26.4.2012 EN Official Journal of the European Union L 114/8 COMMISSION REGULATION (EU) No 360/2012 of 25 April 2012 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid granted to undertakings providing services of general economic interest (Text with EEA relevance) THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to Council Regulation (EC) No 994/98 of 7 May 1998 on the application of Articles 92 and 93 of the Treaty establishing the European Community to certain categories of horizontal State aid (1), and in particular Article 2(1) thereof, Having published a draft of this Regulation (2), After consulting the Advisory Committee on State Aid, Whereas: (1) Regulation (EC) No 994/98 empowers the Commission to set out in a Regulation a threshold below which aid measures are considered not to meet all the criteria laid down in Article 107(1) of the Treaty and therefore do not fall under the notification procedure provided for in Article 108(3) of the Treaty. (2) On the basis of that Regulation, the Commission has adopted, in particular, Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid (3), which sets a general de minimis ceiling of EUR 200 000 per beneficiary over a period of three fiscal years. (3) The Commission’s experience in applying the State aid rules to undertakings providing services of general economic interest within the meaning of Article 106(2) of the Treaty has shown that the ceiling below which advantages granted to such undertakings may be deemed not to affect trade between Member States and/or not to distort or threaten to distort competition can, in some cases, differ from the general de minimis ceiling established in Regulation (EC) No 1998/2006. Indeed, at least some of those advantages are likely to constitute compensation for additional costs linked to the provision of services of general economic interest. Moreover, many activities qualifying as the provision of services of general economic interest have a limited territorial scope. It is therefore appropriate to introduce, alongside Regulation (EC) No 1998/2006, a Regulation containing specific de minimis rules for undertakings providing services of general economic interest. A ceiling should be established for the amount of de minimis aid each undertaking may receive over a specific period of time. (4) In the light of the Commission’s experience, aid granted to undertakings providing a service of general economic interest should be deemed not to affect trade between Member States and/or not to distort or threaten to distort competition provided that the total amount of aid granted for the provision of services of general economic interest received by the beneficiary undertaking does not exceed EUR 500 000 over any period of three fiscal years. In view of the development of the road passenger transport sector and of the mostly local nature of services of general economic interest in this field, it is not appropriate to apply a lower ceiling to this sector and the ceiling of EUR 500 000 should apply. (5) The years to be taken into account for the purpose of determining whether that ceiling is met should be the fiscal years as used for fiscal purposes by the undertaking in the Member State concerned. The relevant period of three years should be assessed on a rolling basis so that, for each new grant of de minimis aid, the total amount of de minimis aid granted in the fiscal year concerned, as well as during the previous two fiscal years, needs to be determined. Aid granted by a Member State should be taken into account for this purpose even when financed entirely or partly by resources of Union origin. It should not be possible for aid measures exceeding the de minimis ceiling to be broken down into a number of smaller parts in order to bring such parts within the scope of this Regulation. (6) This Regulation should apply only to aid granted for the provision of a service of general economic interest. The beneficiary undertaking should therefore be entrusted in writing with the service of general economic interest in respect of which the aid is granted. While the entrustment act should inform the undertaking of the service of general economic interest in respect of which it is granted, it must not necessarily contain all the detailed information as set out in Commission Decision 2012/21/EU of 20 December 2011 on the application of Article 106(2) of the Treaty on the Functioning of the European Union to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (4). (7) In view of the special rules which apply in the sectors of primary production of agricultural products, fisheries, aquaculture and road freight transport, of the fact that undertakings in those sectors are rarely entrusted with services of general economic interest, and of the risk that amounts of aid below the ceiling set out in this Regulation could fulfil the criteria of Article 107(1) of the Treaty in those sectors, this Regulation should not apply to those sectors. However, if undertakings are active in the sectors of primary production of agricultural products, fisheries, aquaculture or road freight transport as well as in other sectors or activities, this Regulation should apply to those other sectors or activities (such as for example collection of litter at sea) provided that Member States ensure that the activities in the excluded sectors do not benefit from the de minimis aid under this Regulation, by appropriate means such as separation of activities or distinction of costs. Member States can fulfill this obligation, in particular, by limiting the amount of de minimis aid to the compensation of the costs of the provision of the service, including a reasonable profit. This Regulation should not apply to the coal sector, in view of its special characteristics and