IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 01 Jan 2010 | Removal date: 01 Jan 2012
Still in force

Interest payment subsidy

On 21 April 2009, the Czech Republic notified a temporary aid scheme ("Ceský prechodný rámec") for granting limited amounts of compatible aid under the Temporary Framework for State aid measures to support access to finance in the current financial and economic crisis".
 
According to the Czech Statistical Office reportindustrial output fell by 23.3% year-on-year in January 2009, showing a fourth straight monthly decrease. Construction output in constant prices dropped by 11.1%. Orders in the industry fell by 26.6% in January 2009. Adjusted for the number of workdays, industrial production went down by 21.5%. The Czech authorities expect a GDP decrease by 2% this year with unemployment around 10%.
 
The Czech authorities adopted a national framework "Ceský prechodný rámec" aimed at remedying a serious disturbance in the economy of Czech Republic by boosting the demand side of the economy.
 
"The aid will be provided in the form of transparent forms of aid, as defined by the General Block Exemption Regulation, and in particular, in the form of direct grants, reimbursable grants, interest rate subsidies, subsidized public loans with an element which is calculated on the basis of the communication on the revision of the method for setting the reference and discount rates (2008/C14/02) and public guarantees where the aid element is calculated either on the basis of notified methodologies, or on the basis of the safe harbor premiums laid down in the annex A to the amended Temporary Framework." (par. 6 of the official letter from the EC to Czech Republic - Brussels, 07.05.2009 C(2009)3782).
 
The scheme applies to SMEs and large firms. The budget of the scheme is approx. EUR1 billion. The Czech authorities estimate the number of beneficiaries will be over 1000 firms.
 
The Commission stated that the notified measure constitutes state aid within the meaning of Article 87 (1) of the EC Treaty and gave the following assessment:
 
 "State resources are involved in the notified scheme since the aid is granted from national, regional and local resources, via the respective aid granting authorities at all levels. The measure is selective since aid is awarded only to certain undertakings. The measure conveys an advantage by making available limited amounts of compatible aid which would not be available to the beneficiaries without the measure. The measure affects trade between Member States since the scheme is not limited to beneficiaries which are active in sectors where no intra-community trade exists. The measure distorts or threatens to distort competition." (par. 22-26 of the letter).
 
Article 87(3)(b) of the EC Treaty enables the Commission to declare aid compatible with the Common Market if it is "to remedy a serious disturbance in the economy of a Member State." This aid has to be applied restrictively and must tackle a disturbance in the entire economy of the Member State according to the interpretation of the Article 87(3)(b) by the Court of First Instance.
 
The Commission referred to its Communication on the financial crisis (Temporary Framework) and concluded that the Measure complies with the conditions laid therein. Therefore, despite the measure constituting State aid pursuant to the Article 87(1) EC, it is compatible with the Common Market according to the Article 87(3)(b) EC Treaty. The Commission raises no objections against the measure at issue and authorizes it as emergency intervention in the face of the current financial crisis. (par.28-33 of the letter).
 
Prolongation of Czech limited amounts of compatible aid scheme - State aid n° SA.32664
 
On 3 March 2011 the Czech authorities notified the prolongation of the existing aid scheme "Limited amounts of compatible aid".
"The aid will not raise the total amount of aid received by the undertaking during the period from 1 January 2008 to 31 December 2011 to a level above the ceiling of EUR 500 000. The expected budget of the prolonged scheme is that in 2011 additional aid to be paid out will not exceed CZK 1 billion (approximately EUR 40 million). The scheme will enter after the approval of the Commission and expire on 31 December 2011". (par. 2-6 of the official letter from the EC to Czech Republic -Brussels, 06.04.2011 C(2011)2505 final)
The Commission has accordingly decided to consider the notified prolongation of the aid scheme as compatible with Article 107(3)(b) of the TFEU.
 
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory
 
 

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