Transcript (a) regions

Regional State aid
Regional aid guidelines
2007-2013
Prague
April 2006
DG Competition
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Main policy objectives
 Concentration of regional aid to
investment in the least favoured regions
 Competitiveness and growth of all
European regions, including flexibility for
Member States and regions to pursue
local regional policy
 Continuity; a smooth transition from the
current rules
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Current rules: RAG 2000-2006
 Basic principle: exceptional nature of
regional aid
Overall coverage of 42.7% of Community
population (EU-15)
 Criteria for allocating the Community
ceiling between Member States
 Criteria for selection of regions:

Article 87(3)(a) less than 75% EU GDP/cap.
Broad coherence with objective 1.
 Article 87(3)(c) based on indicators chosen
by MS. No coherence with Objective 2.

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Impact of enlargement
 Overall coverage increased from
42.7% (EU-15) to 52.2% (EU-25)
 (a) regions from 22.0% to 34.2%
 (c) regions from 20.7% to 18.0%
 Coverage would rise to 55.1% in EU 27
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The context of the revision
 The current maps expire on 31.12.2006
 DG COMP made use of
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
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
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Conclusions of European Councils:
“less and better targeted aid”
Comments submitted by Member States;
Consultations with EP and CoR
Experience with the present RAG;
Literature on the economics and
effectiveness of regional aid
The Third Cohesion report: convergence,
regional competitiveness and employment,
and European territorial co-operation
The different classes of regions post 2006
 Article 87(3)(a) regions
ie less than 75% average EU- 25 GDP/cap
 Statistical effect regions
(‘phasing out’ regions)
ie less than 75% average EU-15 GDP/cap
(82.2% EU-25 GDP/cap)
 Economic development regions
(ex (a) regions with more than 75% average
EU-15 GDP/cap
 Low population density regions
less than 12.5 inhabitants km²
 Possibly other Art 87(3)(c) regions
 Non-assisted regions
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Population coverage under the
RAG 2007-2013
Proposed coverage EU 25
42% + 50% safety net
43.1%
 Article 87(3)(a)
27.7%
Statistical effect
3.6%
Economic development
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+ low population density
4.0%
Additional (c) allocation
6.7%
50% Safety Net
1.1%
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Aid in Areas eligible for Article 87(3)(a)
 Aid for large companies in NUTS II regions
with GDP/cap below 75% of the EU-25
average



GDP below 45%: 50% gross
GDP below 60%: 40% gross
GDP below 75%: 30% gross
 Bonuses
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
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Small companies + 20%
Medium-sized companies + 10%
Aid in non-assisted regions
 No regional investment aid for large
enterprises
 Greater flexibility for R&D, innovation,
environmental investments, training etc
 Significantly more flexible regime for
SMEs
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Regional aid in the Czech Republic 2007-13
Art. 87(3)(a)
GDP % EU-25
Aid intensity

Strední Morava
52,03
40%

Severozápad
53,29
40%

Strední Cechy
54,35
40%

Moravskoslezsko
55,29
40%

Severovýchod
55,59
40%

Jihovýchod
58,17
40%

Jihozápad
60,41
30%
 Total population coverage 2007-2013 88,6 %
 7.7% transitional additional coverage 2007-2008
for the Prague region (GDP 147,2%)
under Art.87(3)(c); intensity 10%
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Transitional provisions
 Phasing in of reductions in aid intensity,
for:

(a) regions > 15% reduction

economic development regions
 Transitional safety net; 66% of current (c)
coverage for 2 years
 Two years to phase out operating aid
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RAG, scope and sensitive sectors
 No major changes to scope:
RAG apply to all sectors except:

Coal, Fisheries, Production of agricultural
products
 Prohibitions on regional investment aid:

Steel (except SMEs), Synthetic fibres
 Apply subject to special rules to

Transport, shipbuilding, agricultural
processing and marketing
 No other sensitive sectors for investment
aid
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Conditions for granting regional
investment aid – main changes
 Clarification of definition of initial
investment
 New rules on incentive effect
 Maintenance of the investment for at least
5 years (reduced to 3 years for SMEs)

Member States may impose longer
periods
 Rules on discounting
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Eligible expenses for investment aid –
main changes
 Land, buildings, plant and machinery
no ‘standard base’
 Clarification of rules on leasing
 ‘Moveable’ assets should be new
exceptions; SMEs and takeovers
 Consultancy costs for SMEs
 More generous treatment of intangible assets:
up to 50% of eligible costs for large firms
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Large investment projects
 Integration of MSF into RAG
 Automatic scaling down mechanism for eligible
expenses over € 50m

€ 50 -100m -
50% of normal aid intensity

> € 100m
34% of normal aid intensity
-
 Transparency mechanism for eligible expenses > €
50m
 Notification threshold – aid exceeds maximum
allowed for a project with € 100 m eligible expenses
 In depth assessment of investment aid where;
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
Beneficiary has more than 25% market share or

Capacity increase >5% in a declining market
Operating aid
 Permanent handicaps of the outermost areas

Possibility of a ‘safe-harbour’ for operating aid in
outermost regions, up to 10% of turnover.
 Permanent transport aid in the outermost and low
population density areas
 Permanent aid to offset depopulation in the least densely
populated areas
 Temporary and degressive operating aid to offset
bottlenecks in 3(a) areas
 Exclusion of operating aid to financial services sector
 Transitional phasing out of operating aid in areas loosing
3(a) status over 2 years
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Enterprise aid
 New form of aid to encourage business start-ups in
the assisted areas
 Widely defined eligible expenses in first five years
of start-up
 Maximum € 3m per enterprise in (a),
€ 2m per enterprise in (c)
 € 1m bonus for (a) regions < 50% EU-GDP, low
population density regions and islands
 Intensities
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years 1-3
years 4-5
(a)
35%
25%
(c)
25%
15%
Next steps
 Adopted by Commission, end 2005
 Proposals for appropriate measures
 Maps approved by COM,
1st semester 2006
 Exemption regulation for transparent
regional investment aid, Oct 2006
 Examination of regional aid schemes 2nd
semester 2006
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Transparency
 Obligation to publish all regional aid schemes
on the internet
Possibility to exclude costs incurred before
publication of the scheme from eligible costs
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