of fact that undertakings in those sectors are rarely entrusted with services of general economic interest. (8) Considering the similarities between the processing and marketing of agricultural products, on the one hand, and of non-agricultural products, on the other, this Regulation should apply to the processing and marketing of agricultural products, provided that certain conditions are met. Neither on-farm activities necessary for preparing a product for the first sale, such as harvesting, cutting and threshing of cereals, or packing of eggs, nor the first sale to resellers or processors should be considered as processing or marketing in this respect. (9) The Court of Justice has established (5) that, once the Union has legislated for the establishment of a common organisation of the market in a given sector of agriculture, Member States are under an obligation to refrain from taking any measure which might undermine or create exceptions to it. For this reason, this Regulation should not apply to aid the amount of which is set on the basis of the price or quantity of products purchased or put on the market. Nor should it apply to de minimis support which is linked to an obligation to share the aid with primary producers. (10) This Regulation should not apply to de minimis export aid or de minimis aid favouring domestic over imported products. (11) This Regulation should not apply to undertakings in difficulty within the meaning of the Community guidelines on State aid for rescuing and restructuring firms in difficulty (6) since it is not appropriate to grant operating aid to firms in difficulty outside of a restructuring concept and there are difficulties linked to determining the gross grant equivalent of aid granted to undertakings of this type. (12) In accordance with the principles governing aid falling within Article 107(1) of the Treaty, de minimis aid should be considered to be granted at the moment the legal right to receive the aid is conferred on the undertaking under the applicable national legal regime. (13) In order to avoid circumvention of maximum aid intensities laid down in different Union instruments, de minimis aid should not be cumulated with State aid in respect of the same eligible costs if such cumulation would result in an aid intensity exceeding that specified in the particular circumstances of each case by a block exemption regulation or decision adopted by the Commission. (14) This Regulation should not restrict the application of Regulation (EC) No 1998/2006 to undertakings providing services of general economic interest. Member States should remain free to rely either on this Regulation or on Regulation (EC) No 1998/2006 as regards aid granted for the provision of services of general economic interest. (15) The Court of Justice, in its Altmark judgment (7), has identified a number of conditions which must be fulfilled in order for compensation for the provision of a service of general economic interest not to constitute State aid. Those conditions ensure that compensation limited to the net costs incurred by efficient undertakings for the provision of a service of general economic interest does not constitute State aid within the meaning of Article 107(1) of the Treaty. Compensation in excess of those net costs constitutes State aid which may be declared compatible on the basis of the applicable Union rules. In order to avoid this Regulation being applied to circumvent the conditions identified in the Altmark judgment, and in order to avoid de minimis aid granted under this Regulation affecting trade due to its cumulation with other compensation for the same service of general economic interest, de minimis aid under this Regulation should not be cumulated with any other compensation in respect of the same service, regardless of whether or not it constitutes State aid under the Altmark judgment or compatible State aid under Decision 2012/21/EU or under the Communication from the Commission — European Union framework for State aid in the form of public service compensation (2011) (8). Therefore, this Regulation should not apply to compensation received for the provision of a service of general economic interest in respect of which other types of compensation are also being granted, except where that other compensation constitutes de minimis aid according to other de minimis regulations and the cumulation rules set out in this Regulation are complied with. (16) For the purposes of transparency, equal treatment and correct application of the de minimis ceiling, all Member States should apply the same method of calculation. In order to facilitate such calculation and in accordance with present practice in applying the de minimis rule, aid amounts not taking the form of a cash grant should be converted into their gross grant equivalent. Calculation of the grant equivalent of transparent types of aid other than grants and of aid payable in several instalments requires the use of market rates prevailing at the time of granting such aid. With a view to uniform, transparent and simple application of the State aid rules, the market rates for the purposes of this Regulation should be deemed to be the reference rates, as currently set out in the Communication from the Commission on the revision of the method for setting the reference and discount rates (9). (17) For the purposes of transparency, equal treatment and effective monitoring, this Regulation should apply only to de minimis aid which is transparent. Transparent aid is aid for which it is possible to calculate precisely the gross grant equivalent ex ante without a need to undertake a risk assessment. Such a precise calculation can, for instance, be made for grants, interest rate subsidies and capped tax exemptions. Aid comprised in