The European Commission has proposed additional support measures for businesses amid the COVID-19 crisis, including allowing member states to defer tax payments and suspend social security contributions for specific regions or sectors to prevent layoffs.
The commission said in a March 27 release that it had already considered 14 state aid decisions under the temporary framework adopted March 19 and approved 22 national relief measures, providing “much needed liquidity to European businesses in these difficult times.” It said its draft proposal to expand the temporary framework has been sent to member states for comment, and that it hopes to have the amended framework in place the week of March 30.
The proposal also calls for additional support for coronavirus-related research and development, construction and upgrading of testing facilities, and production of vaccines and medical equipment. Finally, the proposal calls for targeted support in the form of employee wage subsidies.
"EU State aid rules provide a toolbox for Member States to help companies in this difficult time. We will add to this toolbox to enable Member States to support companies that develop, test and produce much needed products to fight the coronavirus, such as vaccines, medical devices and protective equipment. We will also enable Member States to give targeted support to save jobs in sectors and regions that are hit particularly hard by the outbreak, by relieving them from tax payment and social contributions or giving wage subsidies," said Margrethe Vestager, the commission's executive vice president in charge of competition policy, as quoted in the release.
The state aid temporary framework allows member states to provide companies with direct grants, select tax advantages, and advance payments of up to €800,000 to address urgent liquidity needs. The commission is also allowing aid in the forms of guarantee schemes to support bank loans taken out by businesses; subsidized interest rates for private and public loans to companies; safeguards for banks; and short-term export credit insurance.
The commission also decided March 27 to temporarily remove all countries from its list of “marketable risk” countries, allowing member states to make insurance for short-term export-credit available during the pandemic. This amendment will further expand the flexibility granted for businesses under state aid rules, the commission said.
In another effort to combat the economic effects of the COVID-19 pandemic, the commission proposed March 20 to activate the general escape clause of the Stability and Growth Pact to aid member states, which would allow them to depart from general budgetary requirements under the EU’s fiscal framework and take adequate measures to deal with the crisis.