Malta: European Commission Publishes Draft State Aid General Block Exemption Regulation

Last Updated: 23 May 2013
Article by Neville Gatt

On 8 May 2013, the European Commission published for consultation the first draft of a revised General Block Exemption Regulation ("GBER") on State aid matters. The purpose of this consultation is to collect the views on the first draft of the revised GBER, which will replace the current GBER. The new draft introduces a number of proposed changes, with the main objective of clarifying and simplifying the current regime.


State funding that meets the criteria of Article 107(1) of the Treaty on the Functioning of the European Union ("TFEU") constitutes State aid and generally requires notification to the European Commission. However, the GBER, which was adopted in 2008, sets outs the conditions under which a range of State aid measures can be exempted from prior notification to the Commission. The current GBER will expire on 31 December 2013.

On 8 May 2013, the Commission published the first draft of the revised GBER.

Relevance to Malta and to your business

Malta, as a Member State of the EU, is subject to EU rules on State aid contained in Articles 107 to 109 of the TFEU and the regulations issued thereunder.

The process of notifying a proposed aid measure to the European Commission is a rather long and cumbersome process. By contrast, when the conditions of the GBER are met, the aid can be granted immediately by the Member State without requiring prior notification to, and approval from, the Commission. Member States only have to inform the Commission about the aid after granting it. Public authorities would, therefore, generally consider whether a proposed State aid measure satisfies - or could be adjusted to satisfy - the conditions for exemption laid down in the GBER.

State aid is not just a public sector concern

It is also the responsibility of those businesses which are recipients of public funding to understand their State aid position. If a business receives unlawful State aid, it may be required to pay back the aid it received plus interest. This could have negative consequences on the business' cash flow, as well as on its reputation.

It is therefore important to identify whether any public funding received constitutes State aid, whether such aid requires prior notification, or whether it is exempted from such notification.

The GBER, in both its current and proposed future form, is particularly significant for SMEs since all categories of aid covered by it can be granted to SMEs, and some are specially designed for them.

Proposed changes to the GBER

The Commission is proposing to clarify and simplify the GBER, extend its scope and introduce new safeguards. The proposed main changes to the general provisions of the GBER are the following:

Modification of the notification thresholds

- Increase of the notification thresholds for R&D measures (from €20m to €40m for fundamental research; from €10m to €20m for industrial research; and from €7.5m to possibly €10m for experimental development projects); and risk finance aid (the maximum annual investment tranche of €1.5m will be replaced by an overall investment cap of €10m).

- Introduction of a new exemption for research infrastructure (up to a possible threshold of €15m per infrastructure).

Notification of very large schemes

- Notification of very large schemes whose annual public expenditure cumulatively exceeds 0.01% of national GDP and €100m.

- Introduction of a clause to avoid circumvention by splitting schemes.

Incentive effect

- Options for simplifying how to check that the aid has an incentive effect.

Transparency obligations

- Requirement for Member States to publish key information on a single website, including the name of beneficiaries and the aid amounts.

Withdrawal of the benefit of the block exemption

- A new sanction for failure to comply in the form of withdrawal of the benefit of the block exemption.

The Commission is also proposing changes to the different categories of aid covered by the GBER. In this regard, the main changes are the following:

Regional aid

- In assisted regions, regional aid to SMEs may be granted for initial investments, while for large enterprises this may only be granted for initial investments in favour of new activities.

- New provisions to promote European Territorial Cooperation projects.

- New provisions setting out the conditions for regional aid for broadband network development.

Aid for SMEs

- Revision of risk capital rules to extend their scope, simplify the rules and provide more flexibility.

- Promotion of revolving aid instruments.

- Simpler provisions for start-up aid to SMEs.

Aid for research, development and innovation

- Simpler conditions for research, development and innovation aid.

- Introduction of two categories of aid: research infrastructures and innovation.

Training and employment aid

- Introduction of a single category of training aid.

- Extension of the scope of block exemption for aid for the employment of disadvantaged and disabled workers.

Environmental protection aid

- Facilitating the granting of aid in the areas of resource efficiency, climate change and energy measures.

- A new category to allow support for efficient district heating and cooling.

- New provisions on aid for the remediation of contaminated sites where the polluter cannot be identified.

Next steps

The Commission is inviting institutions, public authorities, citizens, companies and organisations to contribute to the GBER consultation until 28 June 2013.

The consultation page may be found at: .

The Commission will then prepare its proposal for a revised GBER later this year.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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