Strategic directions of the national State aid control policy for 2016 - 2018
- To ensure the introduction of the European Union requirements in the field of the State aid control in Latvia, the preparation of the necessary legal framework, as well as the necessary amendments will be ensured in the field of the State aid control. Taking into account that the European Commission has set new requirements for ensuring the publicity (transparency) requirements in the field of the State aid, and to ensure the observance of these requirements in Latvia, in 2016, new Cabinet regulations will be developed on the procedure for publishing information on the provided State aid.
- To ensure the observance of the European Commission requirements with respect to the State aid provided by the Member States, the yearly report will be prepared and submitted to the European Commission on the State aid provided in Latvia, by aggregating the information on the aid provided within the scope of the aid measures - aid programmes and individual aid projects, including the information in breakdown by sectors and aid mechanisms, and it will be posted also on the website of the Ministry of Finance.
- To ensure that the European Commission would be able to timely carry out the centralised aggregation of notifications of subsidies of the EU Member States and submit them to the World Trade Organisation (WTO), information will be aggregated and prepared to be further submitted to the WRO, arising out of Article 25 of the WTO’s Agreement on Subsidies and Compensation Measures (SCM) and Article XVI of the General Agreement on tariffs and Trade (GATT). Submission of information to the WTO is ensured by the relevant line ministry.
- To ensure introduction of the de minimis aid accounting system in Latvia, the work will continue on the development of the necessary documents and attraction of funding, in order to establish the de minimis aid accounting system, which would include complete information on the granted de minimis aid in Latvia.
- In order to ensure that the aid compatible with the European Union internal market is being provided in Latvia, to focus on the initial assessment of the planned aid measures, including, if necessary, to provide methodological support to the line ministries at the stage of development of the planned State aid measures.
- In order to help the aid providing institutions to prepare the draft documents corresponding to the State aid control norms and in order to ensure that the aid compatible with the European Union internal market is being provided in Latvia, the Department, independently and as necessary, will provide training and methodological support to the aid providing institutions and institutions in charge of the supervision an control of project implementation, explaining the application of the requirements of the norms in the field of the State aid.
Key Principles of the State Aid Policy
Key principles of the State aid policy of the European Union are set in Articles 107 and 108 of the Treaty on the Functioning of the European Union (hereinafter - the Treaty). These provisions are interpreted and put in more detail in the secondary legal framework, the decisions of the European Commission and the judgments of the European Court of Justice.
The main key principle of the State aid in contained in Article 107, Clause 1 of the Treaty. It states: "Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market."
The State aid refers to both granting the resources and the allowances of the mandatory payments established by the State/local governments. It may have various forms or types of expression, not only subsidies or reduced interest rates, but also loan guarantees, accelerated amortisation, capital contribution, etc.
The State aid subsidy equivalent or the "element" of the aid is the gain of the aid beneficiary from the aid calculated in monetary terms. For example, the preferential loan subsidy equivalent is calculated, by deducting the actually paid loan interest amount from the interest amount that should be paid in accordance with the reference rate approved by the European Union for the relevant time period.
More information about the aggregation and explanations of the legal framework of key principles of the State aid is available in the so-called State Aid Handbook developed by the European Commission - Vademecum on state aid rules – or in the insight to the community state aid rules, available also in Latvian on the home page of the European Commission.
On 19 May 2016, the European Commission has published the State Aid Concept Document, explaining in more detail the cases, when the State aid regulation must be applied. The European Commission press release (in English) is available here and the State Aid Concept Document (in English) is available here.
Procedural Rules of the State Aid
Aid notification for approval in the European Commission
When notifying the aid measure in the European Commission, certain procedural order must be complied with. Prior to notifying the planned aid in the European Commission, each and every planned aid measure - programme or individual aid project, as well as each and every planned amendment to the existing aid programmes or individual aid projects, before the commencement of implementation thereof, must be submitted for initial assessment to the Ministry of Finance. Only the projects implemented in accordance with the aid programme already approved by the European Commission are not subject to submission for initial assessment to the Ministry of Finance, except for the cases, when the need for initial assessment arises out of the legal acts of the European Union, the Law on the State Aid, aid programme or the decision of the European Commission.
