1.

On 19 March 2020, the Commission adopted its Communication ‘Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak’ (1) (the ‘Temporary Framework’). On 3 April 2020, it adopted a first amendment to enable aid to accelerate research, testing and production of COVID-19 relevant products, to protect jobs and to further support the economy during the current crisis (2). On 8 May 2020, it adopted a second amendment to further ease the access to capital and liquidity for undertakings affected by the crisis (3). On 29 June 2020, it adopted a third amendment to further support micro, small and start-up companies and incentivise private investments (4). On 13 October 2020, it adopted a fourth amendment to prolong the Temporary Framework and to enable aid covering part of the uncovered fixed costs of undertakings affected by the crisis (5). On 28 January 2021, it adopted a fifth amendment to further prolong the Temporary Framework, to adapt the aid ceilings set out therein and to enable the conversion of repayable instruments into direct grants under certain conditions (6).

2.

The Temporary Framework seeks to ensure an appropriate balance between the positive effects of the aid measures granted to undertakings and any potential negative effects on competition and trade in the internal market. A targeted and proportionate application of State aid control ensures that national support measures effectively help affected undertakings during the COVID-19 pandemic, whilst limiting undue distortions to the internal market, maintaining the integrity of the internal market and ensuring a level playing field. This will contribute to the continuity of economic activity during the COVID-19 pandemic and provide the economy with a strong platform to recover from the crisis, and accelerate the necessary green and digital transitions, in line with EU law and the Union’s objectives.

3.

It is necessary to prolong the measures set out in the Temporary Framework until 30 June 2022; to adapt the aid ceilings of the uncovered fixed cost measure in order to address the prolonged economic effects of the ongoing crisis; to enable investment support towards a sustainable recovery and solvency support; and to clarify and amend the conditions for certain temporary State aid measures that the Commission considers compatible under Article 107(3)(b) of the Treaty on the Functioning of the European Union (‘TFEU’) in light of the serious economic disturbance caused to the economies of all the Member States by the COVID-19 pandemic. In addition, the removal of the list of marketable risk countries set out in the Annex to the Communication from the Commission to the Member States on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to short-term export-credit insurance (‘STEC’) (7) should be prolonged.

4.

First, the Commission recalls that the Temporary Framework was set to expire on 31 December 2021. The Temporary Framework also envisaged that the Commission would review that framework before 31 December 2021 on the basis of important competition or economic considerations.

5.

In that context, the Commission has assessed the continued need for aid under the Temporary Framework, with a view to deciding whether it was necessary to maintain it after 31 December 2021. In particular, the Commission considered the following factors: on the one hand, the evolution of the economic situation in the exceptional circumstances created by the COVID-19 pandemic; on the other hand, the appropriateness of the Temporary Framework as an instrument to ensure that national support measures effectively help affected undertakings during the outbreak, whilst limiting undue distortions to the Internal Market and ensuring a level playing field.

6.

According to the Autumn 2021 Economic Forecast (8), GDP is forecast to grow by 5,0 % in 2021 and 4,3 % in 2022 in both the Union and the euro area. The volume of output is projected to return to pre-crisis level (2019-Q4) by the end of 2021. However, uncertainty and risks surrounding the growth outlook remain high taking into account the resurgence in COVID-19 infections across certain Member States, increasing tensions in the supply chains and the rise of energy prices.

7.

Member States have made substantial use of the possibilities under the Temporary Framework as an instrument to address the serious economic disturbance affecting their economies, as well as to facilitate the development of certain economic activities required to tackle the COVID-19 pandemic.

8.

