State aid Temporary Framework rules: EU Commission approves Covid-19 support for Latvian cultural event organizers

The European Commission has approved a EUR 5 million Latvian aid scheme whereby organizers of cultural events in Latvia affected by the coronavirus pandemic can receive state support.  The European Commission concluded the scheme was in line with the conditions set out under the State aid Temporary Framework rules.  Under the scheme, beneficiaries will receive up to 80% of the total amount of ticket money reimbursed to spectators and ticket-reversal costs will be compensated. 

This recent approval is indeed welcomed and provides somewhat of a safety-net during these unprecedented times for cultural-event providers in Latvia. 

There have been a number of approvals during 2020 under the State aid Temporary Framework rules for Latvian companies affected by the coronavirus outbreak, including:

  • EUR 70.8 million Latvian scheme to support companies in all sectors (allowing for direct grants that can cover 30% of a company’s gross wages and salaries for August, September and October 2020);
  • EUR 51 million Latvian scheme to support companies with exporting activities (allowing Latvian export companies to get support for the payment of mandatory social security contributions.  The measure takes the form of direct grants that cover up to 25% of the payments);
  • EUR 114,000 Latvian scheme to support cooperatives active in the forestry sector (allowing up to three cooperatives providing forest services affected by the pandemic to be eligible for direct grants);
  • EUR 19 million scheme in support of the tourism and events organization sectors (allowing direct grants to operators active in tourism events organizations in Latvia faced with an income loss of at least 30% over one month between April to June 2020, compared to the same month in the previous year);
  • EUR 58 million Latvian rent compensation scheme to support companies that lease property from public bodies (allowing lessees to befit from reduced lease payments for publicly owned property and do not have to pay late payment interest and penalties);
  • Latvian guarantee scheme to support undertakings with export activities.  The scheme provides for State guarantees on loans going up to €160 million. The support is accessible to mid-sized and large undertakings whose exports represent more than 30% of their annual turnover;
  • EUR 250 million Latvian measure to recapitalise airBaltic (Latvia’s national airline);
  • EUR 800,000 Latvian scheme to support tour operators that bore the costs of the repatriation of travellers (support in the form of direct grants);
  • EUR 1.5 million Latvian scheme to support companies active in the primary agricultural production sector (support granted in the form of zero-interest rate loans by the Rural Support Service);
  • EUR 35.5 million Latvian scheme to support the agricultural, fishery, food and school catering sectors facing difficulties (support in the form of direct grants);
  • A subsidised loan scheme and a loan guarantee scheme for companies.  The overall budget for the subsidised loan scheme is €200 million, out of which €50 million is envisaged from the State budget and the rest from the international financial institutions.  The amount envisaged in the State budget for the loan guarantee scheme is €50 million.  It is expected to be leveraged and cover guarantees worth over €200 million.

In light of the ongoing global pandemic, the European Commission has proposed prolonging the State aid Temporary Framework to support businesses and at the same time, maintain healthy and effective competition in the marketplace.  The European Commission has sent it’s draft proposal to Member States for consultation which seeks to:

  • prolong existing provisions of the State aid Temporary Framework until 31 December 2021;
  • increase the ceilings for limited amounts of aid granted under the Temporary Framework (currently up to EUR 120,000 per company active in the fishery and aquaculture sector, EUR 100,000 per company active in the primary production of agricultural products, and EUR 800,000 per company active in all other sectors) and for measures contributing to the fixed costs of companies that are not covered by their revenues (currently up to EUR 3 million per company), taking into account the continued economic uncertainty and the needs of businesses affected by the crisis; and
  • enable Member States to convert also at a later stage the granted repayable instruments (including loans) of up to EUR 800,000 per company (EUR 120,000 per company active in the fishery and aquaculture sector and EUR 100,000 per company active in the primary production of agricultural products) into direct grants. This aims to provide incentives for Member States to choose, in the first place, repayable instruments as a form of aid.

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

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