purposes of
2.
this Regulation, intangible assets shall fulfil the following condi-
tions:

(a) they must be used exclusively in the establishment receiving

the aid;

(27) OJ L 140, 30.4.2004, p. 1.

(b) they must be regarded as amortizable assets;

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(c) they must be purchased from third parties under market
conditions, without the acquirer being in a position to exer-
cise control, within the meaning of Article 3 of Council
Regulation (EC) No139/2004 (28), on the seller, or vice
versa;

(d) they must be included in the assets of the undertaking and
remain in the establishment receiving the aid for at least five
years or three years in the case of SMEs.

3.
In order to be considered an eligible cost for the purposes
of this Regulation, employment directly created by an invest-
ment project shall fulfil the following conditions:

(a) employment shall be created within three years of comple-

tion of the investment; and

(b) the investment project shall
number of employees
compared with the average over
months; and

lead to a net increase in the
in the establishment concerned,
twelve

the previous

(c) the employment created shall be maintained during a
minimum period of five years in case of large enterprise and
a minimum period of three years in case of SMEs.

CHAPTER II

SPECIFIC PROVISIONS FOR THE DIFFERENT CATEGORIES OF
AID

SECTION 1

Regional Aid

Article 11

Regional investment and employment aid

1.
Regional investment and employment aid schemes shall be
compatible with the common market within the meaning of
Article 87(3) of the EC Treaty and shall be exempt from the
notification requirement of Article 88(3) of the Treaty, provided
that the conditions laid down in this Article are fulfilled.

Ad hoc aid which is only used to supplement aid granted on the
basis of regional investment and employment aid schemes and
which does not exceed 50 % of the total aid to be granted for
the investment, 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 the ad hoc aid awarded directly fulfils all
the conditions of this Regulation.

2.
The aid shall be granted in regions eligible for regional aid,
as determined in the approved regional aid map for the Member
State concerned for the period 2007-2013. The investment
must be maintained in the recipient region for at least five years,
or three years in the case of SMEs, after the whole investment

(28) OJ L 24, 29.1.2004, p. 1.

has been completed. This shall not prevent the replacement of
plant or equipment which has become out-dated due to rapid
technological change, provided the economic activity is retained
in the region concerned for the minimum period.

The aid intensity in present gross grant equivalent shall
3.
not exceed the regional aid threshold which is in force at the
time the aid is granted for the region in which the investment
takes place, as determined in the approved regional aid map for
the Member State concerned for the period 2007-2013.

4. With the exception of aid granted in favour of
large
investment projects and regional aid for the transport sector, the
thresholds fixed in paragraph 3 may be increased by 20 percen-
tage points
for aid awarded to small enterprises and by
10 percentage points for aid awarded to medium-sized enter-
prises.

5.
The thresholds fixed in paragraph 3 shall apply to the
intensity of the aid calculated either as a percentage of the
investment's eligible tangible and intangible costs or as a percen-
tage of the estimated wage costs of the person hired, calculated
over a period of two years, for employment directly created by
the investment project or a combination thereof, provided that
the aid does not exceed the most favourable amount resulting
from the application of either calculation.

6. Where the aid is calculated on the basis of tangible or
intangible investment costs, or of acquisition costs in case of
takeovers, the beneficiary must provide a financial contribution
of at least 25 % of the eligible costs, either through its own
resources or by external financing, in a form which is free of
any public support. However, where the maximum aid intensity
approved under the national regional aid map for the Member
State concerned,
increased in accordance with paragraph 4,
exceeds 75 %, the financial contribution of the beneficiary is
If the aid is calculated on the basis of
reduced accordingly.
tangible or intangible investment costs, the conditions set out in
paragraph 7 shall also apply.

7.
In the case of acquisition of an establishment, only the
costs of buying assets from third parties shall be taken into
consideration, provided that
the transaction has taken place
under market conditions. Where the acquisition is accompanied
by other investment, the costs relating to the latter shall be
added to the cost of the purchase.

Costs related to the acquisition of assets under lease, other than
land and buildings, shall only be taken into consideration if the
lease takes the form of financial leasing and contains an obliga-
tion to purchase the asset at the expiry of the term of the lease;
for the lease of land and buildings, the lease must continue for
at least five years after the anticipated date of the completion of
the investment project or three years in the case of SMEs.

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Except in the case of SMEs and takeovers, the assets acquired
shall be new. In the case of takeovers, assets for the acquisition
of which aid has already been granted prior to the purchase
shall be deducted. For SMEs, the full costs of investments in
intangible assets may also be taken into consideration. For large
enterprises, such costs are eligible only up to a limit of 50 % of
the total eligible investment costs for the project.

8. Where the aid is calculated on the basis of wage costs, the
employment shall be directly created by the investment project.

9.
the
By way of derogation from paragraphs 3 and 4,
maximum aid intensities for investments in the processing and
marketing of agricultural products may be set at:

(a) 50 % of eligible investments in regions eligible under
Article 87(3)(a) of the Treaty and 40 % of eligible invest-
ments in other regions eligible for regional aid, as deter-
mined in the regional aid map approved for the Member
States concerned for the period 2007-2013, if the benefi-
ciary is a small or medium-sized enterprise;

(b) 25 % of eligible investments in regions eligible under
Article 87(3)(a) of the Treaty and 20 % of eligible invest-
ments in other regions eligible for regional aid, as deter-
mined in the regional aid map approved for the Member
States concerned for the period 2007-2013, if the benefi-
ciary has
than
EUR 200 million turnover, calculated in accordance with
Annex I.

than 750 employees and/or

less

less

10.
In order to prevent a large investment being artificially
divided into sub-projects, a large investment project will be
considered to be a single investment project when investments
are undertaken during a period of three years by the same
undertaking or undertakings and consists of
fixed assets
combined in an economically indivisible way.