The initial assessment of the aid measure is followed by the submission of aid notification to the European Commission. The aid programme or individual aid project notification is submitted to the European Commission in electronic form, by means of the aid notifications electronic system operated by the European Commission. If the submitted information is sufficient and the planned aid fully corresponds to the requirements of the legal framework, the European Commission approves the aid without objections. In turn, if the planned aid does not fully correspond to the requirements of the legal framework, the preliminary assessment procedure is initiated, to enable the stakeholders to provide information at their disposal.
Exemption from the pre-notification of the aid in the European Commission
In separate cases set by the legal framework the aid may be exempt from the duty to notify it to the European Commission. To this effect, on 7 May 1998 the Council adopted Regulation (EC) No 994/98 on the application of Articles 92 and 93 of the Treaty establishing the European Community to certain categories of horizontal State aid and, especially, Article 1 (1) Sub-clauses a) and b) thereof, thus enabling the Commission to adopt the so-called block exemption regulations in the field of the State aid. This Regulation prescribes that the Commission may declare that certain categories of the State aid are compatible with the Treaty, thus exempting them from the pre-notification and the consent of the Commission. Therewith, the aid provided in accordance with Commission Regulation (EC) No 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market in application of Articles 87 and 88 of the Treaty (General Block Exemption Regulation) and conditions of other Commission Regulations issued on the basis of Council Regulation No 994/98 should not be notified to the European Commission.
However, the exemption of such aid from the pre-notification duty in the European Commission, does not mean that it is exempt from the assessment at the national level. Namely, to verify the conformity of the aid exempt from the pre-notification in the European Commission to the conditions of the exemption regulations, the initial assessment of the planned aid in the Ministry of Finance must be carried out. The initial assessment of the planned aid measure in the Ministry of Finance is followed by sending summary information about the planned aid programme or individual aid project to the European Commission, by means of the State aid notification electronic system operated by the European Commission - SANI.
It should be noted that, in light of the adoption [6 August 2008] and coming into effect [29 August 2008] of the above mentioned General Block Exemption Regulation, the following Regulations became null and void:
Commission Regulation (EC) No 68/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to training aid, as amended by Commission Regulation (EC) No 363/2004 of 25 February 2004 and Commission Regulation (EC) No 1976/2006 of 20 December 2006.
Commission Regulation (EC) No 70/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises, as amended by Commission Regulation (EC) No 364/2004 of 25 February 2004 and Commission Regulation (EC) No 1976/2006 of 20 December 2006.
Commission Regulation (EC) No 2204/2002 of 5 December 2002 on the application of Articles 87 and 88 of the EC Treaty to State aid for employment, as amended by Commission Regulation (EC) No 1976/2006 of 20 December 2006.
Commission Regulation (EC) No 1628/2006 of 24 October 2006 on the application of Articles 87 and 88 of the EC Treaty to national regional investment aid.
In accordance with Article 44 (2) of the General Block Exemption Regulation any aid granted before 31 December 2008, which does not fulfil the conditions laid down in this Regulation but fulfils the conditions laid down in Regulation (EC) No 68/2001, Regulation (EC) No 70/2001, Regulation (EC) No 2204/2002 or Regulation (EC) No 1628/2006 shall be compatible with the common market and exempt from the notification requirement of Article 88(3) of the Treaty. Therewith, starting from 1 January 2009, all aid programmes, for them to be exempt from the pre-notification in the European Commission, must fulfil the conditions of the General Block Exemption Regulation.
To simplify the State aid control procedures, on 16 June 2009, the European Commission has adopted new documents, namely, Code of Best Practice for the conduct of State aid control procedures (Official Journal C 136, 16 June 2009, Pp. 0013-0020) and Notice from the Commission on a simplified procedure for treatment of certain types of State Aid (Official Journal C 136, 16 June 2009, Pp. 0003-0012).
The aim of the said documents is to raise the effectiveness, transparency and foreseeability of the State aid control procedure at all stages of assessment of the aid, thus promoting voluntary cooperation of the European Union and the Member States. The documents, more specifically, propose to the Member States to enhance the communication before the notification of the planned aid measure, so as to exclude, already at the very beginning of the process, possible complications in the review of the case or to recognise the planned aid measure as a compatible aid in accordance with the legal regulation of the State aid control. The said documents also contain new planning mechanisms which would make the solution of both complicated and simple cases more effective. Simplified procedure is applied to the measures communicated to the European Commission starting from 1 September 2009.
Please note that the new documents and the simplified procedure described therein, as well as the procedure for application thereof is available on the website of the European Commission Directorate General for Competition at: