On June 13, 2022, the European Commission (EC) announced its approval of the Spanish State aid scheme in the context of Russia's invasion of Ukraine (“National Framework”), aimed at providing liquidity for companies directly or indirectly affected by the conflict. The scheme’s budget is €10 billion.
This aid scheme has been approved under the EC’s Temporary Crisis Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia (“Temporary Framework”), adopted on March 24, 2022.
The Temporary Framework was based on article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU). Under this provision, the EC considers compatible with the internal market any public aid schemes aimed at remedying a serious disturbance in the economy of a Member State.
Despite not having binding effects, the Temporary Framework has a major interpretative value, since it (i) provides guidance to Member States for designing their aid measures; and (ii) significantly streamlines the EC’s assessment of these measures. Note that the provisions of the National Framework and the EC’s Temporary Framework are very similar.
See below the main elements of the National Framework.
In line with the Temporary Framework, the National Framework provides different forms of aid, including direct grants, tax advantages and subsidized interest rates or guarantees on loans.
For State aid measures to be compatible with the internal market under the National Framework, they need to meet the following conditions: (i) the overall aid cannot exceed €400,000 in gross terms per beneficiary company (except for the aid granted to companies active in the agricultural and fishery sectors, where it will be capped at €35,000); (ii) the aid must be granted before December 31, 2022; and (iii) the aid must be granted only to companies affected by the crisis. The National Framework is available for companies active in all sectors, excluding financial institutions and any other company that has been subject to EU sanctions due to the conflict.
The State aid measures within the scope of the National Framework may be cumulated with any other aid granted under de minimis regulations or general block exemption regulations, as long as the conditions laid down in each of those regulations are fulfilled. Also, the aid granted under the National Framework may be cumulated with the aid provided to mitigate the effects of the COVID-19 pandemic (Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak), as long as the applicable cumulation rules are fulfilled.
Aid in the form of guarantees on loans
The National Framework specifically provides aid measures in the form of guarantees on loans, subject to specific cumulation limits.
The same company may benefit from several guarantees as long as it does not exceed one of the two alternative limits. In particular, the guaranteed amount must not exceed (i) 15% of the beneficiary’s average total annual turnover over the last three closed accounting periods; or (ii) 50% of energy costs over the 12 months preceding the submission of the aid application. Additionally, the amount guaranteed under these instruments must not exceed 80% of the loan principal for SMEs and self-employed workers, or 70% for large enterprises. Finally, the maturity of the loan will be limited to eight years, and liability for losses will be sustained proportionally between the State and the credit institution.
Note that, regarding the same underlying loan, these guarantees cannot be cumulated with other public aid measures in the form of guarantees or subsidized loans under the COVID-19 Temporary Framework.
The aid measures under this category may be cumulated with other forms of aid as long as they do not exceed, together, €2 million.
Aid in the form of loans with subsidized interest rates
Finally, the National Framework sets out the limits and requirements applicable to the aid in the form of loans with subsidized interest rates. This type of aid provides interest rates below market levels due to State intervention.The quantitative limits applicable to this form of aid are the same as those of the guarantees discussed above. However, subsidized loans must have a maximum maturity of six years. Also, the reduced interest rate will be at least equal to the IBOR rate (interbank offered rate) published by the EC on February 1, 2022, or at the moment of notification, plus certain risk margins that will be determined based on the company’s size and the maturity of the loan.