SECTION 2

SME Investment and Employment Aid

Article 12

SME Investment and employment Aid

Investment aid in favour of small and medium-sized enter-
1.
prises 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 the conditions laid down in paragraphs 2, 3 and 4
are fulfilled.

2.

The aid intensity shall not exceed:

(a) 20 % in the case of small enterprises;

3.

The eligible costs shall be the following:

(a) the investment's eligible tangible and intangible costs; or

(b) the estimated wage costs of employment directly created by
the investment project, calculated over a period of two years.

the processing and
4. Where the investment concerns
marketing of agricultural products listed in Annex I to the
Treaty, the aid intensity shall not exceed:

(a) 75 % of eligible investments in the outermost regions;

(b) 65 % of eligible investments in the smaller Aegean Islands
(EEC)

of Council Regulation

the meaning

within
No 2019/93 (29);

(c) 50 % of eligible investments in regions eligible under

Article 87(3)(a) of the Treaty;

(d) 40 % of eligible investments in all other regions.

SECTION 3

Aid for Environmental Protection

Article 13

Definitions

For the purposes of this section, the following definitions shall
apply:

(a) ‘environmental protection’ means any action designed to
remedy or prevent damage to physical surroundings or
natural resources by the beneficiary's own activities,
to
reduce risk of such damage or to lead to a more efficient
use of natural resources, including energy-saving measures
and the use of renewable sources of energy;

(b) ‘energy-saving measures’ means action which enables under-
takings to reduce the amount of energy used in their
production cycle, to the exclusion of the design and manu-
facture of machines or means of transport which can be
operated with fewer natural resources and to the exclusion
of action taken with a view to improving safety or hygiene;

(c) ‘Community standard’ means a mandatory Community
standard setting the level to be attained in environmental
terms. Obligations provided under Council Directive
No 96/61/EC (30) shall not be regarded as a Community
standard for the purpose of this regulation;

(d) ‘renewable energy sources’ means

renewable, non-fossil
energy sources (wind, solar, geothermal, wave, tidal, hydro-
power installations with a capacity below 10 MW, direct
biomass burning,
landfill gas, sewage treatment plant gas
and biogases);

(b) 10 % in the case of medium-sized enterprises.

(29) OJ L 184, 27.7.1993, p. 1.
(30) OJ L 257, 10.10.1996, p. 26.

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(e) ‘energy generation from renewable energy sources’ means
energy generated by processes using only renewable energy
sources, as well as the proportion in terms of calorific value
of energy produced from renewable energy sources in
hybrid installations — like co-firing — also using conven-
tional energy sources,
including renewable electricity used
for filling storage systems and excluding electricity produced
as a result of storage systems;

(f) ‘cogeneration’ means the simultaneous generation in one
process of thermal energy and electrical and/or mechanical
energy;

(g) ‘high efficiency cogeneration’ means cogeneration meeting
to Directive
the criteria of Annex II and Annex III
2004/8/EC of
the
and of
the European Parliament
Council (31) and satisfying the harmonised efficiency refer-
ence values as defined in the Article 4 of that Directive;

(h) ‘environmental tax’ means a tax whose specific taxable base
has a clear negative effect on the environment and which
seeks to tax certain goods or services so that the environ-
mental costs may be included in their price and/or so that
producers and consumers are oriented towards activities
which better respect the environment;

(i) ‘tangible assets’: for the purpose of section 3 of this regu-
lation and by derogation to Article 2(9), road freight trans-
port means and equipment shall also be considered as
eligible tangible assets.

Article 14

Investment aid for environmental protection improving on
Community standards

Investment aid for environmental protection shall be
1.
compatible with the common market within the meaning of
Article 87(3)(c) of the Treaty and shall be exempt from the noti-
fication requirement of Article 88(3) of the Treaty, provided that
the conditions laid down in paragraphs 2 to 5 are fulfilled.

The aided investment shall

2.
conditions:

fulfil one of

the following

(a) the investment enables the beneficiary to reduce the pollu-
tion resulting from its activities by means of improving on
the Community standards applicable,
the
presence of mandatory national standards that are more
stringent than the Community standard;

irrespective of

(b) the investment enables the beneficiary to reduce the pollu-
tion resulting from its existing activities in the absence of
Community standards.

(31) OJ L 52, 21.2.2004, p. 50.

3.

The aid intensity shall not exceed 25 % (32).

However, the aid intensity may be increased by 20 percentage
points for aid awarded to small enterprises and by 10 percen-
tage points for aid awarded to medium-sized enterprises.

4.
The eligible costs shall be the extra investment costs neces-
sary to achieve a level of environmental protection higher than
the level required by the Community standards.

Aid for investments relating to waste management shall

5.
not be exempted under this Article.

Article 15

Aid for early adaptation to future Community standards
for SMEs

Aid allowing SMEs to comply with new Community
1.
standards
improving on environmental protection shall be
compatible with the common market within the meaning of
Article 87(3)(c) of the Treaty and shall be exempt from the noti-
fication requirement of Article 88(3) of the Treaty, provided that
the conditions laid down in paragraphs 2, 3 and 4 are fulfilled.

The Community standards shall have been adopted, but

2.
the date of mandatory transposition must not have expired.

The investment shall be implemented and finalised at least one
year before the mandatory date of transposition.

The aid intensity shall not exceed 15 percentage points (33)
small
for

and 10 percentage points (34)

enterprises

3.
for
medium-sized enterprises.

