The ESPON Programme Peter Mehlbye Meeting Regional Offices, DG Regio 18 November 2009 in Bruxelles.
State aid rules for RDI Key issues / Questions identified ......K. REPPEL, Deputy Head of Unit,...
Transcript of State aid rules for RDI Key issues / Questions identified ......K. REPPEL, Deputy Head of Unit,...
Regional Policy
State aid rules for RDI
Key issues / Questions identified by practitioners in Member States
K. REPPEL, Deputy Head of Unit, Smart & Sustainable Growth, DG REGIO
V. AUGUSTIDOU, Legal Officer, DG REGIO
Disclaimer: The views expressed are those of the authors and cannot be regarded as
stating an official position of the European Commission.
Regional Policy
• Questions on
• economic v. non-economic activities
2
3
"I understand that State aid rules allow a 100%-
financing of non-economic RDI activities. How do I
distinguish economic and non-economic activities?"
4
• Public funding (100%) of non-economic activities is not
State aid - but it is necessary to clearly separate from
any economic activities (RDI Framework 2014, para 18)
• On distinction between economic and non-economic: – List of non-economic activities in para 19 RDI Framework 2014
– Paras 12-37 of the Notion of Aid Notice referring to Court judgments
and decisional practice
• Economic: "offering goods or services on a market" /
construction of an infrastructure commercially exploited
5
"Is the obligation of Research Organisations, to
prove the economic/non-economic nature of their
activities, mandatory for both segments, or,
is it mandatory only for Research Organisations
with economic activities?"
6
• SA rules apply only to RO involved in economic
activities
– do not apply to RO involved solely in non-economic
activities
• But RO must be able to demonstrate that public funding
benefits solely non-economic activities (p.2.1.1. RDI
Framework)
• If RO has ancillary economic activities
– Separate accounts: due allocation of costs, funding and
revenues
– demonstrate respective shares in total overall activity
• so that you can verify compliance with 20% threshold
7
"Can the funding body presume that research
organizations with public funding only and no (or
negligible) own income have no economic activity –
with no need for further basis?
If these research organizations, do not have full
analytic accountability of inputs, but only of financial
resources, can financial statements be considered
sufficient to demonstrate the ancillary nature of any
economic use?"
8
• Point 20 RDI Framework defines "ancillary
economic activity". – The 20% threshold must be assessed on an annual basis at
the level of the "relevant entity" regardless of (separate) legal
personality.
• Neither GBER nor RDI Framework provide for any
mandatory means to measure the "overall annual
capacity share" of economic activities. – Possible to rely on indicators e.g. time of use or total value of
inputs consumed yearly.
– Financial statements are not thus sufficient to demonstrate the
ancillary character of economic activities
9
"In regards to point 20 of the RDI Framework
(Framework for State aid for research and
development and innovation), are there any
examples of how to/how not to measure the "overall
annual capacity share" of economic activities, that
we could use when considering how to set up the
system of monitoring the use of RI.?"
10
• It's possible to rely on indicators such as the time
of use or the total value of inputs (such as
material, equipment, labour and fixed capital)
consumed yearly.
• The share of the overall annual capacity of publicly
funded research infrastructures that will be used
for economic activities should be estimated on the
basis of the best available information at the time
of awarding the aid.
11
"If we grant funds for RI as non-State aid (to RO for
their non-economic activities) which contains new
building, for how long do we have to monitor their
activities to be in line with regulation above? "
12
• Insofar as the eligible costs are investments
costs relating to the construction or upgrade of
RI, the period to be considered for the purposes
of monitoring the share of the overall annual
capacity that is used for economic activities
would be the lifetime period of the relevant
assets.
13
"The obligation to assess the threshold of 20% of
economic activities at the relevant entity's overall
annual capacity, does it require analyses at
different levels:
– The signatory of the funding agreement
– The developer/owner of the RI (not always a legal
entity)
– The RI itself
– If applicable, the operator and, in any case, the
end-users. ?"
14
• Indeed the 20% threshold for considering that an
economic activity is limited in scope will be
assessed at the level of the "relevant entity":
– i.e. every individual entity (such as a laboratory or
department) that, with the organisational structure,
capital, material and workforce that it effectively
has at its disposal, could alone perform the
activity concerned,
– regardless of whether or not such "relevant entity"
has a separate legal personality.
