Financial aid cannot be allocated in the case of an excluded sector, namely:

• the fishing and aquaculture sector, except for research and development aid, and innovation aid for SMEs;
• the primary agriculture sector, except for research and development aid, and innovation aid for SMEs;
• the processing and sale of agricultural products sector:
  • if the amount of the aid is established on the basis of the price or quantity of products of this type purchased from primary producers or put on the market by the businesses concerned; or
  • if the aid is conditional on being partly or entirely passed on to the primary producers.

The following types of aid are also excluded:

• aid for businesses that do not personally operate the aid-funded asset, except for aid for research infrastructures, for testing and experimentation infrastructures and for innovation clusters;
• aid to businesses in difficulty, with the exception of aid granted to innovative start-ups, provided that this aid does not treat businesses in difficulty more favourably than other businesses;
• aid for activities in relation with exports to third countries or Member States;
• aid granted on the condition that preference is given to the use of domestic products instead of imported products.

Employers who have been convicted for violating provisions prohibiting illegal work, or the employment of illegally resident third-country nationals, on at least 2 occasions in the 4 years prior to the ruling by the competent court, are excluded from benefiting from this law for a period of 3 years from the date of the ruling.

Whenever any state aid exceeds a certain threshold, the European Commission must be notified. The Luxembourg government has therefore decided not to grant any aid which exceeds the following thresholds:

• for aid for consultancy services in support of SMEs: EUR 2.2 million per undertaking, per project;
• for aid for start-ups: EUR 1 million or EUR 1.5 million for beneficiaries established in assisted areas meeting the conditions of Article 107(3)(c) of the Treaty;
• for aid for research and development:
  • if the project is predominantly fundamental research: EUR 55 million per undertaking, per project. That is the case when more than half of the eligible costs of the project are incurred through activities which fall within the category of fundamental research;
  • if the project is predominantly industrial research: EUR 35 million per undertaking, per project. That is the case when more than half of the eligible costs of the project are incurred through activities which fall within the category of industrial research or within the categories of industrial research and fundamental research taken together;
  • if the project is predominantly experimental development: EUR 25 million per undertaking, per project. That is the case when more than half of the eligible costs of the project are incurred through activities which fall within the category of experimental development;
  • if the project is a Eureka project or is implemented by a joint undertaking established on the basis of Article 185 or of Article 187 of the Treaty, the amounts referred to in points (i) to (iii) of the regulation are doubled;
  • if the aid for research and development projects is granted in the form of repayable advances which, in the absence of an accepted methodology to calculate their gross grant equivalent, are expressed as a percentage of the eligible costs, and the measure provides that in case of a successful outcome of the project, as defined on the basis of a reasonable and prudent hypothesis, the advances will be repaid with an interest rate at least equal to the discount rate applicable at the time of grant, the amounts referred to in points (i) to (iv) are increased by 50%;
  • aid for feasibility studies in preparation for research activities: EUR 8.25 million per study;
• for investment aid for research infrastructures: EUR 35 million per infrastructure;
• for investment aid for testing and experimentation infrastructures: EUR 25 million per infrastructure;
• for financial aid for innovation clusters: EUR 10 million per innovation cluster;
• for innovation aid for SMEs: EUR 10 million per undertaking, per project;
• for financial aid for process and organisational innovation: EUR 12.5 million per undertaking, per project.

The above thresholds may not be circumvented by artificially splitting up the aid schemes or aid projects.

The applicant company, in particular the single economic entity to which it belongs, has not been the subject of an outstanding recovery order, following a previous decision by the European Commission declaring aid illegal and incompatible with the internal market.

The incentive effect is assumed when the business has submitted its aid application or submitted its response to the call for projects to the granting authority prior to the commencement of work on the project in question. To this end, the application for financial aid must contain at least the following information:

• the name and description of the business;
• the size of the business in accordance with Annex I of Regulation (EU) No. 651/2014;
• the business's organisational chart;
• the annual financial statements for the last 2 financial years of the applicant business and, where applicable, of the single economic entity it belongs to;
• a description of the project, including its start and end dates;
• a description of the project's economic potential;
• if necessary, a description of:
  • how the aid-funded asset is operated;
  • what makes the project innovative;
  • the technological challenges of the project;
  • the economic valuation of the outcome of the project;
• the location of the project;
• the list of the project's eligible costs;
• the form and the amount of aid required for the project;
• the project's business plan, which:
  • lists the costs and expected revenue; and
  • supports the scenarios presented;
• a financing plan, which demonstrates that the applicant business has the necessary equity capital that corresponds to the financial scale of the project;
• for applications that apply to the granting of aid to innovative start-ups: the certificate issued by Luxinnovation (National Agency for Innovation and Research), which confirms that the business is innovative;
• for applications from businesses that have existed for less than 3 years: the business's 3-year cash flow forecast;
• for applications for more than EUR 500,000, submitted by large businesses: a description of the likely counterfactual scenario if the aid is not granted. The counterfactual scenario may consist of an alternative project or the lack of an alternative project;
• for aid less than EUR 100,000: a declaration of honour about other de minimis aid received in accordance with Commission Regulation (EU) 2023/2831 or Regulation (EU) 1407/2013 of 18 December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid;
• any relevant information that will allow the appropriate ministers to assess the qualities or specific features of the project or the incentive effect of the aid.