4.
The eligible costs shall be the extra investment costs neces-
sary to achieve the level of environmental protection required
by the Community standard.

Article 16

Environmental

aid for

investment

in energy saving

measures

Environmental

1.
investment aid enabling undertakings to
realise energy savings shall be compatible with the common
market within the meaning of Article 87(3)(c) of the Treaty and
shall be
from the notification requirement of
Article 88(3) of the Treaty, provided that the conditions laid
down in the paragraphs 2 and 3 are fulfilled.

exempt

(32) This proposal does not prejudge the Commission positions in the
context of the ongoing revision of the environmental guidelines, in
particular with regard to intensities. In any event, given the simplified
calculation methods retained for the purposes of this Regulation, the
maximum aid intensities provided under this Regulation will necessa-
rily have to stay below the maximum aid intensities provided under
the guidelines which are based on more detailed calculation methods.

(33) See footnote 32.
(34) See footnote 32.

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2.

The aid intensity shall not exceed 35 % (35).

Article 19

However, the aid intensity may be increased by 20 percentage
points for aid awarded to small enterprises and by 10 percen-
tage points for aid awarded to medium-sized enterprises.

3.
The eligible costs shall be the extra investment costs neces-
sary to achieve a level of energy savings higher than the level
required by the Community standards. The eligible costs shall
be calculated on the basis of the extra investment costs minus
the operating benefits accruing from the reduced energy
consumption during the first five years of the life of the invest-
ment.

Article 17

Environmental aid for

investment

in high efficiency

cogeneration

Environmental aid enabling undertakings to invest in high
1.
efficiency cogeneration shall be compatible with the common
market within the meaning of Article 87(3)(c) of the Treaty and
shall be
from the notification requirement of
Article 88(3) of the Treaty, provided that the conditions laid
down in paragraphs 2 and 3 are fulfilled.

exempt

Environmental aid in the form of tax reductions

1.
Environmental aid in the form of tax reduction on envir-
onmental tax schemes fulfilling the conditions of Council Direc-
tive 2003/96/EC (38) shall be compatible with the common
market within the meaning of Article 87(3)(c) of the Treaty and
shall be
from the notification requirement of
Article 88(3) of the Treaty, provided the conditions laid down in
paragraphs 2 and 3 are fulfilled.

exempt

2.
The aid shall not exceed the difference between the Com-
munity minimum tax level and the national tax without reduc-
tion.

The Community minimum tax level shall be considered to be
the minimum level of
taxation foreseen in Directive
2003/96/EC.

Tax reductions shall be granted for periods no longer than

3.
ten years.

SECTION 4

2.

The aid intensity shall not exceed 35 % (36).

Aid for consultancy in favour of SMEs and SME participation
in fairs

However, the aid intensity may be increased by 20 percentage
points for aid awarded to small enterprises and by 10 percen-
tage points for aid awarded to medium-sized enterprises.

The eligible costs shall be the extra investment costs neces-

3.
sary to realise a high efficiency cogeneration plant.

Article 18

Article 20

Aid for consultancy in favour of SMEs

Aid to small and medium-sized enterprises for consultancy
1.
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 the conditions laid down in paragraphs 2 and 3
are fulfilled.

Environmental aid for investments to exploit renewable
energy sources

2.

The aid intensity shall not exceed 50 %.

Environmental aid enabling undertakings to realise invest-
1.
ments for the production of energy from renewable energy
sources shall be compatible with the common market within
the meaning of Article 87(3)(c) of
the Treaty and shall be
exempt from the notification requirement of Article 88(3) of
the Treaty, provided that the conditions laid down in para-
graphs 2 and 3 are fulfilled.

The eligible costs shall be the consultancy costs of services

3.
provided by outside consultants.

The services concerned shall not be a continuous or periodic
activity nor relate to the undertaking's usual operating costs,
such as routine tax consultancy services, regular legal services,
or advertising.

2.

The aid intensity shall not exceed 35 % (37).

However, the aid intensity may be increased by 20 percentage
points for aid awarded to small enterprises and by 10 percen-
tage points for aid awarded to medium-sized enterprises.

3.
The eligible costs shall be the extra costs borne by the
beneficiary compared with a conventional power plant or with
a conventional heating system with the same capacity in terms
of the effective production of energy.

(35) See footnote 32.
(36) See footnote 32.
(37) See footnote 32.

Article 21

Aid for SME participation in fairs

Aid to small and medium-sized enterprises for participa-
1.
tion in fairs 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 the conditions laid down in paragraphs 2
and 3 are fulfilled.

(38) OJ L 283, 31.10.2003, p. 51.

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2.

The aid intensity shall not exceed 50 %.

The eligible costs shall be the costs incurred for renting,
3.
setting up and running the stand for the first participation of an
undertaking in a particular fair or exhibition.

SECTION 5

Aid in the form of risk capital

Article 22

Definitions

For the purposes of this section, the following definitions shall
apply:

(a) ‘equity’ means ownership interest in an undertaking, repre-

sented by the shares issued to investors;

(b) ‘quasi-equity’ means financial instruments whose return for
the holder is predominantly based on the profits or losses
of the underlying target undertaking and are unsecured in
the event of default;

(c) ‘private equity’ means private — as opposed to public —
equity or quasi-equity investment in undertakings not listed
on a stock-market, including venture capital;

(d) ‘seed capital’ means financing provided to study, assess and
develop an initial concept, preceding the start-up phase;

(e) ‘start-up capital’ means financing provided to undertakings,
which have not sold their product or service commercially
and are not yet generating a profit for product development
and initial marketing;

(f) ‘expansion capital’ means financing provided for the growth
and expansion of an undertaking, which may or may not
break even or
the purposes of
increasing production capacity, market or product develop-
ment or the provision of additional working capital;

trade profitably,

for

(g) ‘exit strategy’ means a strategy for the liquidation of hold-
ings by a venture capital or private equity fund in accord-
including
ance with a plan to achieve maximum return,
trade sale, write-offs, repayment of preference shares/loans,
sale to another venture capitalist, sale to a financial institu-
tion and sale by public offering,
including Initial Public
Offerings;

(h) ‘target undertaking’ means an undertaking in which an

investor or investment fund is considering investing.

