COVID19: EU approves UK £9bn SME aid

European Commission has approved a GBP 9 billion (approximately € 10.3 billion) UK aid scheme to support self-employed individuals and members of partnerships affected by the coronavirus outbreak. The scheme was approved under the State aid Temporary Framework adopted by the Commission on 19 March 2020, as amended on 3 April and 8 May 2020.

The UK notified to the Commission under the Temporary Framework a scheme to support lower-end income self-employed individuals, including members of partnerships, which have been severely affected by the economic impact of the coronavirus outbreak. The scheme will allow them to continue their activities during and after the crisis.

The scheme will take the form of direct grants and will be applied to all sectors and to the whole territory of the UK.

The Commission found that the UK scheme is in line with the conditions set out in the Temporary Framework. In particular, (i) the income subsidy will be granted over a period of not more than twelve months and will be subject to the condition that the activity of the beneficiaries is ongoing and will be maintained; (ii) aid intensity will not exceed 80% of the monthly gross income (including social security contributions); and (ii) aid will not lead to overcompensation.

The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

On this basis, the Commission approved the measures under EU State aid rules.

According to the UK Withdrawal Agreement, during the transition period, EU law continues to apply to, and in, the UK as if it were a Member State. This includes all EU rules relating to State aid.

The Commission has adopted a Temporary Framework to enable Member States to use the full flexibility foreseen under State aid rules to support the economy in the context of the coronavirus outbreak. The Temporary Framework, as amended on 3 April and 8 May 2020, provides for the following types of aid, which can be granted by Member States:

(i) Direct grants, equity injections, selective tax advantages and advance payments of up to €100,000 to a company active in the primary agricultural sector, €120,000 to a company active in the fishery and aquaculture sector and €800,000 to a company active in all other sectors to address its urgent liquidity needs. Member States can also give, up to the nominal value of €800,000 per company zero-interest loans or guarantees on loans covering 100% of the risk, except in the primary agriculture sector and in the fishery and aquaculture sector, where the limits of €100,000 and €120,000 per company respectively, apply.

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