State aid

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see also: SGEI

What is State Aid?

Any support provided by an arm of the government, e.g. local authorities, as well as direct support from central government, can be classed as State Aid. The State Aid rules were put in place to protect the free market by ensuring that state resources do not distort competition or give an unfair advantage. State Aid is considered to be any advantage given by a State to an undertaking in their domestic economy where such aid may benefit particular industrial sectors or individual undertakings and affect trade in the European Union. The European Commission considers that such aid is contrary to the notion of the European Single market and prohibits it.

How do you know if aid is present?

There are four tests that must be met for State Aid to be present:

  • Aid is granted by a Member State or through a State resource;
  • The aid favours certain undertakings or production of certain goods;
  • It is aid which distorts or threatens to distort competition: and
  • The aid affects trade between Member States.

If these four tests are met, the relevant support is state aid which must be notified to the European Commission if it is not already specifically approved or exempted from the notification.

In simple words any grant/loans, cash injection, leases or sale of property/land or machinery, contracts, etc that is provided to a trading commercial organisation, including social enterprises/Social Firms, must be provided only at a real market value otherwise it will contravene state-aid rules. However there are a number of possibilities where some “aid” could be provided by a local authority to a Social Firm. These can be summarised as:

  • Commercial loans - so far as commercial interest rates apply
  • Ring-fencing - where a social firm, in addition to selling products or services, works for the general benefit of the public sector. Any ring-fencing would need to be reflected in the company's accounts, for example by showing that the cost of goods to the local authority are lower than those sold to the commercial sector.
  • Small and medium enterprise exemption - usually given to starting enterprises. The amount of aid will depend on the number of employees and turnover of the company.
  • Employment block exemption - some financial assistance available for the creation of employment for disabled or disadvantaged workers, however would only account for 'new' employees rather than those transferred in the externalisation process
  • De minimis - A certain level of aid, currently €100,000 (around £90,000) can be granted in any one period of three years which will not count as state aid.

A word of warning:

Under no circumstances should an independent, legally constituted social firm company accept local authority aid, even if granted, unless they have previously sought legal advice, as if assistance is considered unlawful the European Commission has the power to order repayments of aid given with interest.

Source: A Manual to Externalising Social Firm Activity, Visage EQUAL partnership, p. 72 - http://www.socialfirms.co.uk/resources/library/manual-externalising-social-firm-activity

Commission inquires into Italian tax regime for co-operatives

Europe - Aides d’Etat

Après avoir reçu plusieurs plaintes, la Commission européenne a demandé à l’Italie des informations sur le régime fiscal préférentiel accordé aux coopératives actives dans la vente au détail, la distribution et le secteur bancaire. L’Italie a répondu et la Commission est toujours en train d’analyser ce dossier. Elle a toutefois déjà communiqué en juin 2008 les résultats d’un examen préliminaire dans lequel elle dit être consciente de l'importance et de l'utilité des coopératives pour l'économie et la société en général. Elle considère cependant que tout traitement préférentiel réservé aux coopératives peut constituer une aide d'État et n’est donc pas conforme au droit européen de la concurrence. Elle établit ensuite une distinction entre petites et grandes coopératives, estimant que pour les premières, les effets positifs de l’«aide d’état», liés à la réalisation d'objectifs sociaux, l'emportent sur leurs effets négatifs sur la concurrence et le commerce. Ce qui ne serait pas le cas des grandes coopératives et des coopératives non mutualistes.

Coopératives Europe a réagi par un communiqué dont la version finale a été publiée le 6 octobre 2008. Elle estime que les régimes spécifiques accordés aux coopératives par les différents Etats membres ne constituent en aucun cas un avantage mais bien une compensation aux limitations inhérentes au modèle coopératif. L’asbl refuse également toute distinction sur le critère de taille puisqu’elle estime que ces limitations sont identiques dans les petites et grandes coopératives. Elle a par ailleurs lancé une pétition Hands off our coops qui à ce jour, a réuni plus de 90.000 signatures.

Plus d'infos: Coopératives Europe
Tél : +32 2 280 16 09
Courriel : mailto://office@coopseurope.coop
Site : http://www.coopseurope.coop

Source: http://www.saw-b.be/es_archives/es-infos-n-55-d-cembre-2008/