Article 23

Aid in the form of risk capital

1.
Risk capital aid schemes in favour of SMEs shall be
compatible with the common market within the meaning of

Article 87(3) of the Treaty and shall be exempt from the notifi-
cation requirement of Article 88(3) of the Treaty, provided the
conditions laid down in paragraphs 2 to 8 are fulfilled.

The aid shall takes the form of participation into a profit

2.
driven investment fund, managed on a commercial basis.

3.
The tranches of finance realised by the investment fund
shall not exceed EUR 1 000 000 per target undertaking over
any period of twelve months.

in

located

non-assisted

4.
For SMEs located in assisted areas, as well as for small
risk
undertakings
capital measure shall be restricted to providing financing for
seed capital, start-up capital and/or expansion capital. For
medium-sized undertakings located in non-assisted areas, the
risk capital measure shall be restricted to providing financing for
seed capital and/or start-up capital, to the exclusion of expan-
sion capital.

areas,

the

The risk capital measure shall provide at least 70 % of its
5.
total budget in the form of equity or quasi-equity into the target
undertakings. [The maximum duration of
the period during
which aid may be granted on the basis of the risk capital aid
scheme to target undertakings shall be limited to six years.]

investment

6.
At least 50 % of the funding of the investment funds shall
be provided through funding by private equity, or at least 30 %
funds targeting exclusively SMEs
in the case of
located in assisted areas. The providers of private equity shall be
selected by the Member State either on the basis of a public
tender, or on the basis of on open invitation to participate in
the Member State has no discretionary
investment
powers of limiting the number of private equity investors parti-
cipating.

funds if

To ensure that the risk capital measure is profit-driven, the

7.
following conditions shall be fulfilled:

(a) a business plan shall exist for each investment, containing
details of product, sales and profitability development and
establishing the ex ante viability of the project; and

(b) a clear and realistic exit strategy shall exist for each invest-

ment.

8.
To ensure that the management of the investment fund is
effected on a commercial basis, the following conditions shall be
fulfilled:

(a) there shall be an agreement between a professional fund
manager or a management company and participants in the
fund, providing that the manager's remuneration is linked to
performance and setting out the objectives of the fund and
proposed timing of investments; and

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(b) private equity investors shall be represented in the fund
investment structure, such as through an investors' or advi-
sory committee; and

(c) best practices and regulatory supervision shall apply to the

management of funds.

SECTION 6

Aid for research and development

Article 24

Definitions

sarily the final commercial product and where it is too
expensive to produce for it to be used only for demonstra-
tion and validation purposes.
In case of a subsequent
commercial use of demonstration or pilot projects, any
revenue generated from such use must be deducted from
the eligible costs.

The experimental production and testing of products,
processes and services are also eligible, provided that these
cannot be used or transformed to be used in industrial
applications or commercially.

include routine or
Experimental development does not
periodic changes made to products, production lines, manu-
facturing processes, existing services and other operations in
progress, even if such changes may represent improvements.

Article 25

For the purposes of this section, the following definitions shall
apply:

Aid for research and development projects

(a) ‘research organisation’ means an entity, such as a university
or research institute, irrespective of its legal status (organised
under public or private law) or way of financing whose
primary goal is to conduct fundamental research, industrial
research or experimental development and to disseminate
their results by way of teaching, publication or technology
transfer. All profits must be reinvested in these activities, the
dissemination of their results or teaching. Undertakings that
can exert influence upon such an organisation, for instance
in their capacity of shareholders or members of the organi-
sation, shall enjoy no preferential access to the research
capacities of such an organisation or to the research results
generated by it;

(b) ‘fundamental research’ means experimental or theoretical
work undertaken primarily to acquire new knowledge of the
underlying foundations of phenomena and observable facts,
without any direct practical application or use in view;

(c) ‘industrial research’ means the planned research or critical
investigation aimed at the acquisition of new knowledge and
skills for developing new products, processes or services or
for bringing about a significant improvement in existing
products, processes or services. It comprises the creation of
components parts to complex systems, which is necessary
for the industrial research, notably for generic technology
validation, to the exclusion of prototypes;

(d) ‘experimental development’ means the acquiring, combining,
shaping and using existing scientific, technological, business
and other relevant knowledge and skills for the purpose of
producing plans and arrangements or designs for new,
altered or improved products, processes or services. These
may also include, for instance, other activities aiming at the
conceptual definition, planning and documentation of new
products, processes or services. The activities may comprise
producing drafts, drawings, plans and other documentation,
provided that they are not intended for commercial use.

The development of commercially usable prototypes and
pilot projects is also included where the prototype is neces-

Aid for

research and development projects

1.
shall be
compatible with the common market within the meaning of
Article 87(3) of the Treaty and shall be exempt from the notifi-
cation requirement of Article 88(3) of the Treaty provided that
the conditions laid down in paragraphs 2 to 5 are fulfilled.

The aided part of the research project shall completely fall

2.
within one or more of the following research categories:

(a) fundamental research;

(b) industrial research;

(c) experimental development.