Given that the Temporary Framework has been useful as an instrument to address the economic consequences of the pandemic and also in light of the feedback received from Member States, the Commission considers that a limited prolongation of existing measures set out in that framework until 30 June 2022 is appropriate to ensure that national support measures effectively help affected undertakings during the outbreak while maintaining the integrity of the internal market and to ensure a level playing field. This limited prolongation will also ensure that undertakings still affected by the crisis need not be cut off suddenly from necessary support. Rather, it will enable a coordinated phase-out of the level of support in light of the observed economic recovery. That phase-out has to be seen in light of the heterogeneity of the recovery, with specific sectors and regions in different Member States still lagging behind others. Based on currently available information, the Commission considers it likely that no additional prolongation of the existing types of measures covered under sections 3.1 to 3.12 may be necessary beyond 30 June 2022. This is especially the case as regards existing liquidity measures, where the new forward-looking possibilities for investment support towards a sustainable recovery and solvency support should be better suited in the recovery phase to address business needs and policy objectives, including to limit undue distortions in the internal market. The Commission will nevertheless continue to closely monitor the situation and assess whether any measures need to be further extended and/or adapted on the basis of important competition or economic considerations.

9.

The Commission also considers it necessary to adjust the aid ceilings provided under section 3.1 in line with this prolongation.

10.

Second, taking into consideration the continued impact of the COVID-19 pandemic and the lapse of time since the adoption of the Temporary Framework, the Commission considers that it is necessary to increase the aid ceilings set out in section 3.12 of that framework, which enables targeted support to companies that experienced significant turnover losses.

11.

Third, several Member States have underlined the need to mitigate the risk of corporate insolvencies through additional possibilities for debt restructuring and conversion of repayable aid instruments into other forms of aid (e.g., direct grants) (9). In order to address those concerns and mitigate the risk of corporate insolvencies, the Commission considers that it is necessary to enable the conversion of repayable aid instruments into other forms of aid under section 3.1 and section 3.12 of the Temporary Framework until 30 June 2023 provided that the conditions of the applicable sections are complied with (10). Furthermore, the Commission also considers that repayable instruments under section 3.1, section 3.3, and section 3.12 may require restructuring in line with ordinary prudential practices of the financial intermediaries involved. Such a restructuring will be considered compatible, if completed at the latest by 30 June 2023 and under the conditions specified in this Communication. In particular, such restructuring must respect the conditions laid down in the applicable sections and may not lead to an increase of the initially granted amounts (11).

12.

In addition, this Communication clarifies that Member States may extend the duration of guarantees granted under section 3.1, section 3.2, and section 3.12 of the Temporary Framework also after the expiry of that framework, provided the conditions in those sections and section 3.4 are respected. The terms and conditions of such an extension should be stipulated in the initial guarantee contracts between the State and the credit or financial institutions. Those conditions should not leave any discretion to the Member State’s authorities when the duration of the guarantee is extended. Final beneficiaries must be informed at the time of the financing being initially granted that they can request an extension of the maturity of that financing, without prejudice to the fact that the credit or financial institutions may accept or refuse that request in accordance with their standard policies and procedures (12).

13.

Fourth, the Commission considers that the recovery of the Union’s economy will be largely determined by the speed of vaccination programmes and the progression of possible variants of the virus, but also by other unknown factors such as the state of the international economy and the spending and investment behaviours of companies and households.

14.

The Commission recalls that the risk of a post-crisis investment drop actually materialised in the Union in the years following the 2008 crisis, because of increased indebtedness of the private sector. When the present crisis comes to an end, financial difficulties, risk aversion and spare capacity in some sectors could also hold back corporate investment and therefore long-term growth.

15.

It is appropriate to provide further options for Member States based on Article 107(3)(c) TFEU to directly support investments in assets as well as provide an instrument to improve the equity position of European companies, by introducing a new section on investment support towards a sustainable recovery, as well as a new section on solvency support. In parallel, the Commission also considers it to be necessary to apply the individual notification requirements for schemes under specific existing guidelines with particular importance for the recovery in a more flexible manner for a limited amount of time.

16.

On the one hand, investment support should facilitate the development of economic activities required for the return to a sustainable long-term growth, overcoming the negative economic effects of the crisis including a widening of the investment gap. It should also support a more resilient economy for the future, while effectively limiting potential negative effects on competition and trade.

