In recent months, the Czech government has introduced a number of state aid programmes to help businesses hit by the Covid-19 pandemic overcome the period of limited economic activity. In general, the aid provided under individual programmes may be used simultaneously and cumulated. However, in some cases it is not allowed to exceed the maximum aid limit for a single undertaking. What programmes are subject to the limit and what should be included in the calculation? A what exactly does “a single undertaking” mean?
To what aid programmes does the maximum limit apply?
National aid programmes are adopted based on the Temporary Framework for State Aid Measures approved by the European Commission. The Framework defines a cap of aid in the amount of EUR 800,000 (i.e. nearly CZK 21 million) that individual Member States may provide to “a single undertaking” in the form of direct payments or tax and loan benefits. A special aid cap applies to undertakings operating in the primary agricultural production (up to EUR 100,000) or in the fishing industry (EUR 120,000).
Nevertheless, the cap only pertains to some of the aid programmes adopted under the Temporary Framework. Aid cannot exceed CZK 21,000,000 (in total) if provided under Antivirus Plus (full compensation of payroll costs), COVID Accommodation and OP Employment. In order to determine whether the maximum limit per undertaking is exceeded, all aid granted under these individual programmes must be included in the calculation.
On the other hand, the maximum limit does not apply to aid paid out from some other programmes even though they were also adopted based on the Temporary Framework. This includes the frequently used programmes Antivirus A and B (80% or 60% compensation of payroll costs, respectively) or COVID Technology (support for the production of medical and protective equipment).
If a single undertaking receives aid in multiple Member States, the limit applies to every individual country separately. For example, an undertaking may receive aid of EUR 800,000 in the Czech Republic and aid of up to additional EUR 800,000 in Germany.
What is a “single undertaking”?
It is important to note that the cap does not relate to aid provided to an individual “legal person” (e.g. a single joint-stock company), but to “a single undertaking”, which may in fact consist of several intertwined companies.
The term “single undertaking” is defined in EU law and includes all legal entities, both local and foreign, connected by mutual relationships of control (both factual and legal). Assessment of which enterprises form a “single undertaking” is rather complex and takes into account e.g. the shareholder voting rights, rights to appoint or remove members of corporate bodies or special arrangements stipulated in founding documents.
Consequences of non-compliance with the limit
If the cap of EUR 800,000 is not complied with, there is a risk that the recipient will be required to refund part or all of the aid that has already been paid. Since the verification of compliance with the limit is predominantly a matter of administrative inspection, aid providers are expected to focus on compliance with the limit in the future. If you want to make sure that your limit was not exceeded in your case, please do not hesitate to contact us.