When a project encompasses different tasks, each task shall be
qualified as falling under one of the categories listed in the first
subparagraph, or as not falling under any of those categories.

3.

The basic aid intensity shall not exceed:

(a) 100 % for fundamental research;

(b) 50 % for industrial research;

(c) 25 % for experimental development.

The aid intensity shall be established for each beneficiary of
aid, including in a collaboration project, as provided in para-
graph 4(b)(i).

In the case of State aid for a research and development project
being carried out in collaboration between research organisa-
tions and undertakings, the combined aid deriving from direct
government support for a specific research project and, where
they constitute aid, contributions from research organisations to
that project may not exceed the applicable aid intensities for
each benefiting undertaking.

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4.
The basic aid intensities set for industrial research and
experimental development in paragraph 3 may be increased as
follows:

(a) where the aid is given to SMEs, the aid intensity may be
increased by 10 percentage points for medium-sized enter-
prises and by 20 percentage points for small enterprises;
and

(b) a bonus of 15 percentage points may be added, up to a

maximum aid intensity of 80 %, if:

only the depreciation costs corresponding to the life of the
research project, as calculated on the basis of good
accounting practice are considered as eligible. For land, costs
of commercial transfer or actually incurred capital costs are
eligible;

(d) cost of contractual

research,

technical knowledge and
patents bought or licensed from outside sources at market
prices, where the transaction has been carried out at arm's
length and there is no element of collusion involved, as well
as costs of consultancy and equivalent services used exclu-
sively for the research activity;

(i) the project involves effective collaboration between at
least two undertakings which are independent of each
other and the following conditions are fulfilled:

(e) additional overheads incurred directly as a result of

the

research project;

— no single undertaking bears more than 70 % of the

eligible costs of the collaboration project,

— the project involves collaboration with at least one
two different

in at

least

SME or is carried out
Member States; or

(f) other operating expenses,

including costs of materials,
supplies and similar products incurred directly as a result of
the research activity.

All eligible costs shall be allocated to a specific category of

6.
research and development.

(ii) the project involves effective collaboration between an
undertaking and a research organisation and the
following conditions are fulfilled:

— the research organisation bears at least 10 % of the

eligible project costs, and

— the research organisation has the right to publish
the results of the research projects insofar as they
stem from research implemented by that organisa-
tion; or

(iii) in the case of industrial research, the results of the
project are widely disseminated through technical and
scientific conferences or through publication in scien-
tific or technical journals or in open access repositories
(databases where raw research data can be accessed by
anyone, or through free or open source software.

Article 26

Aid for technical feasibility studies

1.
Aid for technical feasibility studies preparatory to indus-
trial research or experimental development activities shall be
compatible with the common market within the meaning of
Article 87(3)(c) of the Treaty and shall be exempt from the noti-
fication requirement of Article 88(3) of the Treaty, provided that
the conditions laid down in paragraphs 2 and 3 are fulfilled.

2.

The aid intensity shall not exceed:

(a) for SMEs, 75 % for studies preparatory to industrial research
activities and 50 % for studies preparatory to experimental
development activities;

For the purposes of points (b)(i) and (ii) of the first sub-
paragraph subcontracting shall not be considered to be
effective collaboration.

(b) for large enterprises, 65 % for studies preparatory to indus-
trial research activities and 40 % for studies preparatory to
experimental development activities.

5.

The eligible costs shall be the following:

3.

The eligible costs shall be the costs of the study.

(a) personnel

costs

other
supporting staff to the extent employed on the research
project);

(researchers,

technicians

and

Article 27

(b) costs of instruments and equipment to the extent and for
the period used for the research project. If such instruments
and equipment are not used for their full
life for the
research project, only the depreciation costs corresponding
to the life of the research project, as calculated on the basis
of good accounting practice, are considered as eligible;

(c) costs for building and land, to the extent and for the dura-
tion used for the research project. With regard to buildings,

Aid for industrial property rights costs for SMEs

1.
Aid to SMEs for the costs associated with obtaining and
validating patents and other industrial property rights shall be
compatible with the common market within the meaning of
Article 87(3)(c) of the Treaty and shall be exempt from the noti-
fication requirement of Article 88(3) of the Treaty, provided the
conditions laid down in paragraphs 2 and 3 are fulfilled.

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2.
The aid intensity shall not exceed the intensity which
would have qualified as project aid covered by Article 25(3) and
(4), in respect of the research activities which first led to the
industrial property rights concerned.

3.

The eligible costs shall be the following:

(a) all costs preceding the grant of the right in the first jurisdic-
tion, including costs relating to the preparation, filing and
prosecution of the application as well as costs incurred in
renewing the application before the right has been granted;

(b) translation and other costs incurred in order to obtain the
granting or validation of the right in other legal jurisdic-
tions;

(c) costs incurred in defending the validity of the right during
the official prosecution of
the application and possible
opposition proceedings, even if such costs occur after the
right is granted.

Article 28

Aid for research and development in the agricultural sector

1.
Aid for research and development concerning products
listed in Annex I to the EC Treaty shall be compatible with the
common market within the meaning of Article 87(3)(c) of the
EC Treaty and shall be exempt from the notification requirement
of Article 88 (3) of the EC Treaty, provided all the following
conditions are fulfilled:

(a) it is of general interest to the particular sector or sub-sector

concerned;

is published on the internet, prior

(b) information that research will be carried out, and with
which goal,
to the
commencement of the research. An approximate date of
expected results and their place of publication on the
internet, as well as a mention that the result will be available
at no cost, must be included;

(c) the results of the research are made available on internet,
for a period of at least 5 years. This information on the
internet shall be published no later than any information
which may be given to members of any particular organisa-
tion;

(d) aid shall be granted directly to the researching institution or
the direct granting of
involve
body and must not
non-research related aid to a company producing, proces-
sing or marketing agricultural products, nor provide price
support to producers of such products.