capital injections should not be considered as transparent de minimis aid, unless the total amount of the public injection is lower than the de minimis ceiling. Aid comprised in risk capital measures as referred to in the Community guidelines on State aid to promote risk capital investments in small and medium-sized enterprises (10) should not be considered as transparent de minimis aid, unless the risk capital scheme concerned provides capital only up to the de minimis ceiling to each target undertaking. Aid comprised in loans should be treated as transparent de minimis aid when the gross grant equivalent has been calculated on the basis of market interest rates prevailing at the time of grant. (18) Legal certainty needs to be provided for guarantee schemes which do not have the potential to affect trade and distort competition and in respect of which sufficient data are available to assess any potential effects reliably. This Regulation should therefore transpose the de minimis ceiling of EUR 500 000 into a guarantee-specific ceiling based on the guaranteed amount of the individual loan underlying such guarantee. This specific ceiling should be calculated using a methodology assessing the State aid amount included in guarantee schemes covering loans in favour of viable undertakings. The methodology and the data used to calculate the guarantee-specific ceiling should exclude undertakings in difficulty as referred to in the Community guidelines on State aid for rescuing and restructuring firms in difficulty. This specific ceiling should therefore not apply to individual aid granted outside the scope of a guarantee scheme, to aid granted to undertakings in difficulty, or to guarantees on underlying transactions not constituting a loan, such as guarantees on equity transactions. The specific ceiling should be determined on the basis of the fact that taking account of a cap rate (net default rate) of 13 %, representing a worst case scenario for guarantee schemes in the Union, a guarantee amounting to EUR 3 750 000 can be considered as having a gross grant equivalent identical to the EUR 500 000de minimis ceiling. Only guarantees covering up to 80 % of the underlying loan should be covered by these specific ceilings. A methodology accepted by the Commission following notification of such methodology on the basis of a Commission regulation in the State aid area may also be used by Member States for the purpose of assessing the gross grant equivalent contained in a guarantee, if the approved methodology explicitly addresses the type of guarantees and the type of underlying transactions at stake in the context of the application of this Regulation. (19) Upon notification by a Member State, the Commission may examine whether an aid measure which does not consist in a grant, loan, guarantee, capital injection, risk capital measure or capped tax exemption leads to a gross grant equivalent that does not exceed the de minimis ceiling and could therefore be covered by the provisions of this Regulation. (20) The Commission has a duty to ensure that State aid rules are complied with and in particular that aid granted under the de minimis rules adheres to the conditions thereof. In accordance with the cooperation principle laid down in Article 4(3) of the Treaty on European Union, Member States should facilitate the fulfilment of this task by establishing the necessary tools in order to ensure that the total amount of de minimis aid granted to the same undertaking for the provision of services of general economic interest does not exceed the overall permissible ceiling. To that end and to ensure compliance with the provisions on cumulation with de minimis aid under other de minimis regulations, when granting de minimis aid under this Regulation, Member States should inform the undertaking concerned of the amount of the aid and of its de minimis character by referring to this Regulation. Moreover, prior to granting such aid the Member State concerned should obtain from the undertaking a declaration about other de minimis aid covered by this Regulation or by other de minimis regulations received during the fiscal year concerned and the two previous fiscal years. Alternatively, the Member State should have the possibility to ensure that the ceiling is observed by means of a central register. (21) This Regulation should apply without prejudice to the requirements of Union law in the area of public procurement or of additional requirements flowing from the Treaty or from sectoral Union legislation. (22) This Regulation should apply to aid granted before its entry into force to undertakings providing services of general economic interest. (23) The Commission intends to carry out a review of this Regulation five years after its entry into force, HAS ADOPTED THIS REGULATION: Article 1 Scope and definitions 1. This Regulation applies to aid granted to undertakings providing a service of general economic interest within the meaning of Article 106(2) of the Treaty. 