Financial aid measures cannot apply to excluded sectors/aids, such as:

• the fishing and aquaculture sector, with the exception of:
  • training aid;
  • aid for access to finance for SMEs;
  • aid for research and development;
  • aid for SME innovation; and
  • aid for disadvantaged workers and for workers with disabilities;
• the primary agriculture sector, with the exception of aid for SMEs for consulting services, and aid for SMEs for the purpose of innovation;
• the processing and marketing of agricultural products sector;
• when the amount of aid is fixed on the basis of the price or quantity of products of this type purchased from primary producers or put on the market by the companies concerned; or
• if the aid is conditional on being partly or entirely passed on to the primary producers;
• 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 national products instead of imported products;
• aid to businesses in difficulty, with the exception of aid granted to remedy the damages caused by natural disasters and aid for young businesses, provided that these aid schemes do not treat businesses in difficulty more favourably than other businesses;
• financial aid granted in the processing and marketing of agricultural products sector, in the following cases:
  • when the amount of aid is fixed on the basis of the price or quantity of products purchased of this type from primary producers or put on the market by companies; or
  • when the aid is conditional on being partly or entirely passed on to the primary producers.

And finally, the Grand ducal regulation of 12 October 2018 excludes the following activities:

• shopping centres;
• cable operators;
• solarium businesses;
• businesses active in the production of cinematographic works;
• businesses whose activity is controlled by state concessions;
• event organisers of any kind;
• retail stores selling mainly tobacco or electronic cigarettes;
• fuel businesses;
• property developers, condominium management agencies, real estate management companies, real estate agencies;
• liberal professions, with the exception of architects and engineers, accountancy firms, chartered accountants, consultants and fiduciaries.

The following are not eligible for the aid provided for by this law, with the exception of that laid down in Article 10(2)(d):

• transport auxiliaries;
• training centres and institutes;
• businesses in the forestry sector;
• wellness centres;
• security companies;
• taxi companies and car rental companies with driver.

The following are not eligible for the aid provided for by this law, with the exception of that laid down in Article 9, provided that they have been accredited by the respective line ministry:

• liberal professions;
• businesses whose activity is controlled by state concessions;
• crèches.

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.

The gross amount of any aid may not be less than EUR 1,000 for micro and small enterprises or less than EUR 5,000 for medium-sized and large enterprises, except in the case of state programmes of entrepreneurial performance.

Whenever any State aid exceeds a certain threshold, the European Commission must be notified. The thresholds in force are:

• for investment aid: EUR 25 million per undertaking per investment project;
• for aid for consultancy in favour of SMEs: EUR 2.2 million per undertaking, per project;
• for SMEs participating in trade fairs: EUR 2.2 million per undertaking, per year;
• variable, depending on the form of aid in favour of young businesses.

The above threshold cannot be circumvented by artificially splitting up the aid schemes or aid projects.

The Deggendorf Principle states that the payment of a new aid which has been declared compatible as such, may, in certain circumstances, be suspended until the illegally obtained previous aid to the same company has been reimbursed, except in the case of aid intended to remedy the damages caused by natural disasters.

The incentive effect is satisfied when the company has submitted a full application for aid 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 current legal organisation chart, dated and signed by the legal representatives, showing the structure and size of the company and the company's shareholder structure up to its beneficial owner(s);
• the annual financial statements for the last 2 financial years of the applicant company and, where applicable, of the single economic entity it belongs to;
• the bank account identification document of the applicant company;
• a description of the investment project, including its start and end dates;
• a description of the operating conditions of the investment project and the economic potential;
• the location of the project;
• the total project cost;
• a list of the project's eligible costs depending on the type of aid requested;
• the operating costs and profits, if any;
• a financing plan, which demonstrates that the applicant business has the necessary equity capital to co-finance the project in view of its financial scale;
• the form and the amount of public financial aid required for the project;
• any other relevant information which would help the ministers in charge to assess the qualities or the specific features of the project or programme and its incentive effect;
• if the application concerns the granting of de minimis aid, a declaration of honour relating to any other de minimis aid that may have been received in accordance with Regulation (EU) 2023/2831 or Regulation (EU) 1407/2013.

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 accumulate different forms of State aid for 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. 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;
• NACELUX Rev. 2 group activity sector;
• the aid element, the amount of aid expressed in local currency;
• financial aid instrument;
• the date on which the aid is granted;
• purpose of the aid;
• granting authority.

The applicant company must indicate whether it is a partner company or a company affiliated with one or more other businesses, in accordance with Appendix I of the General Block Exemption Regulation (GBER). Together, these companies form a 'single economic entity'.

An undertaking that can be considered an undertaking in difficulty is not eligible under the financial aid schemes, except in the case of:

• aid schemes granted to remedy the damages caused by natural disasters;
• aid for young businesses; and
• aid granted under state programmes of entrepreneurial performance, provided that the aid schemes do not treat businesses in difficulty more favourably than other businesses.

A 'business in difficulty' refers to any undertaking that fulfils at least one of the following conditions:

• if it is a limited liability company, a public limited company or a partnership limited by shares, other than an SME that has been in existence 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 deduction of 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 (partnerships or limited partnerships), other than an SME that has been in existence for less than 3 years, where more than half of its own 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.

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:

Only one of the 2 criteria 'Annual turnover' and 'Annual balance sheet' need be satisfied. Consideration should be given to the size of the workforce and annual turnover/balance sheet total not only of the applicant company, but also of any other economic entity with which the applicant company forms a 'single economic entity'.

For more information, please consult the European Commission's User guide to the SME definition.

The beneficiary will forfeit their entitlement if they:

• abandon or transfer to third parties, for no objective reason, all or part of the projects;
• dispose of the investments for which the aid was granted before the end of a 5-year period from the granting of aid for the acquisition of movable assets;
• received the aid by providing incomplete or inaccurate information or do not respect the conditions under which the aid was granted without obtaining the minister's prior approval, following a written and substantiated request to this effect;
• do not use or cease to use such investments for their intended purpose;
• are 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 of the competent court. The beneficiary is excluded from the aid measure for 3 years from the date of the judgement.

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.

Entitlement to aid will not be forfeited if the disposal, abandonment or change in purpose have been approved in advance by the minister, and are the result of force majeure or circumstances beyond the beneficiary’s control.

Persons who have received financial aid by providing incomplete or inaccurate information or who do not respect the conditions under which the aid was granted, run the risk of being sentenced to the following sanctions, without prejudice to the restitution of the aid granted and the decision of exclusion:

• a prison term of between 4 months and 5 years; and
• a fine of between EUR 251 and EUR 30,000.

The beneficiary may also be sentenced to a ban.

Procedures

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