Revamp to cut EU red tape for state aid

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Half of all the applications to Brussels for state aid approval may no longer be required under revamped rules that exempt more assistance from scrutiny, a senior European Union official said on Monday.

The new rules – which were unveiled on Monday and come into force in a few weeks’ time – will mean that assistance given in areas ranging from R&D for large businesses to environmental protection do not have to be notified to Brussels.

Also included in the list of “exempt” categories for the first time will be aid to enterprises newly created by female entrepreneurs. They can receive up to €1m ($1.6m, £795,000) a company, without the assistance having to be reported.

Neelie Kroes, EU competition commissioner, said the package could mean that the number of applications for approval under state aid rules, which runs to thousands annually, is halved.

The new framework would reinforce the “positive trend” of state aid spending “where the balance has been shifted away from aid for favoured industries or companies, and towards so-called horizontal aid”, she said.

She added that the new rules would cut costs for public authorities and companies benefiting from aid while allowing the Commission “to focus its attention on other, more distortive types of aid”.

Historically, the EU’s state aid rules have incorporated a so-called “block exemption” – that is, categories of aid that are thought to be compatible with single market principles and so do not have to be notified to Brussels.

But the latest revamp nearly triples the number of exempted measures. For example, five new categories of assistance are added – including environmental aid, innovation aid, research and development aid for large companies, aid in the form of risk capital as well as aid for female entrepreneurs. Other areas – such as regional aid and training aid – are expanded,

Ms Kroes said there was a serious “market failure” that prevented female entrepreneurs accessing finance in many cases, and dismissed any suggestion that the new exemption in this area could fall foul of discrimination laws. Child care and parent care costs can also be included as part of the eligible cost basis for aid measures within the exempt categories for the first time.

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