The amendment of the General Block Exemption Regulation 2023

EU state aid law is currently undergoing a “wave of amendments”. In recent months, the Commission has increasingly clarified, supplemented and adapted existing state aid regulations. The new General Block Exemption Regulation (GBER) 2023, focused on below, was adopted on March 9, 2023 [1] and will enter into force after publication in the Official Journal. A look at its new regulations shows that it is keeping up with the constant developments at European level and has been supplemented in the area of science, research and development by a particularly relevant funding element (investment aid for experimental and testing infrastructures in accordance with Art. 26a GBER).

1. aid for research and development and innovation (fourth section of the GBER)

The fourth section of the GBER (“Aid for research, development and innovation”) standardizes for what, to whom and under which specific conditions aid for research and development and innovation may be granted. The purpose of the targeted amendments to the new GBER, in particular in the fourth section, is to enable EU Member States to contribute to accelerating investment in the production of clean technologies and, in doing so, to provide access to the financing needed for this purpose, as well as to ensure a level playing field in the internal market.[2] The new GBER is also intended to provide a framework for the granting of aid for research and development and innovation.

Aid for research, development and innovation has been extended to include the exemption in Article 26a of the GBER (“Investment aid for experimental and test infrastructures”), which is the focus of the following. There are also innovations in Art. 27 GBER (“Aid for innovation clusters”). The GBER was also supplemented by the new Art. 25e GBER (“Aid in the framework of the co-financing of projects supported by the European Defense Fund or the European Defense Industrial Development Program”).

In the following, we will take a closer look at Art. 26a GBER, which is particularly relevant in the field of science, and the innovations in Art. 27 GBER.

1.1. NEW: Investment aid for experimental and testing infrastructures according to Art. 26a GBER

According to the newly inserted Art. 26a GBER, state aid for the construction or expansion of experimental and testing infrastructures is declared compatible with the internal market under certain conditions and exempted from notification and approval requirements.

“Trial and testing infrastructures” are, according to the new paragraph 98a inserted in the definitions of Art. 2 GBER, facilities, equipment, capabilities and resources such as test beds, pilot lines, demonstration facilities, experimental facilities or living laboratories, as well as related support services, used primarily by companies, in particular SMEs, seeking support for trials and testing in order to develop new or improved products, processes and services and to test and scale-up technologies to advance industrial research and experimental development.

Such experimental and testing infrastructures, even if they are predominantly used for commercial activities, can now receive government funding. Eligible costs are the costs of investment in tangible assets (for example, land, buildings and plant, machinery and equipment) and intangible assets (for example, patent rights, licenses, know-how or other intellectual property rights).

However, as is usual in the exemption provisions of the GBER, the aid intensity is also specified here. Aid intensity is used to express the permissible aid ceiling, i.e. the amount of aid expressed as a percentage of eligible costs before deduction of taxes and other charges. In principle, according to Art. 26a para. 5 GBER, the aid intensity will not exceed 25 % of the eligible costs. However, the aid intensity may be increased up to a maximum intensity of 40 %, 50 % and 60 % of the eligible investment costs of large, medium-sized and small enterprises, respectively, as follows:

(a) by 10 percentage points for medium-sized enterprises and by 20 percentage points for small enterprises;

(b) by an additional 10 percentage points for cross-border experimental and test infrastructures for which at least two Member States provide the public funding or for experimental and test infrastructures evaluated and selected at Union level;

(c) by an additional 5 percentage points for experimental and testing infrastructures where at least 80 % of the annual capacity is allocated to SMEs.

In addition to the aid intensity, it is also necessary to take into account the aid intensity specified in the existing Art. 4 para. 1 GBER added letter (jα) to the notification threshold. The maximum amount shall not exceed the notification threshold for experimental and test infrastructures. This is 25 million euros per test and trial infrastructure.

Article 26a of the GBER also imposes requirements on the test and trial infrastructures to be funded, which must be taken into account in the concept of the test and trial infrastructure and in the planning of the projects. Access to publicly funded experimental and testing infrastructure must be granted on a transparent and non-discriminatory basis and on market terms for multiple users. In addition, the price charged for the operation or use of the infrastructure must correspond to the market price or, in the absence of a market price, reflect its costs plus an appropriate margin. However, companies that have financed at least 10% of the investment costs of the infrastructure can obtain preferential access on more favorable terms. To avoid overcompensation, this access must be proportionate to the company’s contribution to the investment costs, and these terms must be made publicly available.