15
"Could technology transfer, under specific
conditions, be considered as a non-economic
activity?"
16
• Technology transfer may be a non-economic
activity
– where it is conducted by a RO/RI (or jointly with other
similar research entities) and
– where any net income is reinvested in the primary
activities of that RO/RI.
17
"What does self-sustainability of economic activities
(use of own resources) concretely mean? "
18
• It means that operating aid can be given to e.g.
innovation clusters, for a limited period of time,
until they become able to self-finance their
activity.
• The aid is granted to the operator of the cluster
and similar conditions to RI as regards access
and pricing are imposed.
19
"If the 20% ceiling is exceeded, the management authority can
choose between two mechanism: the claw-back or asses the
project under standard State aid rules (GBER - art. 26).
In the second hypothesis, shall we apply the state rules
conditions at this stage, i.e., check the incentive effect and limit
the public funding to eligible costs? Alternatively, is it advisable,
in any case, to limit the funding to eligible costs and check out
the incentive effect at instruction stage?"
20
• It's recommended to use the claw-back mechanism
which is easy to use. If you reassess the whole public
funding from the start, it is much more complex work.
In any event, it is difficult to apply the incentive effect
in a retroactive way.
21
"We expect that our planned research infrastructure
will be used only to a small extent for economic
activities. How should we determine if our research
infrastructure will stay below the 20% ancillary
threshold for economic activities?"
22
• RDI financing can fall outside State aid rules in its entirety
if the economic use of research infrastructure is purely
ancillary (Recital 49 GBER 2014, para 20 RDI Framework 2014)
– Rules require i.a. that economic use must be < 20% of
relevant annual capacity
• Capacity-share can be determined in several ways
– e.g. number of working hours, share of input; however,
revenues are typically not appropriate for measuring capacity
• Reasonable prognosis necessary
– Article 26(7) GBER: monitoring and claw-back mechanism to
address situation where economic share increases
23
"How do I avoid spill over of public funding for non-
economic activities to economic activities?"
24
• Activities need to be clearly separated so that
cross-subsidisation of economic activities is
effectively avoided
• Separation is done by keeping separate accounts
in line with the principles governing the
Transparency Directive 2006/111/EC ("functional
separation")
25
"On the grounds of non-economic character of
knowledge transfer activities, as defined in the RDI
Framework, does the concept of “such entities”
include other research/knowledge dissemination
organisations only, or does it comprehend also
enterprises,
provided that [jointly with, or on behalf of
other such entities], all profits from those
activities are reinvested in the primary
activities of the research organisation or
research infrastructure?"
26
• Knowledge transfer activities can only be considered
non-economic and thus its financing fall outside of
State aid rules when the two cumulative conditions
spelled out in Point 19 b) of the RDI Framework are
fulfilled
– activities performed by a research organisation &
– all revenues generated reinvested in primary
activities
• Otherwise, knowledge transfer activities need to be
considered as economic activities.
27
Other Questions
28
"If, because of the conditions of the regime and the
specificity of the project, it is not possible to apply the
regulation on RI, is it acceptable to apply the aid for
local infrastructure framework (as long as the project
contribute to improving the business, consumer
environment and modernising and developing the
industrial base)?
Indeed, the regime shall not apply to aid for
infrastructures that is covered by other sections of the
GBER (GBER – art. 56), but, on the other hand,
managing authorities are supposed to apply the most
favourable regime."
29
• You cannot use Article 56 GBER as a legal base
if you can use another one.
• The managing authority could either modify the
project parameters to fit under the RI –relevant
rules or they could notify.
30
"What can we do to avoid State aid in technology
transfers?"
31
• Technology transfers (from a public entity, or when
developed with public resources) to an undertaking
may involve State aid if transfer not adequately
remunerated
• Ways for ensuring an adequate remuneration:
– Undertakings pay the market price
– In RDI cooperation, the contribution to the joint research
may be sufficient
• Advisable that cooperation contracts/agreements
explicitly mention remuneration for the (potential) transfer
of technology / IP rights
32
“Can you give us an example of an independent
collaborative R&D under point 19 a) of the RDI
Framework and the consideration that a granting
authority should take into account when deciding
if the specific activities are of a non-economic
nature?"