2.

The aid intensity shall not exceed 100 %.

3.
Aid for research and development concerning products
listed in Annex I to the EC and not fulfilling the conditions laid
down in paragraph 1 shall be compatible with the common
market within the meaning of Article 87(3)(c) of the EC Treaty
from the notification requirement of
and shall be exempt

Article 88(3) of the Treaty, provided the conditions laid down in
Articles 24 to 27 are fulfilled.

SECTION 7

Training aid

Article 29

Definitions

For the purposes of this section, the following definitions shall
apply:

1.

2.

‘specific training’ means training involving tuition directly
and principally applicable to the employee's present or future
position in the undertaking and providing qualifications
which are not or only to a limited extent transferable to
other undertakings or fields of work;

‘general training’ means training involving tuition which is
not applicable directly and principally to the employee's
present or future position in the undertaking, but which
provides qualifications that are largely transferable to other
undertakings or fields of work.

Training shall be considered ‘general’ if, for example:

(a) it is jointly organised by different independent undertak-
ings, or if employees of different undertakings may avail
themselves of the training; or

(b) it is recognised, certified or validated by public authori-
ties or bodies or by other bodies or institutions on which
a Member State or the Community has conferred the
necessary powers.

Article 30

Training aid

1.
Training aid 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 the conditions laid down in para-
graphs 2, 3 and 4 are fulfilled.

2.

The aid intensity shall not exceed:

(a) 25 % for specific training; and

(b) 60 % for general training.

However, the aid intensity may be increased, up to a maximum
aid intensity of 80 %, as follows:

(a) by 10 percentage points if the training is given to disabled

or disadvantaged workers;

(b) by 10 percentage points

awarded to
if
medium-sized enterprises and by 20 percentage points if the
aid is awarded to small enterprises.

aid is

the

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3.
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 shall apply.

4.

The eligible costs of a training aid project shall be:

(a) trainers' personnel costs;

5.
Except in the case of lawful dismissal for misconduct, the
disadvantaged worker shall be entitled to continuous employ-
ment for a minimum period of 12 months. By way of deroga-
tion, Member States may limit the minimum period of employ-
ment
legislation governing
employment contracts, in which case the aid shall be reduced
pro rata accordingly.

consistent with their national

(b) trainers' and trainees' travel expenses, including accommoda-

Article 32

tion;

(c) other current expenses such as materials and supplies

directly related to the project;

Aid for the employment of disabled workers in the form
of wage subsidies

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

are used exclusively for the training project;

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

training project;

(f) trainees' personnel costs and general indirect costs (adminis-
trative costs, rent, overheads) up to the amount of the total
of the other eligible costs referred to in (a) to (e). As regards
the former type of costs, only the hours during which the
trainees actually participate in the training, after deduction
of any productive hours, may be taken into account.

SECTION 8

Aid for disadvantaged and disabled workers

Article 31

Aid for the recruitment of disadvantaged workers in the
form of wage subsidies

1.
Aid schemes for the recruitment of disadvantaged workers
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 the conditions laid down in paragraphs 2 to 5 are
fulfilled.

1.
Aid schemes for the employment of disabled workers in
the form of wage subsidies 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 the conditions laid down in
paragraphs 2 to 5 are fulfilled.

The aid intensity shall not exceed 60 % of the eligible

2.
costs.

Eligible costs shall be the wage costs over any given dura-

3.
tion during which the disabled worker is being employed.

4. Where the recruitment does not represent a net increase
in the number of employees in the undertaking concerned, the
post or posts shall have fallen vacant following voluntary depar-
ture, disability, retirement on grounds of age, voluntary reduc-
tion of working time or lawful dismissal for misconduct and
not as a result of redundancy.

5.
Except in the case of lawful dismissal for misconduct the
disabled workers shall be entitled to continuous employment for
a minimum period of 12 months By way of derogation,
Member States may limit the minimum period of employment
consistent with their national legislation governing employment
contracts, in which case the aid shall be reduced pro rata accord-
ingly.

The aid intensity shall not exceed 50 % of the eligible

2.
costs.

Article 33

Eligible costs shall be the wage costs over a maximum

3.
period of 12 months following recruitment.

Aid for the employment of disabled workers compensating
for additional expenses

4. Where the recruitment does not represent a net increase
in the number of employees in the undertaking concerned, the
post or posts shall have fallen vacant following voluntary depar-
ture, disability, retirement on grounds of age, voluntary reduc-
tion of working time or lawful dismissal for misconduct and
not as a result of redundancy.

Aid schemes for compensating the additional costs of
1.
employing disabled workers
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 the conditions laid down in
paragraphs 2 and 3 are fulfilled.

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The aid intensity shall not exceed 100 % of the eligible

2.
costs.

Any references to the repealed Regulations shall be construed as
references to this Regulation.

Eligible costs shall be costs other than wage costs, which
3.
the employer has to bear and which are additional to those
which the undertaking would have incurred if employing
workers who are not disabled, over any given duration during
which the disabled worker is being employed.

The following costs shall be eligible:

(a) costs of adapting premises;

(b) costs of employing staff for time spent solely on the assis-

tance of the disabled workers;

(c) costs of adapting or acquiring equipment, or acquiring and
validating software for
their use by disabled workers,
including adapted or assistive technology facilities, which are
to those which the beneficiary would have
additional
incurred if employing workers who are not disabled;

(d) where

the

the beneficiary undertaking provides

sheltered
employment,
installing or
expanding the establishment concerned, and any costs of
administration and transport which result directly from the
employment of disabled workers;

constructing,

costs of

(e) where the beneficiary provides supported employment, any
costs of administration and transport which result directly
from the employment of disabled workers.