2. This Regulation does not apply to: (a) aid granted to undertakings active in the fishery and aquaculture sectors, as covered by Council Regulation (EC) No 104/2000 (11); (b) aid granted to undertakings active in the primary production of agricultural products; (c) aid granted to undertakings active in the processing and marketing of agricultural products, in the following cases: (i) when the amount of the aid is fixed on the basis of the price or quantity of such products purchased from primary producers or put on the market by the undertakings concerned, (ii) when the aid is conditional on being partly or entirely passed on to primary producers; (d) aid to export-related activities towards third countries or Member States, namely aid directly linked to the quantities exported, to the establishment and operation of a distribution network or to other current expenditure linked to the export activity; (e) aid contingent upon the use of domestic over imported goods; (f) aid granted to undertakings active in the coal sector, as defined in Council Decision 2010/787/EU (12); (g) aid granted to undertakings performing road freight transport for hire or reward; (h) aid granted to undertakings in difficulty. If undertakings are active in the sectors referred to in points (a), (b), (c) or (g) of the first subparagraph as well as in sectors not excluded from the scope of application of this Regulation, this Regulation applies only to aid granted in respect of those other sectors or activities, provided that Member States ensure that the activities in the excluded sectors do not benefit from the de minimis aid under this Regulation, by appropriate means such as separation of activities or distinction of costs. 3. For the purposes of this Regulation: (a) ‘agricultural products’ means products listed in Annex I to the Treaty, with the exception of fishery products; (b) ‘processing of agricultural products’ means any operation on an agricultural product resulting in a product which is also an agricultural product, except on-farm activities necessary for preparing an animal or plant product for the first sale; (c) ‘marketing of agricultural products’ means holding or display with a view to sale, offering for sale, delivery or any other manner of placing on the market, except the first sale by a primary producer to resellers or processors and any activity preparing a product for such first sale; a sale by a primary producer to final consumers shall be considered as marketing if it takes place in separate premises reserved for that purpose. Article 2 De minimis aid 1. Aid granted to undertakings for the provision of a service of general economic interest shall be deemed not to meet all the criteria of Article 107(1) of the Treaty and shall therefore be exempt from the notification requirement of Article 108(3) of the Treaty if it fulfils the conditions laid down in paragraphs 2 to 8 of this Article. 2. The total amount of de minimis aid granted to any one undertaking providing services of general economic interest shall not exceed EUR 500 000 over any period of three fiscal years. This ceiling shall apply irrespective of the form of the de minimis aid and regardless of whether the aid granted by the Member State is financed entirely or partly by resources of Union origin. The period shall be determined by reference to the fiscal years used by the undertaking in the Member State concerned. 3. The ceiling laid down in paragraph 2 shall be expressed as a cash grant. All figures used shall be gross, that is, before any deduction of tax or other charges. Where aid is awarded in a form other than a grant, the aid amount shall be the gross grant equivalent of the aid. Aid payable in several instalments shall be discounted to its value at the moment of it being granted. The interest rate to be used for discounting purposes shall be the discount rate applicable at the time of grant. 4. This Regulation shall apply only to aid in respect of which it is possible to calculate precisely the gross grant equivalent of the aid ex ante without need to undertake a risk assessment (‘transparent aid’). In particular: (a) aid comprised in loans shall be considered as transparent de minimis aid when the gross grant equivalent has been calculated on the basis of the reference rate applicable at the time of the grant; (b) aid comprised in capital injections shall not be considered as transparent de minimis aid, unless the total amount of the public injection does not exceed the de minimis ceiling; (c) aid comprised in risk capital measures shall not be considered as transparent de minimis aid, unless the risk capital scheme concerned provides capital only up to the de minimis ceiling to each target undertaking; (d) individual aid provided under a guarantee scheme to undertakings which are not undertakings in difficulty shall be treated as transparent de minimis aid when the guaranteed part of the underlying loan provided under such scheme does not exceed EUR 3 750 000 per undertaking. If the guaranteed part of the underlying loan only accounts for a given proportion of this ceiling, the gross grant equivalent of that guarantee shall be deemed to correspond to the same proportion of the ceiling laid down in paragraph 2. The guarantee shall not exceed 80 % of the underlying loan. Guarantee schemes shall also be considered as transparent if: (i) before the implementation of the scheme, the methodology to calculate the gross grant equivalent of the guarantees has been accepted following notification of this methodology to the Commission under a regulation adopted by the Commission in the State aid area, and (ii) the approved methodology explicitly addresses the type of guarantees and the type of underlying transactions at stake in the context of the application of this Regulation. 5. Where the overall amount of de minimis aid under this Regulation granted to an undertaking for the provision of services of general economic interest exceeds the ceiling laid down in paragraph 2, that amount may not benefit from this Regulation, even for a fraction not exceeding that ceiling. In such a case, the benefit of this Regulation may not be claimed for this aid measure. 6. De minimis aid under this Regulation shall not be cumulated with State aid in respect of the same eligible costs if such cumulation would result in an aid intensity exceeding that stipulated in the specific circumstances of each case by a block exemption regulation or decision adopted by the Commission. 