In addition to the grant ceilings and maximum grant levels that apply to individual Options within Rural Priorities (and which are set out in the Option guidance on the website), the amount of grant payable for certain activities can also be limited because of rules applied by the European Commission in relation to State Aid.
The types of activities most likely to be affected by limitations on State Aid are non-agricultural, commercial activities. Please see attached guidance on how to work out if a particular project or activity is likely to be affected.
This guidance is intended to help Case Officers and applicants understand how these restrictions are being applied to Rural Priorities.
What is State Aid?
'State Aid' is help, including grant funding, which is given to undertakings to enable them to engage in commercial activity. The term 'undertakings' can include businesses, groups and individuals.
The European Community is founded on free market principles so starts from the premise that State Aid is undesirable because it can distort a free market. However, the European Commission (EC) recognises that there need to be some exceptions made.
What is De Minimis?
One of the exceptions accepted by the EC is the payment of de minimis funding. The EC considers that public funding to a single recipient up to a certain limit (the de minimus limit) over a 3 year period has little impact on trade and competition, and is, therefore allowable without special permission. This approach offers the greatest flexibility in the level of grant payable to the widest range of activities, and will therefore be adopted for most projects approved under Rural Priorities.
The current De Minimis Regulation enables aid of up to €200,000 to be awarded to a single undertaking over a 3 year period. However, under the Temporary State Aid framework, the European Commission has introduced a temporary new measure enabling a limited but higher amount of aid to be given as compatible State Aid. Thus the temporary limit has been raised to €500,000 per business, over a rolling 3-year period. This only applies to applications which receive approval on or before 31 December 2010, and is subject to the de minimis limitations as described here.
This limit is not in addition to the €200,000. For example, if an applicant has already been awarded funding under Rural Priorities up to the previous State Aid de minimis limit, an additional €300,000 may be available to fund other State Aid-qualifying developments.
The up to date exchange rate can be found on the EC website
Exclusions to De Minimis
This type of de minimis aid cannot be given for export related activities (except attendance at trade fairs), agriculture (covered under separate regulation) or aid favouring domestic goods over imports.
How to adopt the De Minimis approach
Funding for those elements of a project which meet all of the State Aid criteria will be restricted to the de minimis limit. There may be instances where some activities within a project are subject to State Aid restrictions and others which are not, so some affected projects may have total funding awarded which is above the limit.
Applicants also need to declare if they have received any other de minimis State Aid funding within the last 3 years. We will inform the recipient explicitly (at contract stage) that they are being awarded de minimis, for their future reference. The letter will include the value of the award in Euros.
How to work out if State Aid Rules Apply