General terms and conditions for regional aid
Last update
All regional aid measures are based on the law of 17 July 2017 on the implementation of financial aid for regional investments. This law implements some of the provisions of the amended Commission Regulation (EU) No. 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty (GBER).
In addition to the specific terms and conditions associated with the various aid schemes, the issuing authority must ensure that the applicant business meets the following criteria:
Excluded sectors
Financial aid measures cannot apply to excluded sectors/aids, such as:
- the fishery and aquaculture sector, with the exception of aid for training, aid intended to facilitate SME access to funding, aid for research and development, aid for SMEs for the purpose of innovation, and aid for disadvantaged and disabled employees;
- the primary agriculture sector;
- the transformation and sale 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 for businesses in difficulty;
- 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.
Excluded persons
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.
Notification thresholds
Whenever any State aid exceeds a certain threshold, the European Commission must be notified. The applicable threshold is calculated according to a formula in article 5 of the said law.
Deggendorf Principle
The Deggendorf Principle states that the payment of any new aid which has been declared compatible as such, may, in certain circumstances, be suspended until any illegally obtained previous aid to the same business has been reimbursed.
Incentive effect
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 size (small or medium-sized) of the business;
- a description of the investment project, including its start and end dates;
- the location of the investment;
- a list of the costs associated with the investment;
- a financing plan;
- the form of the aid (capital grant, etc.) and the amount of aid needed for the investment;
- any relevant information that will allow the competent ministers to assess the qualities or specific features of the project, programme, activity or investment, and related operations, and its incentive effect.
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.
Cumulation rule
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.
Disclosure of the financial aid
Each individual aid measure exceeding the EUR 100,000 cap must be published on the transparency website of the European Commission. More specifically, the authorities granting aid are required to publish the following information on individual aid measures which exceed the above-mentioned cap:
- name of the beneficiary;
- ID (VAT/identification number) of the beneficiary;
- company type (SME/large business) at the time of granting (signature of the agreement) the financial aid;
- 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;
- date on which the aid is granted;
- purpose of the aid;
- the granting authority.
Single economic entity
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'.
Businesses in difficulty
An undertaking that can be considered an undertaking in difficulty is not eligible under the financial aid schemes. 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-liability company or a partnership limited by shares, other than an SME that has been in existence for less than 3 years, when over half of its subscribed share capital has been lost due to cumulative 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 vanished as a result of accumulated losses;
- where the undertaking 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.
Definition of an SME
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:
Criterion |
Small business |
Medium-sized business |
Number of staff |
< 50 |
< 250 |
Annual turnover or |
< EUR 10 million |
< EUR 50 million |
Annual balance sheet |
< EUR 10 million |
< EUR 43 million |
Only one of the two criteria 'Annual turnover' and 'Annual balance sheet' need be fulfilled. Consideration should be given to the number of staff and annual turnover/balance sheet not only of the applicant company, but also to those of any other economic entity with which the applicant company forms a 'single economic entity'.
Sanctions, repayment and criminal law provisions
The beneficiary will forfeit their entitlement if they:
- provide false or incomplete information, or do not respect the conditions under which the aid was granted;
- abandon or transfer to third parties, for no objective reason, all or part of the projects;
- manage the projects in an improper or inappropriate way;
- make fundamental changes to the objectives and methods of such projects;
- dispose of the investments 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 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 paid, 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 competent ministers, and are the result of force majeure or circumstances beyond the beneficiary’s control.
Any person who has received financial aid on the basis of incorrect or incomplete information may be punished:
- by a prison term of between 4 months and 5 years;
- a fine of between EUR 251 and EUR 30,000.
Who to contact
General Directorate - Industry, New Technologies and Research (Financing and State Aid)
-
Ministry of the Economy General Directorate - Industry, New Technologies and Research (Financing and State Aid)
- Address:
-
19-21, boulevard Royal
L-2449
Luxembourg
Luxembourg
L-2914 Luxembourg
- Email address:
- FAE@eco.etat.lu
- Website:
- https://meco.gouvernement.lu/fr.html
Related procedures and links
Procedures
Links
Further information
on the website of the Publications Office of the European Union
Legal references
-
Règlement (UE) modifié n°651/2014 de la Commission du 17 juin 2014
déclarant certaines catégories d’aides compatibles avec le marché intérieur en application des articles 107 et 108 du traité
-
Texte consolidé du règlement (UE) n°651/2014 de la Commission du 17 juin 2014 (sans valeur légale)
déclarant certaines catégories d’aides compatibles avec le marché intérieur en application des articles 107 et 108 du traité
-
Loi du 27 juillet 1993
ayant pour objet le développement et la diversification économiques et l'amélioration de la structure générale et de l'équilibre régional de l'économie