33
• Paras. 19(a) & 21 of RDI Framework:
– independent collaborative R&D implemented by a RO =
non-economic activity
• provided that the project meets the requirements of para.
27 of the RDI Framework and is of an independent nature
i.e. the topic of the research is fully in line with the
institutional mission of the ROs/Ris (no influence
regarding research goals, e.g. new materials)
– contract research by a RO = economic activity.
34
"I heard that the block exemption cannot be applied
to sectorial schemes. Can my innovation scheme fit
under the GBER even if it is targeting only a few
sectors?"
35
• The RDI GBER section can apply to sectorial
schemes
• However, the regional aid section of the GBER does
not apply to sectorial schemes:
o a scheme is considered sectorial only if it applies to
less than 5 classes of the NACE Rev.2 statistical
classifications (Art. 2(45) GBER 2014)
o Ad-hoc aid is possible
o State aid notifications can allow for sectorial schemes
as regional aid
36
"Is the requirement for a contribution of at least
10% in Article 26(4) GBER meant to be 'per
undertaking' or can this be done by several
undertakings together?
Can contributions in the form of land and buildings
qualify as contribution under Article 26(4) GBER?"
37
• Art.26 GBER applies to investment aid for research
infrastructures (RI)
• Access to RI has to be open to several users but
undertakings which have financed at least 10% of
the investment cost may get preferential access
(under more favourable conditions)
o The 10%-contribution applies 'per undertaking'
o Contributions in the form of land and buildings can
qualify for achieving the 10% participation
38
"Innovations clusters:
we understand that the legal entity operating the
cluster can be the only beneficiary. Must that entity
also be the owner of the infrastructure?
Would it be possible (and how) to allow for some of
the ownership of the cluster infrastructure remain in
the public domain?
39
• Art. 27 GBER allows for both investment & operating aid
– but only entity eligible as aid beneficiary is cluster
operator (Art. 27(2) GBER); if operator & investor/owner are different
legal entities, no investment aid can be granted.
• If operator pays concession fees to owner for using
infrastructure = operating cost of the cluster
– but concession fees not included in eligible costs of
innovation aid (Art. 27(8) GBER)
• Investment costs borne by undertakings would thus not
be eligible for innovation cluster investment aid.
– but could benefit from preferential access (under more
favourable conditions)
40
"Innovations clusters:
Is it possible to create a new cluster with some
members that are also members of other slightly
different clusters under which they have received
already cluster aid ?
In such a context, how to read the individual
threshold of 7.5 million euro foreseen in Art. 4
GBER?
41
• Art. 27 GBER: aid is granted to entity operating the
cluster, not its members.
• If new cluster overlaps with existing one and the aid
to the new cluster brings the total aid above
notification threshold:
– circumvention of the applicable GBER threshold
– aid to new cluster (above GBER threshold) and should
be notified to the Commission
• Operating aid to cluster operator up to 10 years max
– existing clusters: any past aid must be taken into
account, i.e. calculation since date of first aid granted
42
"Innovations clusters:
Can a combination of article 26 and 27 GBER be a
solution for the granting of aid to one beneficiary
(e.g. the public body partner) for the infrastructure
based upon article 26 & the operating aid of the
cluster via article 27 for the cluster operator?
Is a combination of aid based upon the RDI
Framework and Articles 26-27 GBER possible for a
single beneficiary?”
43
• The facilities of an innovation cluster do not normally
qualify as a research infrastructure (Article 2(91) GBER)
as they are not used by the scientific community to
conduct research
• Any investment aid for the construction/upgrade of
innovation cluster (including all its assets) falls under
Article 27GBER; and
– the notification threshold laid down in Article
4(1)(k)GBER must not be circumvented.
44
"Article 2 (87) in the GBER provides a definition of
´feasibility study´, explaining that it concerns ´the
evaluation and analysis of the potential of a
project…”.
Is it correct to understand that the projects in
question are only those which are preparatory to
industrial research or experimental development
activities?
