News and developments
State aid amid COVID-19 outbreak
COVID-19 not only represents a worldwide health security issue, but it also triggers significant negative economic consequences as businesses all over encounter disruptions in their activity.
European Commission stepped in to mitigate the negative consequences on the economy caused by the COVID-19 outbreak.
How? What are the actual measures taken by the European Commission?
During yesterday’s speech, Margrethe Vestager, Executive Vice-President of the European Commission stated that it is necessary for the Member States to act fast in order to preserve the continuity of economic activity in such hard times. Therefore, besides support measures that may be granted by the Member States under existing State aid regulations, a temporary new state aid framework has been adopted.
Under this special crisis framework the Member States may give five types of support:
- Direct grants, selective tax advantages and advance payments:Member States will be able to set up schemes to grant up to €800,000 to companies.
- State guarantees for loans taken by companies from banks: The aim is to ensure that banks keep providing loans to consumers.
- Subsidised public loans to companies: granting loans with favourable interest rates to companies.
- Safeguards for banks that channel State aid to the real economy:According to the European Commission “Some Member States plan to build on banks’ existing lending capacities, and use them as a channel for support to businesses – in particular to small and medium-sized companies. The Framework makes clear that such aid is considered as direct aid to the banks’ customers, not to the banks themselves, and gives guidance on how to ensure minimal distortion of competition between banks”.
- Short-term export credit insurance: Additional flexibility on the proof that certain countries are not-marketable risks and thus enabling short-term export credit insurance to be provided by the State where needed.
- Credit guarantee in the limit of 80% & subsiding the credit interest rate;
- Facilities for companies which encounter financial difficulties;
- Prolonging the terms for submission of restructuration of budgetary obligations demands & deadlines for payment of local taxes;
- Suspension of enforcement procedures regarding citizens’ payment of taxes obligations;
- SME’s may obtain an emergency situation certificate based on which they may postpone payment of rents & utilities;
- For the acquisition of protective equipment gear the Ministry of Public Finances grants a loan to the National Company Unifarm S.A.