17.

Support of that kind may also help Member States to particularly develop those economic activities required to achieve the objectives of the green and digital transitions and support recovery towards a greener and more digital future while strengthening resilience and preserving a level playing field. It is also relevant as part of a phase-out of immediate short-term crisis response measures, predominantly in terms of liquidity support, and a shift towards fostering a more long-term recovery of the economy. In order to achieve the intended effect of accelerated investment spending, the application of this measure should be limited until 31 December 2022.

18.

The pandemic and the measures taken by the Member States to combat the spread of the COVID-19 virus induced an immediate fall in economic activity on an unprecedented scale, in particular as regards investment. In light of these exceptional circumstances created by this crisis, the Commission considers that the provisions of section 3.13 of the present amendment may be applied to aid granted after 1 February 2020, provided all conditions are met and in particular an incentive effect can be demonstrated. Such measures need to pursue the same objective as the one laid down in section 3.13, namely provide a stimulus to overcome an investment gap accumulated in the economy due to the crisis.

19.

On the other hand, solvency support is an important element for the development of economic activities in a wide range of sectors in situations where undertakings are suffering from increased debt ratios due to the crisis. Given the overall macroeconomic increase of indebtedness, Member States may seek to provide undertakings with easier access to private investments in the form of equity while limiting potential negative effects on the internal market. Such support can be an important element to strengthen the economic recovery. A longer application period for this type of solvency support measure is appropriate given the complexity and time needed to set up such schemes. Against that background, the period of application of this type of measure should extend to 31 December 2023.

20.

Through the Technical Support Instrument (13), the Commission supports Member States in designing and implementing reforms aimed at overcoming the investment gap and accelerating the green and digital transitions. Member States can ask for support through the Technical Support Instrument to design and put in place solvency support measures.

21.

Fifth, the application of the Temporary Framework has shown the need to introduce additional clarifications and amendments to other points of that framework, especially in section 1.3, section 3.11 and section 4, and add new tools under sections 3.13 and 3.14.

22.

Therefore, Member States may envisage modifying existing aid measures approved by the Commission under the Temporary Framework in order to prolong their period of application until 30 June 2022, allow restructuring or conversion of certain instruments up to 30 June 2023, introduce new measures supporting investments towards a sustainable recovery until 31 December 2022, or new measures providing solvency support until 31 December 2023. Member States may also envisage increasing the budget of existing measures approved in light of section 3.12 or introducing other amendments to align those measures with the Temporary Framework, as amended by this Communication. This may also include a dedicated tailoring of new or existing aid measures to sectors that are particularly affected by the crisis in specific Member States within the limits of the amended Framework.

23.

Member States that plan to prolong or modify existing schemes are invited to notify a list of all existing aid measures they envisage modifying and to provide the necessary information listed in the Annex of this Communication. This will allow the Commission to adopt one decision covering the list of notified measures.

24.

Finally, the Commission considers that it should continue applying the provisions of the communication on the short-term export-credit insurance (‘STEC’) beyond 2021 to allow for a coordinated transition to normal market practice or the adoption of specific schemes under the applicable rules where necessary. It accordingly prolongs the temporary removal of all countries on the list of marketable risk countries set out in the Annex of STEC until 31 March 2022.

25.

The STEC provides that marketable risks shall not be covered by export-credit insurance with the support of Member States. As a consequence of the COVID-19 pandemic, the Commission found in March 2020 that there is a lack of sufficient private insurance capacity for short-term export-credits in general and considered all commercial and political risks associated with exports to the countries listed in the Annex to the STEC as temporarily non-marketable until 31 December 2020 (14). By its Communications of 13 October 2020 and 28 January 2021, the Commission prolonged that temporary exception until 30 June 2021 and 31 December 2021, respectively. The current STEC will expire on 31 December 2021 and will be replaced by a new communication, which will still consider the criterion of non-marketable risk.

26.