If these conditions are not met, there may be state aid to the users of the infrastructure. In such cases, aid to users or for construction or modernization is exempt from notification only if the aid to users is granted in accordance with applicable state aid rules.

1.2. Changes in aid for innovation clusters according to Art. 27 GBER

In Art. 27 of the GBER (“Aid for innovation clusters”), the group of eligible persons was also expanded.

Innovation clusters are, according to the legal definition in Art. 2(92) GBER, entities or organized groups of independent partners (e.g., innovative start-ups, small, medium and large enterprises, research and knowledge dissemination entities, non-profit entities, as well as other interconnected economic operators) that aim to stimulate innovation activity by providing appropriate support, sharing facilities, exchanging knowledge and know-how, and effectively contributing to knowledge transfer, networking, information dissemination and cooperation among the enterprises and other entities of the innovation cluster.

Art. 27 par. 2 GBER now contains as an innovation that aid can no longer only be granted to the operator as operating aid, but now also to the owner of the innovation cluster as investment aid. In addition, Art. 27 GBER now stipulates that if the operator is different from the owner, it can either have its own legal personality or be a consortium of companies without its own legal personality. In any case, each company must keep separate accounts of the costs and revenues of each activity (ownership, operation and use of the cluster) in accordance with the applicable accounting standards.

1.3. Further change in the fourth section

In addition, the aid intensities for investment aid for research infrastructure under Art. 26 GBER were supplemented by a possibility for an increase. According to Art. 26 par. 6 GBER, the aid intensity may not exceed 50 % of the eligible costs. With the addition, it can now be increased to up to 60%, provided that at least two Member States provide the public funding or a research infrastructure is evaluated and selected at Union level.

2. further changes / innovations of the AGVO

Through the newly introduced Art.19c and 19d GBER, the GBER contains exemption possibilities for aid measures to regulate energy prices (e.g. prices for electricity, gas and heat generated from natural gas or electricity) in response to the developments resulting from the Ukraine war. Furthermore, provisions on risk finance aid for SMEs and start-ups, as well as for financial products supported by the “InvestEU” fund, were clarified and streamlined, and more possibilities for training and retraining measures in many sectors were made possible through the exemption of training aid amounting to less than EUR 3 million.[3]

For reasons of legal certainty and regulatory stability, the period of validity of the GBER was extended from the original deadline of December 31, 2023 to the end of 2026, and the thresholds were even raised beyond the specific areas to be reviewed. The increase in aid intensities and notification thresholds were made in particular to facilitate the implementation of certain projects involving aid recipients in several Member States, e.g. important projects of common European interest (“IPCEI”), in the fields of research and development.

3. conclusion

In principle, the new GBER does not differ significantly from its predecessors. The existing and in parts complex system of funding for AGVO projects was maintained or specifically expanded and adapted to the requirements associated with ecological and digital change. In particular, the new funding provision in Art. 26a of the GBER (investment aid for experimental and test infrastructures) opens up new scope for public funding of science-related projects. This is because, in contrast to research infrastructures, experimental and testing infrastructures are predominantly used for the provision of services to companies and thus for economic activities. Due to the new eligibility criteria, a state subsidy is now nevertheless possible without notification.

The extended period of validity of the GBER and the increased thresholds are to be welcomed. These give the member states more planning security. Overall, the new funding opportunities, extensions and clarifications of the GBER are to be welcomed, as they strengthen the EU’s pioneering role in ecological and digital change.

[1] Commission press release of 09.03.2023 (see: State aid: Commission amends General Block Exemption Regulation (europa.eu), retrieved: 16.03.2023).

[2] Commission press release of 09.03.2023 (see: State aid: Commission amends General Block Exemption Regulation (europa.eu), retrieved: 16.03.2023).

[3] Commission press release of 09.03.2023 (see: State aid: Commission amends General Block Exemption Regulation (europa.eu), retrieved: 23.03.2023).