Latvia wins EU approval for its Cultural Sector aid scheme

On March 17, the European Commission (the “EC”), after receiving notification from the Latvian State, approved the injection of EUR 3 million (in the form of direct grants) to assist Latvian cultural institutions in dealing with their cash flows in light of the ongoing coronavirus restrictions in Latvia.

All Latvian registered companies active in ‘cultural sector’ are able to apply to receive the direct grants.  Those cultural sector institutions include, companies active in arts and entertainment, libraries and museums.

The aid scheme was approved under the State aid Temporary Framework rules (the “Temporary Framework”) and will assist in providing Latvian cultural institutions with a “basic survival kit” (i.e., the scheme will simply assist in covering monthly expenses, such as rent payments, utility bills, communication and IT services, as well as employees' salaries and related taxes). The aid scheme will serve to cover paid expenses for the period 1 January 2021 until 30 June 2021.

The EC held the Latvian aid scheme is in line with in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework and specifically, (i) the overall aid cap of EUR 1.8 million per company will be respected; and (ii) the aid will be granted no later than 31 December 2021.  Further, the EC underlined the aid measure is “necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State”.  This recent approval is indeed welcomed and provides somewhat of a safety-net during these unprecedented times for cultural institutions in Latvia.  Whether these cultural institutions will be able to pick themselves up after the national restrictions are eased will have to be seen.

The non-confidential version of the decision will shortly be made available under the case number SA.61769.

Under a previously approved cultural aid support scheme, organizers of cultural events in Latvia affected by the coronavirus pandemic can receive state support.  Beneficiaries can receive up to 80% of the total amount of ticket money reimbursed to spectators and ticket-reversal costs will be compensated.  Aid applications are evaluated in three rounds: one with an application deadline in January, one in March and one in May 2021. Organisers of cultural events are eligible for the aid if the meet the following criteria:

  • They are legal entities registered in Latvia;
  • Their announced events, for which tickets have already been sold, have been cancelled due to the state of emergency declared by the Cabinet of Ministers from 9 November 2020 until 11 January 2021 or in subsequent periods in which the Cabinet of Ministers will have decided to prohibit the organisation of public events;
  • They are registered in the State Revenue Service taxpayer register; and
  • At the time of submission of the application, their tax debt does not exceed EUR 1,000, except for tax payments for which an extension of the payment term has been granted, an agreement on the voluntary payment of taxes has been concluded, or any other agreement has been made.

Latvia has notified and received 14 approvals during 2020/2021 under the State aid Temporary Framework rules for Latvian companies affected by the coronavirus outbreak.

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 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.  With EU vaccination programs slowly moving forward and the EU proposal for a pan-European health certification system, companies are beginning to see light at the end of tunnel.  Many factors are involved and nothing is certain.

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

Team

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