In the dynamic landscape of state aid, the De Minimis regulation has been put in place to ensure a fair competition between enterprises across the European Union. However, significant updates to the regulation have recently been made. Looking at the future, such changes promise to reshape how companies navigate this important aspect of state aid. With this article, an overview of the regulation has been made.
What is considered as state aid ?
State aid concerns various forms of assistance or support provided by governments or public authorities using state resources. Ranging from direct grants and subsidies to tax advantages and loan guarantees, this aid aims to benefit specific – individual – companies. However, if not closely controlled, it can distort fair competition in the EU. To tackle this, state aid regulations within the European Union’s Single Market are in place to ensure fair competition among businesses. Typically, all state aid requires the approval of the European Commission thereby preventing unfair advantages for certain companies, maintaining a level playing field, and promoting fair competition across the EU.
However, an exception exists for aid falling below a specified threshold, since they are considered to have no impact on competition and trade in the Single Market. In these circumstances, the De Minimis regulation applies. Understanding the De Minimis regulations before applying for state aid is crucial. Indeed, if a company fails to comply with these regulations (e.g., by surpassing the De Minimis aid threshold), the received assistance might be categorised as illicit state aid and repayment of the benefit is required. Furthermore, this could also lead to legal sanctions, all of which negatively affects the company’s reputation.
Changes in the De Minimis regulation, effective from 2024
As of January 1st 2024, several crucial amendments have come into effect with regards to the De Minimis regulations:
- Increased threshold: the maximum amount of the De Minimis aid that a company can receive over three consecutive years has been raised from € 200 k to € 300 k. Fortunately for the transport sector, this new threshold is also applicable to them as they previously faced a lower threshold of € 100k.
- Shift in reference period: the calculation period for the received aid has transitioned to a “rolling period” of the full three years. For example, in the case of an aid decision on February 1, 2024, all De Minimis aid granted from February 1, 2021 to February 1, 2024 will have to be taken into consideration. This replaces the former method in which the reference period could often be significantly shorter than three years, for example, when the aid was granted at the beginning of a financial year, the reference period was only two years and a few months.
- Group affiliation: aid allocation remains calculated per Member State for all companies on a consolidated basis. This means the collective group can receive a maximum of € 300 k De Minimis aid per Member State.
An overview of future regulations planned
Looking ahead, forthcoming changes are set to reshape how companies engage with the De Minimis regulation:
- Mandatory register implementation: by January 1st 2026, the European Commission plans to introduce a mandatory central register specifically dedicated to recording the De Minimis aid, thereby replacing the “declaration of honour” which is now in place. This register aims to streamline processes and reduce administrative burdens. For companies on the one hand, the reporting obligations and self-monitoring efforts of their compliance are reduced. For governmental bodies on the other hand, the control of the De Minimis ceilings are facilitated.
- Transition period and ongoing compliance: until the register has been active for three consecutive years, the existing practice of declaring aid via a “declaration of honour” will persist. However, once the register is operational for the specified duration, companies are not required to complete a “declaration of honour”, potentially from January 1st 2029 onwards.
Closing remark
The changes regarding the De Minimis regulation mark a shift towards a more streamlined and transparent process in managing the De Minimis aid. Businesses operating within the European Union will have to remain vigilant to ensure compliance with the evolving regulations.
If you want to get more insights on the De Minimis regulation, please reach out to Tom Wallyn (tom.wallyn@pwc.com), or Bart Wyns (bart.wyns@pwc.com). We are happy to guide you through the dynamic state aid landscape!