CHAPTER III

FINAL PROVISIONS

Article 34

Repeal

Regulation (EC) No 70/2001, Regulation (EC) No 68/2001
(EC)
2204/2002
Regulation
No 1628/2006 are repealed.

and Regulation

(EC) No

Article 35

Transitional provisions

1.
This Regulation shall apply to aid granted before its entry
into force, if the aid fulfils all the conditions laid down in this
Regulation, with the exception of Article 9, paragraphs 1 to 3.

2.
Any aid granted before [31 December 2008], which does
not fulfil the conditions laid down in this Regulation but fulfils
the conditions laid down in Regulation (EC) No 70/2001, Regu-
lation (EC) No 68/2001, Regulation (EC) No 2204/2002 or
Regulation (EC) No 1628/2006 shall be exempt from the notifi-
cation requirement of Article 88(3) of the Treaty.

Any other aid granted before the entry into force of this Regu-
lation aid which fulfils neither the conditions laid down in this
Regulation nor the conditions laid down in one of the Regula-
tions mentioned in the previous paragraph, will be assessed by
the Commission in accordance with the relevant frameworks,
guidelines, communications and notices.

At the end of the period of validity of this Regulation, any
3.
aid schemes exempted under
remain
exempted during an adjustment period of six month, with the
exception of regional aid schemes. The exemption of regional
aid schemes under Regulation (EC) No 1628/2006 shall expire
at the date of expiry of the approved regional aid maps.

this Regulation shall

Article 36

Entry into force and applicability

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

It shall apply until 31 December 2013.

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

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ANNEX I

DEFINITION OF SME

Article 1

Enterprise

An enterprise is considered to be any entity engaged in an economic activity, irrespective of its legal form. This includes,
in particular, self-employed persons and family businesses engaged in craft or other activities, and partnerships or associa-
tions regularly engaged in an economic activity.

Article 2

Staff headcount and financial thresholds determining enterprise categories

1.
The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer
than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet
total not exceeding EUR 43 million.

2. Within the SME category, a small enterprise is defined as an enterprise which employ fewer than 50 persons and
whose annual turnover and/or annual balance sheet total does not exceed EUR 10 million.

3. Within the SME category, a micro-enterprise is defined as an enterprise which employs fewer than 10 persons and
whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million.

Article 3

Types of enterprise taken into consideration in calculating staff numbers and financial amounts

An ‘autonomous enterprise’ is any enterprise which is not classified as a partner enterprise within the meaning of

1.
paragraph 2 or as a linked enterprise within the meaning of paragraph 3.

2.
‘Partner enterprises’ are all enterprises which are not classified as linked enterprises within the meaning of para-
graph 3 and between which there is the following relationship: an enterprise (upstream enterprise) holds, either solely or
jointly with one or more linked enterprises within the meaning of paragraph 3, 25 % or more of the capital or voting
rights of another enterprise (downstream enterprise).

However, an enterprise may be ranked as autonomous, and thus as not having any partner enterprises, even if this 25 %
threshold is reached or exceeded by the following investors, provided that those investors are not linked, within the
meaning of paragraph 3, either individually or jointly to the enterprise in question:

(a) public investment corporations, venture capital companies, individuals or groups of individuals with a regular venture
capital investment activity who invest equity capital in unquoted businesses (business angels), provided the total invest-
ment of those business angels in the same enterprise is less than EUR 1 250 000;

(b) universities or non-profit research centres;

(c) institutional investors, including regional development funds;

(d) autonomous local authorities with an annual budget of less than EUR 10 million and less than 5 000 inhabitants.

3.

‘Linked enterprises’ are enterprises which have any of the following relationships with each other:

(a) an enterprise has a majority of the shareholders' or members' voting rights in another enterprise;

(b) an enterprise has the right to appoint or remove a majority of the members of the administrative, management or

supervisory body of another enterprise;

(c) an enterprise has the right to exercise a dominant influence over another enterprise pursuant to a contract entered

into with that enterprise or to a provision in its memorandum or articles of association;

(d) an enterprise, which is a shareholder in or member of another enterprise, controls alone, pursuant to an agreement
with other shareholders in or members of that enterprise, a majority of shareholders' or members' voting rights in
that enterprise.

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There is a presumption that no dominant influence exists if the investors listed in the second subparagraph of paragraph 2
are not involving themselves directly or indirectly in the management of the enterprise in question, without prejudice to
their rights as stakeholders.

Enterprises having any of the relationships described in the first subparagraph through one or more other enterprises, or
any one of the investors mentioned in paragraph 2, are also considered to be linked.

Enterprises which have one or other of such relationships through a natural person or group of natural persons acting
jointly are also considered linked enterprises if they engage in their activity or in part of their activity in the same relevant
market or in adjacent markets.

An ‘adjacent market’ is considered to be the market for a product or service situated directly upstream or downstream of
the relevant market.

4.
Except in the cases set out in paragraph 2, second subparagraph an enterprise cannot be considered an SME if 25 %
or more of the capital or voting rights are directly or indirectly controlled, jointly or individually, by one or more public
bodies.

5.
Enterprises may make a declaration of status as an autonomous enterprise, partner enterprise or linked enterprise,
including the data regarding the thresholds set out in Article 2. The declaration may be made even if the capital is spread
in such a way that it is not possible to determine exactly by whom it is held, in which case the enterprise may declare in
good faith that it can legitimately presume that it is not owned as to 25 % or more by one enterprise or jointly by enter-
prises linked to one another. Such declarations are made without prejudice to the checks and investigations provided for
by national or Community rules.

