The European Commission has published the draft revised General Block Exemption Regulation (GBER) for public consultation, together with an Explanatory Memorandum setting out the rationale for the proposed amendments. The revised GBER — which will replace Regulation (EU) No 651/2014 — is intended to simplify the existing framework, align it with recent policy, social, market and technological developments, and streamline its structure by addressing inconsistencies and improving readability.
Considering that the GBER underpins the vast majority of State aid measures granted in Ireland without prior notification to the Commission, the revision will be of direct relevance to Irish public bodies, enterprise agencies, and aid recipients across the economy. We set out below the most significant proposed changes.
A simpler rulebook
The current GBER consists of four chapters. While Chapters I, II and IV contain common provisions, Chapter III contains specific provisions relating to different categories of aid, grouped into 16 thematic sections. The Commission is proposing a series of simplifications designed to reduce administrative burden for EU Member States.
First, some of the common provisions the GBER , for example, some definitions or the notification thresholds, will become part of the specific conditions in Chapter III.
Second, other common provisions on the transparent calculation of aid, the incentive effect, the concept of “start of works” and the cumulation of aid from different sources will be simplified to make them easier to interpret and apply.
Third, the obligation on Member States to carry out ex post evaluation of large block-exempted aid schemes will be abolished. This requirement — introduced in 2014 — has been a recurring source of compliance cost, and its removal is expected to extend to the other block exemption regulations.
Fourth, the use of simplified cost options (or SCOs) (namely, flat rates, unit costs or lump sums) for calculating the aid intensity and eligible costs, which is currently limited to some research and development (R&D) aid and aid where EU co-funding is involved, will be extended to all aid categories, including measures funded from national resources.
Small amounts of aid: a new lighter-touch regime
New specific conditions applicable to small amounts of aid for certain projects or activities will make it easier to grant such aid without giving rise to undue distortions of
competition. First, for certain categories typically involving limited sums — including SME investment aid, SME risk finance aid not involving financial intermediaries, training aid and local infrastructure aid — only a small number of straightforward conditions will need to be satisfied.
Second, for investment aid in R&D or environmental protection below a specified cap, higher aid intensities will be permitted, with the effect that the existing SME bonus can be applied to larger undertakings where the aid amount is modest. Small mid-caps, municipal undertakings and social economy entities are all expected to benefit.
Broader sectoral scope
At present, the primary agricultural production sector and fisheries and aquaculture sector are excluded from the scope of the current GBER, with some exceptions. The GBER’s scope will be extended to include these sectors, without prejudice to the existing sectoral block exemptions. Consequently, these sectors will become eligible for most aid categories under the GBER (subject to meeting certain conditions for some aid categories). This will make it easier to design multisectoral aid schemes and thus to support these sectors effectively.
R&D&I, digital and innovative start-ups
The R&D&I provisions will be simplified, including through the introduction of a new “applied research” category that combines industrial research and experimental development. Operating aid for innovation clusters will be permitted for longer, and aid for testing and experimentation infrastructures will be simplified.
A new exemption is proposed to allow R&D&I aid to be granted to certain innovative start-ups that currently fall within the definition of “undertakings in difficulty” notwithstanding their longer-term viability. The precise calibration of this exemption will depend on the Commission’s ongoing work to define “innovative start-ups”.
The draft GBER proposal includes the possibility of supporting SMEs and small mid-caps for innovative activities, such as subsidised access to crucial digital infrastructure (including compute resources of AI factories), subsidised access to regulatory sandboxes, and support for costs of digitalisation, including for the acquisition of equipment and software to enable digitalisation.
Environmental protection and energy
A number of changes are proposed to reduce the burden of calculating permitted aid for environmental protection. Member States will have greater flexibility in choosing between competitive processes, aid intensities or in some cases the funding-gap method. Where aid intensities are used, they may in certain cases be applied to total eligible investment costs rather than the narrower counterfactual base.
The €300 million per annum threshold on aid scheme budgets for renewable energy will be abandoned, and standalone electricity and thermal storage will be eligible for support without a direct connection to a renewable generation installation. This will facilitate further support for renewable energy.
The Social Economy, Social Enterprises and SMEs
Consistent with the Commission’s Action Plan for the Social Economy and its “Union of Skills” Communication, conditions for SME risk finance, start-up aid and energy-efficiency aid will be relaxed for social enterprises, and higher training aid intensities will be available for upskilling and reskilling, particularly in STEM and digital skills or in just transition regions. Aid in the form of share options and warrants to SME employees will also be block-exempted, assisting start-ups in attracting talent.
Conclusion
While the window for public consultation will soon end, after which the Commission will finalise its position having regard to Member State input, the current draft of the GBER provides a clear insight of the GBER's likely shape and the potential consequences for State aid in Ireland.
For further information, please contact John Gaffney or your usual contact in Beauchamps LLP.