7. De minimis aid under this Regulation may be cumulated with de minimis aid under other de minimis regulations up to the ceiling laid down in paragraph 2. 8. De minimis aid under this Regulation shall not be cumulated with any compensation in respect of the same service of general economic interest, regardless of whether or not it constitutes State aid. Article 3 Monitoring 1. Where a Member State intends to grant de minimis aid under this Regulation to an undertaking, it shall inform that undertaking in writing of the prospective amount of the aid expressed as gross grant equivalent, of the service of general economic interest in respect of which it is granted and of the de minimis character of the aid, making express reference to this Regulation and citing its title and publication reference in the Official Journal of the European Union. Where de minimis aid under this Regulation is granted to different undertakings on the basis of a scheme and different amounts of individual aid are granted to those undertakings under that scheme, the Member State concerned may choose to fulfil that obligation by informing the undertakings of a fixed sum corresponding to the maximum aid amount to be granted under that scheme. In such case, the fixed sum shall be used for determining whether the ceiling laid down in Article 2(2) is met. Prior to granting the aid, the Member State shall also obtain a declaration from the undertaking providing the service of general economic interest, in written or electronic form, about any other de minimis aid received under this Regulation or under other de minimis regulations during the previous two fiscal years and the current fiscal year. The Member State shall grant the new de minimis aid under this Regulation only after having checked that this will not raise the total amount of de minimis aid granted to the undertaking concerned to a level above the ceiling laid down in Article 2(2) and that the cumulation rules in Article 2(6), (7) and (8) are complied with. 2. Where a Member State has set up a central register of de minimis aid containing complete information on all de minimis aid granted to undertakings providing services of general economic interest by any authority within that Member State, the first subparagraph of paragraph 1 shall cease to apply from the moment the register covers a period of three years. 3. Member States shall record and compile all the information regarding the application of this Regulation. Such records shall contain all information necessary to demonstrate that the conditions of this Regulation have been complied with. Records regarding individual de minimis aid shall be maintained for 10 fiscal years from the date on which the aid was granted. Records regarding a de minimis aid scheme shall be maintained for 10 years from the date on which the last individual aid was granted under such a scheme. On written request, the Member State concerned shall provide the Commission, within a period of 20 working days or such longer period as may be fixed in the request, with all the information that the Commission considers necessary for assessing whether the conditions of this Regulation have been complied with, and in particular the total amount of de minimis aid under this Regulation and under other de minimis regulations received by any undertaking. Article 4 Transitional provisions This Regulation shall apply to de minimis aid granted for the provision of services of general economic interest before its entry into force, provided that such aid fulfils the conditions laid down in Articles 1 and 2. Any aid for the provision of services of general economic interest which does not fulfil those conditions shall be assessed in accordance with the relevant decisions, frameworks, guidelines, communications and notices. At the end of the period of validity of this Regulation, any de minimis aid which fulfils the conditions of this Regulation may be validly implemented for a further period of six months. Article 5 Entry into force and period of validity This Regulation shall enter into force on the third day following that of its publication in the Official Journal of the European Union. It shall apply until 31 December 2018. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 25 April 2012. For the Commission The President José Manuel BARROSO (1) OJ L 142, 14.5.1998, p. 1. (2) OJ C 8, 11.1.2012, p. 23. (3) OJ L 379, 28.12.2006, p. 5. (4) OJ L 7, 11.1.2012, p. 3. (5) Case C-456/00 French Republic v Commission of the European Communities [2002] I-11949. (6) OJ C 244, 1.10.2004, p. 2. (7) Case C-280/00 Altmark Trans GmbH and Regierungspräsidium Magdeburg v Nahverkehrsgesellschaft Altmark GmbH, and Oberbundesanwalt beim Bundesverwaltungsgericht [2003] ECR I-7747. (8) OJ C 8, 11.1.2012, p. 15. (9) OJ C 14, 19.1.2008, p. 6. (10) OJ C 194, 18.8.2006, p. 2. (11) OJ L 17, 21.1.2000, p. 22. (12) OJ L 336, 21.12.2010, p. 24.

Summary: De minimis aid for services of general economic interest De minimis aid for services of general economic interest SUMMARY OF: Regulation (EU) No 360/2012 — application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid granted to services of general economic interest Article 107 TFEU — Aids granted by states Article 108 TFEU — Aids granted by states WHAT IS THE AIM OF THE REGULATION? Article 107(1) of the Treaty on the Functioning of the European Union (TFEU) sets out which measures constitute State aid. Article 108(3) TFEU requires, as a general principle, State aid to be notified to the European Commission so that it can assess whether the aid is compatible with the internal market. Regulation (EU) No 360/2012 complements the general regulation on de minimis aid, i.e. small State aid amounts* (Regulation (EU) No 1407/2013 — see summary). Both regulations provide that aid below a certain threshold can be exempted from the notification requirement. However, this regulation applies specifically to aid granted to undertakings providing services of general economic interest (SGEIs), which are services that meet social needs such as health and long-term care, childcare, access to and reintegration in the labour market, social housing and the care and social inclusion of vulnerable groups. This regulation increases legal certainty and reduces the administrative burden for granting compensation for small SGEIs. KEY POINTS Article 2 of Regulation (EU) 2015/1588 on the application of Articles 107 and 108 TFEU to certain types of State aid (see summary) allows the Commission to include a de minimis rule*in any regulation it adopts. Under this rule, small aid amounts are considered not to be State aid because they have no effect on competition and/or trade between EU Member States; they therefore are not subject to the notification requirement provided for in Article 108(3) TFEU. Regulation (EU) No 360/2012 complements the general de minimis regulation and applies to aid granted to organisations providing a SGEI. Such aid does not need to be notified if the total amount of de minimis aid granted to an organisation providing SGEIs does not exceed €500,000 over any period of 3 fiscal years and the conditions on cumulation are met. The ceiling for exempted aid set out in Regulation (EU) No 1407/2013, in contrast, is only €200,000. Monitoring If a Member State intends to grant de minimis aid under this regulation, it must inform the organisation concerned in writing of: the proposed amount of aid;the SGEI for which the aid is granted;the de minimis character of the aid. Prior to granting the aid, the Member State must obtain a declaration from the organisation in question, in written or electronic form, about any other de minimis aid received under this regulation or under other de minimis regulations during the previous 2 fiscal years and the current fiscal year. The Member State must check that the new sum will not increase the total amount of de minimis aid granted to the undertaking above the ceiling of €500,000. Alternatively, Member States can set up a central register for all de minimis aid granted in their territory. Time-bound derogation in the context of the COVID-19 pandemic Regulation (EU) 2020/1474 amends Regulation (EU) No 360/2012 to allow undertakings which were not in difficulty on 31 December 2019 but which became undertakings in difficulty in the period from 1 January 2020 to 30 June 2021 as a consequence of the COVID-19 outbreak to remain eligible under Regulation (EU) No 360/2012 for a limited period of time. FROM WHEN DOES THE REGULATION APPLY? The period of application was initially to expire on 31 December 2018. The Commission considered that the circumstances underlying the regulation had not substantially changed and therefore adopted Regulation (EU) 2018/1923, which extended the period of application for a further 2 years until 31 December 2020. Amending Regulation (EU) 2020/1474 further extended the period of application of Regulation (EU) No 360/2012 until 31 December 2023. BACKGROUND For more information, see: Services of General Economic Interest (European Commission). KEY TERMS De minimis rule. A rule that exempts small subsidies from the obligation of being notified in advance to the Commission for clearance under EU State aid rules. MAIN DOCUMENTS Commission Regulation (EU) No 360/2012 of 25 April 2012 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid granted to undertakings providing services of general economic interest (OJ L 114, 26.4.2012, pp. 8–13). Successive amendments to Regulation (EU) No 360/2012 have been incorporated in the original text. This consolidated version is of documentary value only. Consolidated version of the Treaty on the Functioning of the European Union — Part Three — Union policies and internal actions — Title VII — Common rules on competition, taxation and approximation of laws — Chapter 1 — Rules on competition — Section 2 — Aids granted by states — Article 107 (ex Article 87 TEC) (OJ C 202, 7.6.2016, pp. 91–92). Consolidated version of the Treaty on the Functioning of the European Union — Part Three — Union policies and internal actions — Title VII — Common rules on competition, taxation and approximation of laws — Chapter 1 — Rules on competition — Section 2 — Aids granted by states — Article 108 (ex Article 88 TEC) (OJ C 202, 7.6.2016, pp. 92–93). RELATED DOCUMENTS Council Regulation (EU) 2015/1588 of 13 July 2015 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to certain categories of horizontal State aid (codification) (OJ L 248, 24.9.2015, pp. 1–8). See consolidated version. Commission Regulation (EU) No 1407/2013 of 18 December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid (OJ L 352, 24.12.2013, pp. 1–8). See consolidated version. last update 26.10.2021


11.1.2012 EN Official Journal of the European Union L 7/3 COMMISSION DECISION of 20 December 2011 on the application of Article 106(2) of the Treaty on the Functioning of the European Union to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (notified under document C(2011) 9380) (Text with EEA relevance) (2012/21/EU) THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 106(3) thereof, Whereas: (1) Article 14 of the Treaty requires the Union, without prejudice to Articles 93, 106 and 107 of the Treaty, to use its powers in such a way as to make sure that services of general economic interest operate on the basis of principles and conditions which enable them to fulfil their missions. (2) For certain services of general economic interest to operate on the basis of principles and under conditions which enable them to fulfil their missions, financial support from the State may prove necessary to cover some or all of the specific costs resulting from the public service obligations. In accordance with Article 345 of the Treaty, as interpreted by the Court of Justice of the European Union, it is irrelevant whether such services of general economic interest are operated by public or private undertakings. (3) Article 106(2) of the Treaty states in this respect that undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly are subject to the rules contained in the Treaty, in particular to the rules on competition, in so far as the application of these rules does not obstruct, in law or in fact, the performance of the tasks entrusted. This should however not affect the development of trade to such an extent as would be contrary to the interests of the Union. (4) In its judgment in Altmark (1), the Court of Justice held that public service compensation does not constitute State aid within the meaning of Article 107 of the Treaty provided that four cumulative criteria are met. First, the recipient undertaking must actually have public service obligations to discharge, and the obligations must be clearly defined. Second, the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner. Third, the compensation must not exceed what is necessary to cover all or part of the costs incurred in the discharge of the public service obligations, taking into account the relevant receipts and a reasonable profit. Finally, where the undertaking that is to discharge public service obligations, in a specific case, is not chosen pursuant to a public procurement procedure which would allow for the selection of the tenderer capable of providing those services at the least cost to the community, the level of compensation needed must be determined on the basis of an analysis of the costs that a typical undertaking, well-run and adequately provided with the relevant means, would have incurred. (5) Where those criteria are not fulfilled and the general conditions for the applicability of Article 107(1) of the Treaty are met, public service compensation constitutes State aid and is subject to Articles 93, 106, 107 and 108 of the Treaty. (6) In addition to this Decision, three instruments are relevant for the application of the State aid rules to compensation granted for the provision of services of general economic interest: (a) a new Communication on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest (2) clarifies the application of Article 107 of the Treaty and the criteria set by the Altmark ruling to such compensation; (b) a new Regulation, which the Commission intends to adopt, on the application of Articles 107 and 108 of the Treaty to de minimis aid for the provision of SGEI lays down certain conditions – including the amount of the compensation – under which public service compensations shall be deemed not to meet all the criteria of Article 107(1); (c) a revised framework for State aid in the form of public service compensation (3) specifies how the Commission will analyse cases that are not covered by this Decision and therefore have to be notified to the Commission. (7) Commission Decision 2005/842/EC of 28 November 2005 on the application of Article 86(2) of the EC Treaty to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (4) specifies the meaning and extent of the exception pursuant to Article 106(2) of the Treaty and sets out rules intended to enable effective monitoring of the fulfilment of the criteria set out in that provision. This Decision replaces Decision 2005/842/EC and lays down the conditions under which State aid in the form of compensation for a service of general economic interest is not subject to the prior notification requirement of Article 108(3) of the Treaty as it can be deemed compatible with Article 106(2) of the Treaty. (8) Such aid may be deemed compatible only if it is granted in order to ensure the provision of services of general economic interest as referred to in Article 106(2) of the Treaty. It is clear from the case-law that, in the absence of sectoral Union rules governing the matter, Member States have a wide margin of discretion in the definition of services that could be classified as being services of general economic interest. Thus the Commission’s task is to ensure that there is no manifest error as regards the definition of services of general economic interest. (9) Provided a number of conditions are met, limited amounts of compensation granted to undertakings entrusted with the provision of services of general economic interest do not affect the development of trade and competition to such an extent as would be contrary to the interests of the Union. An individual State aid notification should therefore not be required for compensation below a specified annual amount of compensation provided the requirements of this Decision are met. (10) Given the development of intra-Union trade in the provision of services of general economic interest, demonstrated for instance by the strong development of multi-national providers in a number of sectors which are of great importance for the development of the internal market, it is appropriate to set a lower limit for the amount of compensation which can be exempted from the notification requirement in accordance with this Decision than what was set by Decision 2005/842/EC, while allowing for that amount to be computed as an annual average over the entrustment period. (11) Hospitals and undertakings in charge of social services, which are entrusted with tasks of general economic interest, have specific characteristics that need to be taken into consideration. In particular, account should be taken of the fact that, in the present economic conditions and at the current stage of development of the internal market, social services may require an amount of