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State Aid Rules

Information about EU state aid rules.

State aid regulations

State funding to research and knowledge dissemination organisations (research organisations) and research infrastructures can in certain circumstances constitute State aid, cf. article 107(1) in the Treaty of the Functioning of the European Union (TFEU). Therefore, it must be administered in accordance with the EU State aid regulations such as the Communication from the Commission on the Framework for State aid for research and development and innovation (2022/C 414/01), and Commission regulation no 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty (General Block Exemption Regulation (GBER)).

When does State funding constitute State aid?

Research organisations and research infrastructures are recipients of State aid if their public funding fulfils all conditions of Article 107(1) of the Treaty.

State funding to research organisations and research infrastructures could e.g. constitute State aid, if the recipient exerts an economic activity. This encompasses any activity consisting in offering goods and services on a given market, such as renting out equipment or laboratories to undertakings, or if a research infrastructure is used for supplying services to undertakings or performing contract research etc.

Where a research organisation or research infrastructure is used for both economic and non-economic activities its funding may fall outside State aid rules in its entirety, provided that the economic use remains purely ancillary, that is to say corresponds to an activity which is directly related to and necessary for the operation of the research organisation or research infrastructure or intrinsically linked to its main non-economic use, and which is limited in scope.

This can be the case, where the economic activities consume exactly the same inputs (such as material, equipment, labour and fixed capital) as the non-economic activities and the capacity allocated each year to such economic activities does not exceed 20 % of the relevant entity’s overall annual capacity.

Primary activities of research organisations and research infrastructures, in particular independent R&D for more knowledge and better understanding, including collaborative R&D where the research organisation or research infrastructure engages in effective collaboration and wide dissemination of research results on a non-exclusive and non-discriminatory basis, are generally being considered of a non-economic character.

The question of whether and under which conditions undertakings obtain an advantage within the meaning of Article 107(1) of the Treaty in cases of contract research or research services provided by a research organisation or research infrastructure, as well as in cases of collaboration with a research organisation or research infrastructure must be answered in accordance with general State aid principles.

State funding under the General Block Exemption Regulation

funding meeting the criteria in article 107(1) TFEU, including the exertion of an economic activity, constitutes State aid and requires notification to the Commission by virtue of Article 108(3) of the Treaty. However, under certain conditions laid down in the GBER, State aid can be exempted from the notification requirement. In that regard, the common provisions in chapter I together with the specific provisions for different categories of aid in chapter III are of particular importance.

The following, among other, applies concerning State aid to research infrastructures that perform economic activities:

  • Aid is granted solely for the construction and establishment or upgrade of research infrastructures, and the aid does for that reason not cover the operation period.
  • Where a research infrastructure pursues both economic and non-economic activities, the financing, costs and revenues of each type of activity shall be accounted for separately on the basis of consistently applied and objectively justifiable cost accounting principles.
  • The aid intensity shall not exceed 50 % of the eligible costs. In that context, it is the total amount of State aid for the aided activity or project or undertaking which shall be taken into account. This means, among other, that additional public funding, regardless of the source, is included herein, meaning that the eligible activities will have to be funded with at least 50 % from private enterprises.
  • The price charged for the operation or use of the infrastructure shall correspond to a market price.
  • Access to the infrastructure shall be open to several users and be granted on a transparent and non-discriminatory basis. Undertakings which have financed at least 10 % of the investment costs of the infrastructure may be granted preferential access under more favourable conditions. In order to avoid overcompensation, such access shall be proportional to the undertaking's contribution to the investment costs and these conditions shall be made publicly available.

Furthermore, the aid is required to have an incentive effect.

Aid is to be considered to have an incentive effect if the beneficiary has submitted a written application for the aid to the Member State concerned before work on the project or activity starts. The application for the aid shall contain at least the following information:

  • Undertaking's name and size.
  • Description of the project, including its start and end dates.
  • Location of the project.
  • List of project costs.
  • Type of aid (grant, loan, guarantee, repayable advance, equity injection or other) and amount of public funding needed for the project.

It should be noted that the beneficiary must not be an “undertaking in difficulty” as defined in the GBER, just as 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 granted by the same Member State illegal and incompatible with the internal market, is excluded.

 

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Danish Agency for Higher Education and Science
last modified June 23, 2024