ANNOUNCEMENT 31 Jul 2020

In July 2020, the European Commission approved a EUR 6 billion (approx. USD 7.1 billion) Italian state aid that provides tax credits and subordinated loan schemes to businesses in the context of the COVID-19 pandemic.  

NUMBER OF INTERVENTIONS

3

  • 3 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

SA.57289 COVID-19: Capital-strengthening measures for medium-sized companies. Available at: https://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_57289

European Commission Decision. Subject: State Aid SA.57289 (2020/N) – Italy
COVID-19: Capital-strengthening measures for medium-sized companies. Available at: https://ec.europa.eu/competition/state_aid/cases1/202032/287450_2178812_80_2.pdf

SA.59681 Italy – Covid-19 – Prolongation and amendment of SA.56963, SA.57289 and SA.57937. Available at: https://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_59681

European Commission Decision. State Aid SA.59681 (2020/N) – Italy COVID-19: Prolongation and amendment of SA.56963, SA.57289 and SA.57937. Available at: https://ec.europa.eu/competition/state_aid/cases1/20212/289795_2229929_62_2.pdf


SA.64358 ( 2021/N ) Prolongation State Aid SA.57289 (2020/N) as amended by State Aid SA.59681 (2020/N) – Italy - COVID-19: Capital-strengthening measures for medium-sized companies
https://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_64358

European Commission decision. SA.64358
https://ec.europa.eu/competition/state_aid/cases1/202134/296214_2308530_33_2.pdf

Inception date: 31 Jul 2020 | Removal date: 31 Dec 2020

Financial grant

On 31 July 2020, the EU approved a EUR 6 billion (approx. USD 7.1 billion) Italian state aid measure that provides subsidies and tax credits in relation to equity investments, tax credits, as well as subordinated debt to businesses in the context of the COVID-19 pandemic.  

The first aid component will be delivered through non-repayable subsidies of up to 20% of the amount invested by SMEs. The measure is linked to a tax credit for the investors, aiming to incentivize private investment in Italy.

The budget for the first and second components – i.e. subsidies and tax credits – amounts to EUR 2 billion (approx. USD 2.4 billion). The beneficiaries are SMEs with a 2019 turnover between EUR 5 million and EUR 50 million. No restrictions in terms of the economic sector, except that they are not financial or insurance institutions.

The European Commission highlighted that “the measure is liable to distort competition, since it strengthens the competitive position of its beneficiaries”, as well as it “also affects trade between Member States, since those beneficiaries are active in sectors in which intra-Union trade exists”.

Regardless, the Commission approved the state aid without raising objections, concluding the measure “is compatible with the internal market pursuant to Article 107(3)(b) of the TFEU”.

The state aid is approved under the Temporary Framework under the State Aid and its amendment of 2 April 2020. The European Commission adopted the Temporary Framework under the State Aid rules of the European Union on 19 March, see related state act. 

AFFECTED SECTORS

 
N/A

AFFECTED PRODUCTS

 
N/A
Inception date: 31 Jul 2020 | Removal date: 30 Jun 2021

Tax or social insurance relief

On 31 July 2020, the EU approved a EUR 6 billion (approx. USD 7.1 billion) Italian state aid measure that provides subsidies and tax credits in relation to equity investments, tax credits, as well as subordinated debt to businesses in the context of the COVID-19 pandemic.  

The second aid component will be delivered through tax credits of 50% of the losses registered in 2020, as long as they exceed 10% of the company’s net equity.

The budget for the first and second components – i.e. subsidies and tax credits – amounts to EUR 2 billion (approx. USD 2.4 billion). The beneficiaries are SMEs with a 2019 turnover between EUR 5 million and EUR 50 million. No restrictions in terms of the economic sector, except that they are not financial or insurance institutions.

The European Commission highlighted that “the measure is liable to distort competition, since it strengthens the competitive position of its beneficiaries”, as well as it “also affects trade between Member States, since those beneficiaries are active in sectors in which intra-Union trade exists”.

Regardless, the Commission approved the state aid without raising objections, concluding the measure “is compatible with the internal market pursuant to Article 107(3)(b) of the TFEU”.

The state aid is approved under the Temporary Framework under the State Aid and its amendment of 2 April 2020. The European Commission adopted the Temporary Framework under the State Aid rules of the European Union on 19 March, see related state act. 

On 23 December 2020, the European Commission issued a decision under state aid case 59681 extending the coverage period of the scheme. In particular, the tax credits can be granted for capital increases made until 30 June 2021 and can be used until 30 November 2021. These amendments are in line with the prolongation of the Temporary Framework, see related state act.

 
N/A
 
N/A
Inception date: 31 Jul 2020 | Removal date: 31 Dec 2021

State loan

On 31 July 2020, the EU approved a EUR 6 billion (approx. USD 7.1 billion) Italian state aid measure that provides subsidies and tax credits in relation to equity investments, tax credits, as well as subordinated debt to businesses in the context of the COVID-19 pandemic.  

The third aid component will be delivered through a subordinated loan scheme for small and medium-sized companies. The loan will have a maximum maturity of six years, and with have a maximum amount of 12.5% of the 2019 turnover of each company.

The budget for this third component amounts to EUR 4 billion (approx. USD 4.7 billion). The beneficiaries are medium-sized companies with a 2019 turnover between EUR 10 million and EUR 50 million. No restrictions in terms of the economic sector, except that they are not financial or insurance institutions.

The European Commission highlighted that “the measure is liable to distort competition, since it strengthens the competitive position of its beneficiaries”, as well as it “also affects trade between Member States, since those beneficiaries are active in sectors in which intra-Union trade exists”.

Regardless, the Commission approved the state aid without raising objections, concluding the measure “is compatible with the internal market pursuant to Article 107(3)(b) of the TFEU”.

The state aid is approved under the Temporary Framework under the State Aid and its amendment of 2 April 2020. The European Commission adopted the Temporary Framework under the State Aid rules of the European Union on 19 March, see related state act. 

On 16 August 2021, the European Commission approved an amendment of this measure under state act number 64358. According to the amendment, loans can be granted until 31 December 2021.  

 
N/A
 
N/A