In the context of the continuing difficulties due to the COVID-19 pandemic and in accordance with points 35 and 36 of the STEC, the Commission conducted a public consultation to assess the availability of short-term export-credit insurance in order to determine whether the current market situation might justify the prolongation of the removal of all countries from the list of marketable risk countries in the Annex to the STEC beyond 31 December 2021.

27.

Taking into account the outcome of the public consultation, as well as the global signs of continuing disruptive impact of COVID-19 on the economy of the Union as a whole, the Commission considers that a prolongation of that removal for a period of three months is an adequate solution to allow for a smooth transition before all countries listed in the Annex are considered marketable again as from 1 April 2022. Evidence submitted in the consultation by private insurers and a number of Member States indicates that private insurers started to provide coverage to serve the exporters active in most relevant markets. At the same time, further feedback received points towards a situation where market capacity is still insufficient to cover all economically justifiable risks for exports to countries from the list of marketable risk countries in the Annex to the STEC. In those circumstances, the Commission will therefore continue to consider all commercial and political risks associated with exports to the countries listed in the Annex to the STEC as temporarily non-marketable until 31 March 2022 as a prolongation to ensure a smooth transition towards normal market practice or the adoption of specific schemes under the applicable rules where needed.

28.

The following amendments to the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak will take effect as of 18 November 2021.

29.

The following point 14bis is introduced:

‘The Commission acknowledges that the COVID-19 pandemic and the measures taken to contain it have created exceptional circumstances for many undertakings. In that unique situation, and depending on the individual case, the Commission clarifies that it may be justified that own contributions within the meaning of points (62) to (64) of the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (*1) (the “Rescue and Restructuring Guidelines”) remain below 50 % of the restructuring costs, as long as they remain significant and include additional fresh funding at market conditions. The exceptional and unforeseeable nature of the current situation may also allow for exceptions from the “one time last time” principle, pursuant to point (72)(c) of the Rescue and Restructuring Guidelines, if the renewed difficulties arise from the COVID-19 pandemic and the economic downturn generated by it, i.e., if the undertaking concerned has become an undertaking in difficulty due to the COVID-19 pandemic and the following economic downturn. For the avoidance of doubt it should be noted that the remaining provisions of the Rescue and Restructuring Guidelines, and in particular the need for a restructuring plan, the return to long-term viability, and burden-sharing, continue to apply.’

(*1)  Communication from the Commission (OJ C 249, 31.7.2014, p. 1)."

30.

Footnote 19, attached to letter a. of point 22 is replaced by the following:

31.

‘(*) Aid granted on the basis of schemes approved under this section that has been reimbursed before granting new aid under this section shall not be taken into account in determining whether the relevant ceiling is exceeded.’

32.

Letter a. of point 22 is replaced by the following:

(*2)  Aid granted on the basis of schemes approved under this section which has been reimbursed before granting new aid shall not be taken into account in determining whether the relevant ceiling is exceeded.’"

33.

Letter d. of point 22 is replaced by the following:

(*3)  If the aid is granted in the form of a tax advantage, the tax liability in relation to which that advantage is granted must have arisen no later than 30 June 2022.’"

34.

Letter a. of point 23 is replaced by the following:

(*4)  As defined in Article 2(1) of Commission Regulation (EU) No 717/2014 of 27 June 2014 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid in the fishery and aquaculture sector (OJ L 190, 28.6.2014, p. 45)."

(*5)  As defined in Article 2(5) of Commission Regulation (EC) No 702/2014 of 25 June 2014 declaring certain categories of aid in the agricultural and forestry sectors and in rural areas compatible with the internal market in application of Articles 107 and 108 of the Treaty on the Functioning of the European Union (OJ L 193, 1.7.2014, p. 1)."

(*6)  Aid granted on the basis of schemes approved under this section which has been reimbursed before granting of new aid shall not be taken into account in determining whether the relevant ceiling is exceeded.’"

35.

