EU gives Latvia the green light for modified aid scheme to help revive economy

On March 2, 2021 the European Commission (“EC”) announced its approval for Latvia to significantly increase its financial support to companies affected by the coronavirus pandemic by EUR 240 million, in line with the State aid Temporary Framework rules.

From a timeline perspective, the existing aid scheme was approved by the EC on December 16, 2020 and first amended on February 3, 2021.

In its notification to the EC, Latvia laid out the following modifications:

  • An increase of the budget from EUR 70.8 million to EUR 310.8 million;
  • The possibility to grant aid up to EUR 1.8 million per company active in all sectors, excluding the primary production of agricultural products, fisheries and aquaculture; and
  • Other technical amendments.

In light of these notified modifications, the EC held the aid scheme continues to be necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the State aid Temporary Framework rules. Publication of the non-confidential version of the decision should be available shortly, under the case number SA. 61873.

While undoubtably welcomed, the significant increase in the size of the aid scheme signifies the ever piling impact of the coronavirus pandemic in Latvia.  The ever increasing aid scheme notifications under the State aid Temporary Framework rules is slowly evidencing the extent of the economic cost of the pandemic across the Member States.  It is without a word of doubt, we will continue to see the modification and extension, as well as the introduction of additional aid schemes in the months to come.

On 28 January 2021, the European Commission announced its decision to extend the validity of State aid Temporary Framework rules, as well as the previous scope to assist the European bloc in its fight against the ongoing economic strains caused by the coronavirus outbreak.  The Temporary Framework rules will now apply until 31 December 2021.

If you have any questions concerning the recently approved scheme(s) or any other State aid related questions, please contact a member of our competition team.

by Charles Clarke, Expert Counsel, Latvia


Related Experience

Sale of shopping mall “Riga Plaza” to Summus Capital OU and Ivar Vendelin by LSREF3 Latvia Investments S.à r.l. where Vilgerts acted for the buyers.

Assistance to BPM Capital with exit from financing of DEAC and Smiltenes piens with mezzanine loans.

Provision of legal assistance and representing property development company that focuses its operations in Riga in court proceedings and arbitration proceedings concerning non-performance of contractual obligations by a bank and liability thereof.

Legal support to Nulles Depozīts SIA, a bidder for bottle deposit system in Latvia, with corporate and regulatory matters.