European COVID-19 Economic Incentives: Where is the Money Going? State and Local Tax

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European COVID-19 Economic Incentives: Where is the Money Going?

European COVID-19 Economic Incentives: Where is the Money Going?

 

Overview and Update

In March 2020, the European Commission established a Temporary State Aid Framework to temporarily modify the EU state aid rules so member states could more easily respond to the economic impact of the COVID-19 pandemic. It has since been amended three times to expand aid to furthering COVID-19-related research, to include subordinated debt and recapitalization measures and to allowing more flexibility in supporting small and micro businesses. Half a year later, we examine how much money has been authorized and who is benefitting. In the past six months, 290 programs have been implemented to help businesses, individuals, and in some cases, specific companies. View our comprehensive summary of approved EU member state programs here.

Budgeted Amounts

The equivalent of EUR 1.2 trillion has been budgeted for these programs, with France and Italy accounting for over half of that sum.

European COVID-19 Economic Incentives: Where is the Money Going?

The top 12 countries, by approved budgets are

Country EUR (millions)
France 397,428
Italy 277,273
United Kingdom 78,728
Spain 70,000
Belgium 65,651
Germany 64,390
Poland 56,718
Austria 43,021
Czech Republic 28,865
Netherlands 17,713
Portugal 17,448
Sweden 14,204

Targeted Beneficiaries

To date, as one of the most negatively impacted industries by the pandemic, airlines have been the biggest beneficiary of this temporary state aid. Overall, roughly EUR 11 billion was allocated to airlines and airports. The largest recipient was Air France, at EUR 7 billion, which took the form of a state guarantee on loans and a subordinated shareholder loan to the company by the French state.

Agriculture and fisheries were another big recipient at over EUR 9 billion. France (EUR 7 billion) and Italy (EUR 1.3 billion) allocated the most funding to this sector in the forms of direct grants, loan guarantees and subsidized loans. 

As a reminder, there is a maximum benefit of EUR 100,000 per agricultural company and EUR 120,000 per fishery, whereas all other industries are allowed a maximum of EUR 800,000.

Programs exclusive to small businesses were approved for almost EUR 72 billion, most of which were in the form of subsized loans and loan guarantees.

Type of Aid Approved

Many of the programs approved by the European Commission included a combination of various forms of support, but by far the most popular form of state aid has been state guarantees of loans. The chart below breaks out the types and budgets for each major category of aid approved to date.

European COVID-19 Economic Incentives: Where is the Money Going?

Expiration of Temporary Aid

The amended Temporary Framework will be in place until the end of December 2020. Recapitalization measures expire at the end of June 2021. The European Commission is expected to assess a possible extension before these dates.

How We Can Help

Duff & Phelps’ Site Selection and Incentives Advisory professionals can help your team determine if you qualify, prepare the relevant applications and presentation materials and support your compliance efforts after the incentive is awarded.

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