Article 4

Data used for the staff headcount and the financial amounts and reference period

1.
The data to apply to the headcount of staff and the financial amounts are those relating to the latest approved
accounting period and calculated on an annual basis. They are taken into account from the date of closure of the
accounts. The amount selected for the turnover is calculated excluding value added tax (VAT) and other indirect taxes.

2. Where, at the date of closure of the accounts, an enterprise finds that, on an annual basis, it has exceeded or fallen
below the headcount or financial thresholds stated in Article 2, this will not result in the loss or acquisition of the status
of medium-sized, small or micro-enterprise unless those thresholds are exceeded over two consecutive accounting
periods.

In the case of newly-established enterprises whose accounts have not yet been approved, the data to apply is to be

3.
derived from a bona fide estimate made in the course of the financial year.

Article 5

Staff headcount

The headcount corresponds to the number of annual work units (AWU), i.e. the number of persons who worked full-time
within the enterprise in question or on its behalf during the entire reference year under consideration. The work of
persons who have not worked the full year, the work of those who have worked part-time, regardless of duration, and the
work of seasonal workers are counted as fractions of AWU. The staff consists of:

(a) employees;

(b) persons working for the enterprise being subordinated to it and deemed to be employees under national law;

(c) owner-managers;

(d) partners engaging in a regular activity in the enterprise and benefiting from financial advantages from the enterprise.

Apprentices or students engaged in vocational training with an apprenticeship or vocational training contract are not
included as staff. The duration of maternity or parental leaves is not counted.

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Article 6

Establishing the data of an enterprise

In the case of an autonomous enterprise, the data, including the number of staff, are determined exclusively on the

1.
basis of the accounts of that enterprise.

2.
The data, including the headcount, of an enterprise having partner enterprises or linked enterprises are determined
on the basis of the accounts and other data of the enterprise or, where they exist, the consolidated accounts of the enter-
prise, or the consolidated accounts in which the enterprise is included through consolidation.

To the data referred to in the first subparagraph are added the data of any partner enterprise of the enterprise in question
situated immediately upstream or downstream from it. Aggregation is proportional to the percentage interest in the
capital or voting rights (whichever is greater). In the case of cross-holdings, the greater percentage applies.

To the data referred to in the first and second subparagraph are added 100 % of the data of any enterprise, which is
linked directly or indirectly to the enterprise in question, where the data were not already included through consolidation
in the accounts.

3.
For the application of paragraph 2, the data of the partner enterprises of the enterprise in question are derived from
their accounts and their other data, consolidated if they exist. To these are added 100 % of the data of enterprises which
are linked to these partner enterprises, unless their accounts data are already included through consolidation.

For the application of the same paragraph 2, the data of the enterprises which are linked to the enterprise in question are
to be derived from their accounts and their other data, consolidated if they exist. To these are added, pro rata, the data of
any possible partner enterprise of that linked enterprise, situated immediately upstream or downstream from it, unless it
has already been included in the consolidated accounts with a percentage at least proportional to the percentage identified
under the second subparagraph of paragraph 2.

4. Where in the consolidated accounts no staff data appear for a given enterprise, staff figures are calculated by aggre-
gating proportionally the data from its partner enterprises and by adding the data from the enterprises to which the enter-
prise in question is linked.

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ANNEX II

FORM FOR THE PROVISION OF SUMMARY INFORMATION FOR RESEARCH AND DEVELOPMENT UNDER
THE EXTENDED REPORTING OBLIGATION LAID DOWN IN ARTICLE 9(4)

1. Aid in favour of (name of the undertaking(s) receiving the aid, SME or not):

2. Aid scheme reference (Commission reference of the existing scheme or schemes under which the aid is awarded):

3. Public entity/entities providing the assistance (name and co-ordinates of the granting authority or authorities):

4. Member State where the aided project or measure is carried out:

5. Type of project or measure:

6. Short description of project or measure:

7. Where applicable, eligible costs (in EUR):

8. Discounted aid amount (gross) in EUR:

9. Aid intensity (% in gross grant equivalent):

10. Conditions attached to the payment of the proposed aid (if any):

11. Planned start and end date of the project or measure:

12. Date of award of the aid:

FORM FOR THE PROVISION OF SUMMARY INFORMATION FOR AID FOR LARGE INVESTMENT PROJECTS
WHERE THE AID DOES NOT EXCEED THE THRESHOLDS REFERRED TO IN ARTICLE 9(4)

1. Aid in favour of (name of the undertaking(s) receiving the aid):

2. Aid scheme reference (Commission reference of the existing scheme or schemes under which the aid is awarded):

3. Public entity/entities providing the assistance (name and co-ordinates of the granting authority or authorities):

4. Member State where the investment takes place:

5. Region (NUTS 3 level) where the investment takes place:

6. Municipality (previously NUTS 5 level, now LAU 2) where the investment takes place:

7. Type of project (setting-up of a new establishment, extension of existing establishment, diversification of the output
of an establishment into new additional products or a fundamental change in the overall production process of an
existing establishment):

8. Products manufactured or services provided on the basis of the investment project (with PRODCOM/NACE nomen-

clature or CPA nomenclature for projects in the service sectors):

9. Short description of investment project:

10. Discounted eligible cost of investment project (in EUR):

11. Discounted aid amount (gross) in EUR:

12. Aid intensity (% in GGE):

13. Conditions attached to the payment of the proposed assistance (if any):

14. Planned start and end date of the project:

15. Date of award of the aid: