In addition to the maximum grant levels set out for Rural Priorities options, the amount of grant payable for certain activities, mainly under Axis 3, can also be limited because of rules applied by the European Commission in relation to State Aid.
Eligible projects most likely to be affected are ones with non-agricultural, commercial activities. The guidance below explains this in more detail and aims to help you understand how these restrictions are applied to Rural Priorities.
What is State Aid?
All public funding is State Aid.
Why does State Aid only affect some projects?
Some types of activities are governed by specific State Aid regulations. Included in this are agriculture and forestry. Rural Priorities funding is set in line with these specific regulations. Therefore while the funding for agricultural and forestry projects is State Aid the funding limit generally cannot be breached.
Why is State Aid an issue?
The European Community is founded on free market principles so starts from the premise that State Aid is undesirable because it can distort a free market. However, the European Commission (EC) recognises that there need to be some exceptions made.
What are the restrictions?
Projects falling out of the agriculture and forestry regulations will be assessed by the Case Officer to determine if restrictions need to be applied. Currently the maximum ceiling limit for "undertakings" is €200,000 in a 3 fiscal year rolling period. This funding is known as de minimis.
What are "undertakings"
The term 'undertaking' can include businesses, groups and individuals.
What is a fiscal year?
The fiscal year in Scotland is the tax year. This means the 1st April in one year through to the 31st March of the following year.
What is "de minimis"?
One State Aid exception accepted by the EC is the payment of de minimis funding. The EC considers de minimis funding to undertakings over 3 rolling fiscal years has little impact on trade and competition. De minimis enables public funding of up to €200,000 to be awarded to a single undertaking over 3 rolling fiscal years.
Does this State Aid only affect projects over €200,000?
No. Any undertaking paid using the de minimis regulation will be notified in writing. The undertaking must notify any public body of this funding if they apply for any funding for any project within 3 fiscal years.
What is €200,000 in Pounds/Sterling?
The up to date exchange rate can be found on the EC website. The exchange rate used will be the current rate at the time your contract is issued.
What about the €500,000 State Aid limit?
You may be aware that we utilised a temporary State Aid limit of €500,000 in part of 2009 and 2010. This increased limit was introduced by the EC on a temporary basis and comes to an end on the 31st December 2010. Therefore all future funding will revert to the maximum limit of €200,000.
Exclusions to de minimis
De minimis cannot be given for export related activities (except attendance at trade fairs), agriculture (covered under separate regulation) or aid favouring domestic goods over imports.
How to adopt the de minimis approach
Your Case Officer will explain to you if your funding is to be paid as de minimis. If you disagree with this assessment then you should fully outline your reasons in writing to your Case Officer. We may refer your application to State Aid specialists for further advice and in extreme cases may need to refer your application to the EC for a decision.
As an undertaking you must declare if you have received any other de minimis State Aid funding within the last 3 years. We will inform you explicitly (at contract stage) that you are being awarded de minimis. The letter will include the value of the award in Euros.
For further information regarding State Aid, please refer to the Scottish Government State Aid Unit's website.