Basic principles of the State aid policy 31/01/2018
Basic principles of the State aid policy are determined by Article 107 and 108 of the Treaty establishing the European Community (hereinafter – Treaty). These rules are interpreted and specified by secondary normative acts, decisions of the European Commission and judgements of the Court of Justice. The main principle of the State aid is included in Article 107(1) of the Treaty. It is the following: “Save as otherwise provided in this Treaty, 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 production of certain goods shall, insofar as it affects trade between Member States, be compatible with the common market.”
State aid applies to granting of resources, as well as to allowances for mandatory state/municipality payments. State aid may take different forms, not just grants or interest rate rebates, but also loan guarantees, accelerated depreciation allowances, capital injections etc.
The subsidy equivalent or aid “element” is the gain of the aid recipient from the aid in monetary terms. For instance, the subsidy equivalent for preferential credits shall be calculated by deducting the actual credit interest sum that would have to be paid, in accordance with the reference rate in the relevant time period approved by the European Commission.
Detailed summary and explanations of the State aid basic principle legal framework are available in the Vademecum on State Aid Rules developed by the Commission, which is also available in Latvian on the web site of the European Union.