The prohibition against state aid also falls under European competition law
. This prohibition means that governments may not provide direct or indirect financial aid to a company or a specified group of companies, if this could distort competition in the internal market. Every measure which could have a favourable effect falls under the 'aid' concept. If the company fares better after receiving the aid, the competitive position has improved and competition is distorted. However, there must be preferential treatment of specified companies or sectors. There must also be influence on the trade between the member states. However, this is quickly assumed and potential influence is sufficient.
The European Commission has specified that state aid up to an amount of 200,000 euro does not negatively influence trade between the member states and does not distort competition. This is called ‘de-minimis aid’. Aid below this threshold may be provided by the government to one single company and applies for a period of three tax years.
Claiming aid back
Intended state aid must be reported by the government to the European Commission. The European Commission is the only body that assesses state aid and that can approve or reject this. If the state aid is not reported in a timely manner then the court can be applied to in preliminary relief proceedings to halt the state aid and to report this at a later date to the European Commission. Aid which is not reported or aid which is not used for the objective for which it was approved, can in exceptional cases result in the reclaiming of the aid granted.
There are exceptions to the prohibition of state aid. This includes, among other things, the repair of damage caused by natural disasters, investment in a region where the standard of living is unusually low and the maintenance of cultural heritage. In addition to these exceptions it is also possible that a company performs a government duty or public service and receives financial compensation for this from the government. The compensation must form consideration for the goods or services delivered, the remuneration must cover the costs and the amount that is paid may not be much higher than other companies in the market would have charged for this.
State aid and housing associations
On 1 January 2011, the scheme for state aid to housing associations (the temporary scheme for services of general economic importance approved public housing organisations) came into force, which was amended on 1 January 2012. Conditions are included in this, including the permitting of state aid to housing associations. At least 90% of dwellings that become available with a rent up to 664.66 euro are allocated to tenants with an income up to 34,085 euro. The remaining dwellings, not exceeding 10%, can be allocated to tenants with a higher income. In some cases, an exception can be made to the income threshold. It is expected of housing associations that they provide priority to households which experience difficulties in finding housing due to personal, social or other circumstances. Housing associations can only enter into tenancy agreements with associations or foundations which are focused on the public interest or with government institutions in the case whereby property has a social function.
The Property department of AK Advocaten advises semi-public bodies, governments and companies, in particular housing corporations, in the field of competition and state aid. Our lawyers have a wealth of experience in testing whether a subsidy is or is not permissible on the basis of European and Dutch competition law. In addition to providing advice we can also negotiate on your behalf or, if it comes to legal proceedings, take care of your interests in court.
Please contact us.