45
• Feasibility studies, have to relate to a research and
development project complying with at least one of
the research categories mentioned in Article 25 (2)
(a) – (c) of the GBER
– Fundamental research
– Industrial research
– Experimental development
46
"In Article 28 GBER 2014 the definition of
'innovation advisory services' does not require that
services are related to an 'innovative' technology
transfer.
Is it therefore sufficient to verify that the services
are related a technology transfer?"
47
• For Article 28 GBER to apply, it is necessary that the
support is for 'innovation'
• Even if definition in Article 2(94) GBER does not
repeat word 'innovation', requirement that services
are related to innovation, results from the scope of
exemption set out in Article 28(1) GBER
• Therefore, if 'innovation advisory services' are related
to a technology transfer, then the technology to be
transferred needs to be innovative
48
"Article 2 (94) GBER provides a definition of
´innovation advisory services´.
Could you confirm that one of the activities eligible
for support is consultancy, assistance and training
in the field of knowledge transfer, and that
‘knowledge transfer’ in this context corresponds to
the definition provided in the RDI Framework (section
1.3 v) ?"
49
• ‘Innovation advisory services’ means consultancy,
assistance and training in the field of knowledge
transfer (indeed in the meaning of the definition
covered by the RDI Framework), acquisition,
protection and exploitation of intangible assets, use
of standards and regulations embedding them.
• Costs incurred by SMEs when procuring consultancy
services fulfilling the above definition are considered
as eligible under Article 28 GBER (Innovation aid for
SMEs).
50
“ERDF Regulation (No. 1301/2013) encourages MS to
strengthen RDI in various ways (Article 5.1 b), e.g. funding of
so-called test beds, i.e. where operators (public & private)
meet to network, test innovative solutions to problems of
mutual interest, etc.
Which GBER Articles would be advisable to apply in
relation to the setting up of such a `test bed facility,
regarding investments and staff costs?
Are there any workable alternatives to aid for
innovation clusters (Article 27 GBER)?”
51
• Aid for innovation clusters (Article 27 GBER) is the only
option to support ‘test beds’ under GBER, combined with:
– aid to participating SMEs under Art. 28 GBER - SME
innovation advisory and support services
– Art. 31 GBER - training aid
– Art. 25(2)(d) - feasibility studies
– Art. 22 - start up aid &
– de minimis aid
• Art. 56 of the GBER (Investment aid for local
infrastructure) – not possible option
52
"We would like to combine resources from Horizon
2020 with ERDF. What does this mean for the
calculation of the GBER notification thresholds and
for aid intensities?"
53
• H2020 are centrally managed Union resources which do not qualify as
State aid. By contrast, ERDF resources are State resources as MS
decide its use
• Where H2020 and ERDF are combined, only ERDF (+ any other
national public funding) is taken into account for calculating notification
thresholds or maximum aid intensities (see Article 8(2) GBER)
• However, most favourable funding rates may not be exceeded for the
same eligible cost
• In case of requirement of own contributions, H2020 resources do not
count as own resources
54
"In order to check the incentive effect in Seal of
Excellence projects to be funded under an
exempted GBER scheme, what is the correct point
in time when the works on the project should not
have started:
before the H2020 application, or before the written
application which is needed for the GBER based
aid scheme?"
55
• In the case of Seal of Excellence projects the
application date for funding under the Horizon 2020
SME Instrument programme is considered as the
relevant application date to the H2020 call (see Explanatory
Note on application of State aid rules to national funding schemes supporting
projects with a H2020 Seal of Excellence)
– Written application has to include the undertaking's
name and size, description of the project (incl. the start
and end dates) and its costs, location of the project and
the type of aid
56
"I need legal certainty for my project. Please tell me
how I should to set it up and draft my support
scheme to have it compliant with State aid rules"
57
• MS have flexibility on how to set up projects/schemes
• For achieving State aid compliance, MAs
– should first discuss with their national State aid contacts
– TA budget may be used for getting expert advice
(Jaspers, TAIEX Peer 2 Peer)
– Send interpretation questions to 'ECN e State aid -WIKI',
through national contact points
– contact COMP (H2 Unit – SA for RDI, IPCEI and
Environment) for pre-notification discussions
• Key part of Cohesion policy 2014-2020: increase
administrative capacity in MS in the field of State aid
58
Thank you for your attention!