De minimis aid
The financial support provided by UAB Investment and Business Guarantees (INVEGA), is treated as de minimis aid in the form of the Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid.
De minimis regulation is a measure according to which the Member States can be very quick to give small grants to businesses, especially small and medium enterprises (hereinafter SMEs), without notice to the European Commission and without any administrative procedures. The basic principle applied to State aid refers to the fact that State aid provided from a Member State or through State resources, which distorts or threatens to distort competition to the exclusion and providing privileges to certain companies or products are not compatible with the common market if it is an intra-trade. Setting out the general rule is to show that fair competition between SMEs can be assured only if the entities operate in a single market by using its own resources. State and local authorities, providing some form of assistance, create different game rules because state-sponsored entity may produce its output at lower cost than the competitors. Therefore, support meeting these criteria is prohibited. De minimis rule is based on the assumption that in most cases small amounts of aid do not affect trade and competition between the Member States; therefore, there it is not State aid under Article 87(1).
Total de minimis aid, granted to one company over a period of three fiscal years (subject to the taxation year of a company), may not exceed EUR 200 000 (or EUR 100 000 for businesses within the road transport sector).
This limit applies regardless of the form of aid or the objective pursued, or whether the assistance is financed by the Community resources in whole or partially. If the total amount of aid exceeds the threshold, Regulation 1998/2006 cannot be applied even to the part of aid that does not exceed this limit.
If the aid is different than a grant, it is necessary to determine the grant equivalent, i.e. the aid amount expressed in money terms. If the aid is paid in instalments, its value is discounted at the current time.
Different forms of assistance granted and the size of its calculation method can vary.
- a company has received INVEGA guarantee for the loan, the amount of support in the subsidy equivalent is equal to 13 percent of the amount of the guarantee.
- a company has received compensation for the guarantee fee, the amount of the company’s support is equal the guarantee fee amount paid to the company;
- a company has received a soft loan, the amount of support is equal to the difference between interest payable during entire loan period to which g a comparable interest rate established by the European Commission is applied (the EU's communication of the reference interest rate with the premium of 4 percent) and interest payable under a soft loan.
De minimis rules can be applied only to transparent aid, i.e the amount of which that can be accurately calculated ex ante (in advance), without any need of risk assessment:
- If the aid is provided in the form of loans, the gross grant equivalent shall be calculated following the prevailing market interest rates;
- If the aid is provided in the form of capital injection, the entire state administration shall not exceed the de minimis margin;
- If the aid is a form of risk capital by venture capital scheme for capital may not exceed the de minimis margin for each case of the company;
- If the aid is provided in the form of a guarantee, guaranteed loan cannot exceed EUR 1.5 million (road transport sector - 0.75 EUR million) for each case of the company; and
- The guarantee shall not exceed 80% of the loan.
De minimis aid does not exclude a borrower from application for other State aid approved by the European Commission's decision. However, the de minimis aid cannot be cumulated with other State aid for the same expenditure, where this would exceed aid intensity regulated by the Block Exemption Regulation or the European Commission's decision.
Provisions under Regulation 1998/2006 shall not apply to the following:
- aid granted to undertakings active in the fishery and aquaculture
sectors, as covered by Council Regulation (EC)No 104/2000 (1);
Aid granted to undertakings active in the primary production of agricultural products as listed in Annex I to the Treaty;
- Aid granted to undertakings active in the processing and marketing of agricultural products as listed in Annex I to the Treaty, in the following cases:
- when the amount of the aid is fixed on the basis of the price or quantity of such products purchased from primary producers or put on the market by the undertakings concerned;
- when the aid is conditional on being partly or entirely passed on to primary producers;
- Aid to export-related activities towards third countries or the Member States, namely aid directly linked to the quantities exported, to the establishment and operation of a distribution network or to other current expenditure linked to the export activity;
- Aid contingent upon the use of domestic over imported goods;
- Aid granted to the undertakings active in the coal sector, as defined in Regulation (EC) No 1407/2002;
- Aid for the acquisition of road freight transport vehicles granted to the undertakings performing road freight transport for hire or reward;
- Aid granted to the undertakings in difficulty.
Resolution No. 35 of Lithuanian Government dated 19 January 2005 Regarding Establishment of State Aid Register, Validation of its Regulations and Launch Arrangements has been set up in the register of State aid. It includes total State aid, and the de minimis aid as well. Before the de minimis aid is granted, the aid provider, , is required to verify whether it will not exceed the permissible limit of de minimis aid, and certain data on de minimis aid shall be entered into the registry within three working days . If due de minimis aid amount and the amount of already granted aid together exceeds the maximum margin (200 000 EUR or 100 000 EUR), a new de minimis aid is not available at all (residue may not be covered as well).
De minimis aid granting is not associated with the financial support to beneficiaries. The donor's decision to grant de minimis aid is deemed as an aid has already been provided (to its full extent) to a company.