It is important to note that no binding commitment in respect of the project for which state aid is being sought may be made before the aid application is submitted.

A project may not combine different forms of state aid covering the same costs, unless the aid intensity cap for the relevant schemes continues to be observed.

Each individual aid measure exceeding the EUR 100,000 cap must be published on the transparency website of the European Commission no later than 12 months after it is granted. More specifically, the aid-granting authorities are required to publish the following information on individual aid measures which exceed the above-mentioned cap:

• name of the beneficiary;
• business ID (VAT/identification number) of the beneficiary;
• company type (SME/large business) when the financial aid is granted (i.e. when the agreement is signed);
• the beneficiary's region under NUTS II;
• NACE group activity sector;
• amount of aid expressed in local currency, with no decimal point;
• financial aid instrument;
• the date on which the aid is granted;
• purpose of the aid;
• granting authority;
• financial aid measure number.

The applying business must indicate whether it belongs, de jure or de facto, to a business group, i.e. it has a relationship of influence with other businesses. Together, these companies form a 'single economic entity' with regard to state aid.

Given the difficulties encountered by SMEs, such as access to capital or a lack of human resources, certain categories of aid under the GBER provide for an increase in the intensity of aid available to them.

To ascertain whether an applicant company qualifies for 'SME' status, the following should be checked:

Both the number of staff and annual turnover/balance sheet of the company and that of any other company with which the applicant company forms a 'single economic entity' should be taken into account.

Also watch the Luxinnovation video below, which provides companies with a simplified guide that presents the definition of an SME.

A business that can be considered a business in difficulty is not eligible for the financial aid schemes. A 'business in difficulty' refers to any undertaking that fulfils at least one of the following conditions:

• in the case of a limited liability company (other than an SME that has existed for less than 3 years), where more than half of its subscribed share capital has disappeared as a result of accumulated losses. This is the case when deducting accumulated losses from reserves (and all other elements generally considered as part of the own funds of the company) leads to a negative cumulative amount that exceeds half of the subscribed share capital;
• in the case of a company where at least some members have unlimited liability for the debt of the company (other than an SME that has existed for less than 3 years), where more than half of its capital as shown in the company accounts has disappeared as a result of accumulated losses;
• where the business is subject to collective insolvency proceedings or fulfils the criteria under its domestic law for being placed in collective insolvency proceedings at the request of its creditors;
• when the business has received rescue aid and has not yet reimbursed the loan or terminated the guarantee, or has received restructuring aid and is still subject to a restructuring plan;
• in the case of a business that is not an SME, where, for the past 2 years:
  • the business's book debt to equity ratio has been greater than 7.5;
  • the business's EBITDA interest coverage ratio has been below 1.0.

The analysis is made at the level of the single economic entity ('group').

The beneficiary will forfeit their entitlement if they:

• provide false or incomplete information, or fail to comply with the conditions under which the aid was granted;
• abandon or transfer all or part of the programmes or projects to third parties, for no objective reason;
• manage the projects or programmes in an improper or inappropriate way;
• make fundamental changes to the objectives and methods of such projects, programmes or operations;
• dispose of the investments and operations for which the aid was granted before the end of a 5-year period from the payment of the financial aid in full;
• do not use or cease to use such investments and operations for their intended purpose;
• are convicted on at least 2 occasions for contravening provisions prohibiting illegal work or provisions prohibiting the employment of illegally residing third-country nationals during the 4 years preceding the judgment of the competent court. The beneficiary is excluded from the aid measure for 3 years from the date of the judgment.

In all of these cases, the beneficiary must repay the amount of aid received, plus interest, within 3 months of the decision to that effect.

Any person who has received financial aid on the basis of incorrect or incomplete information may be punished:

• by a prison term ranging from 4 months to 5 years;
• by a fine ranging from EUR 251 to EUR 30,000.

Procedures

Links