Point 23bis is replaced by the following:

‘Where an undertaking is active in several sectors to which different maximum amounts apply in accordance with points 22(a) and 23(a), the Member State concerned shall ensure, by appropriate means, such as separation of accounts, that the relevant ceiling is respected for each of those activities and that the overall maximum amount of EUR 2,3 million is not exceeded per undertaking. Where an undertaking is active in the sectors covered by point 23(a), the overall maximum amount of EUR 345 000 should not be exceeded per undertaking.’

36.

Footnote 27, attached to point 23 is replaced by the following:

37.

Point 23ter is replaced by the following:

38.

Letter c. of point 25 is replaced by the following:

39.

The chapeau in letter d. of point 25 is replaced by the following:

40.

Letter e. of point 25 is replaced by the following:

41.

Letter c. of point 27 is replaced by the following:

42.

The chapeau in letter d. of point 27 is replaced by the following:

43.

Letter e. of point 27 is replaced by the following:

44.

The following point 27ter is included:

45.

Point 33 is replaced by the following:

46.

Letter a. of point 35 is replaced by the following:

47.

Letter b. of point 37 is replaced by the following:

48.

Letter b. of point 39 is replaced by the following:

49.

Point 41 is replaced by the following:

50.

Letter c. of point 43 is replaced by the following:

51.

Point 48 is replaced by the following:

52.

The following point 77bis is introduced:

(*7)  For the purpose of this point, hybrid capital instruments issued up to six months after the issuance of the COVID-19 hybrid capital instruments are considered to have been issued at the same time as those instruments."

(*8)  Such hybrid capital instruments shall be taken into account in the assessment under point 54."

(*9)  Up to the total amount of existing COVID-19 hybrid capital instruments."

(*10)  Difference between the contractually agreed maximum and minimum coupon rates over the lifetime of the hybrid instruments."

(*11)  If the beneficiary redeems several tranches of hybrid capital instruments with different interest rates, this condition must be applied to each tranche independently.’"

53.

Letter a. of point 87 is replaced by the following:

54.

Footnote 75, attached to letter b. of point 87 is replaced by the following:

55.

Letter d. of point 87 is replaced by the following:

(*12)  Aid granted on the basis of schemes approved under this section that has been reimbursed before granting new aid under this section shall not be taken into account in determining whether the relevant ceiling is exceeded.’"

56.

The following point 87bis is introduced:

57.

The following section is inserted:

(*13)  Within the meaning of Annex I of the General Block Exemption Regulation."

(*14)  Within the meaning of Annex I of the General Block Exemption Regulation."

(*15)  Within the meaning of Article 17 of Regulation (EU) 2020/852 (OJ L 198, 22.6.2020, p. 13)."

(*16)  For measures which are identical to measures within Recovery and Resilience Plans as approved by the Council, compliance with the “Do no significant harm” principle is considered fulfilled, since this has already been verified."

(*17)  As defined in Article 2(18) of the General Block Exemption Regulation."

(*18)  Alternatively, if they have received rescue aid, they have reimbursed the loan or terminated the guarantee at the moment of granting of the aid under this Communication."

(*19)  Alternatively, if they have received restructuring aid, they are no longer subject to a restructuring plan at the moment of granting the aid under this Communication."

(*20)  Guidelines on State aid for environmental protection and energy 2014-2020 (OJ C 200, 28.6.2014, p. 1)."

(*21)  Framework for State aid for research and development and innovation (OJ C 198, 27.6.2014, p. 1).’"

58.

The following section is inserted:

(*22)  As defined in point 52 (xxvii) of the Guidelines on State aid to promote risk finance investments, OJ C 19, 22.1.2014, p. 4.’"

59.

Points 88-96 are renumbered as points 103-111.

60.

Point 90 is renumbered as point 105 and is replaced by the following:

61.

Point 93 is renumbered as point 108 and is replaced by the following:

62.

The Commission considers that all commercial and political risks associated with exports to the countries listed below are temporarily non-marketable until 31 March 2022.