aid beyond the threshold in this Decision to compensate for the public service costs. A larger amount of compensation for social services does thus not necessarily produce a greater risk of distortions of competition. Accordingly, undertakings in charge of social services, including the provision of social housing for disadvantaged citizens or socially less advantaged groups, who due to solvency constraints are unable to obtain housing at market conditions, should also benefit from the exemption from notification provided for in this Decision, even if the amount of compensation they receive exceeds the general compensation threshold laid down in this Decision. The same should apply to hospitals providing medical care, including, where applicable, emergency services and ancillary services directly related to their main activities, in particular in the field of research. In order to benefit from the exemption from notification, social services should be clearly identified services, meeting social needs as regards health and long-term care, childcare, access to and reintegration into the labour market, social housing and the care and social inclusion of vulnerable groups. (12) The extent to which a particular compensation measure affects trade and competition depends not only on the average amount of compensation received per year and the sector concerned, but also on the overall duration of the period of entrustment. Unless a longer period is justified due to the need for a significant investment, for example in the area of social housing, the application of this Decision should therefore be limited to periods of entrustment not exceeding 10 years. (13) In order for Article 106(2) of the Treaty to apply, the undertaking in question must have been specifically entrusted by the Member State with the operation of a particular service of general economic interest. (14) In order to ensure that the criteria set out in Article 106(2) of the Treaty are met, it is necessary to lay down more precise conditions that must be fulfilled in respect of the entrustment of the operation of services of general economic interest. The amount of compensation can be properly calculated and checked only if the public service obligations incumbent on the undertakings and any obligations incumbent on the State are clearly set out in one or more acts of the competent public authorities in the Member State concerned. The form of the instrument may vary from one Member State to another but it should specify, at least, the undertakings concerned, the precise content and duration of and, where appropriate, the territory concerned by the public service obligations imposed, the granting of any exclusive or special rights, and describe the compensation mechanism and the parameters for determining the compensation and avoiding and recovering any possible overcompensation. In order to ensure transparency in relation to the application of this Decision, the act of entrustment should also include a reference to it. (15) In order to avoid unjustified distortions of competition, the compensation should not exceed what is necessary to cover the net costs incurred by the undertaking in operating the service, including a reasonable profit. (16) Compensation in excess of what is necessary to cover the net costs incurred by the undertaking concerned in operating the service is not necessary for the operation of the service of general economic interest, and consequently constitutes incompatible State aid that should be repaid to the State. Compensation granted for the operation of a service of general economic interest but actually used by the undertaking concerned to operate on another market for purposes other than those specified in the act of entrustment is not necessary for the operation of the service of general economic interest, and may consequently also constitute incompatible State aid that should be repaid. (17) The net cost to be taken into account should be calculated as the difference between the cost incurred in operating the service of general economic interest and the revenue earned from the service of general economic interest or, alternatively, as the difference between the net cost of operating with the public service obligation and the net cost or profit operating without the public service obligation. In particular, if the public service obligation leads to a reduction of the revenue, for instance due to regulated tariffs, but does not affect the costs, it should be possible to determine the net cost incurred in discharging the public service obligation on the basis of the foregone revenue. In order to avoid unjustified distortions of competition, all revenues earned from the service of general economic interest, that is to say, any revenues that the provider would not have obtained had it not been entrusted with the obligation should be taken into account for the purposes of calculating the amount of compensation. If the undertaking in question holds special or exclusive rights linked to activities, other than the service of general economic interest for which the aid is granted, that generate profits in excess of the reasonable profit, or benefits from other advantages granted by the State, these should be included in its revenue, irrespective of their classification for the purposes of Article 107 of the Treaty. (18) Reasonable profit should be determined as a rate of return on capital that takes into account the degree of risk, or absence of risk, incurred. The rate of return on capital should be defined as the internal rate of return that the undertaking obtains on its invested capital over the duration of the period of entrustment. (19) Profit not exceeding the relevant swap rate plus 100 basis points should not be regarded as unreasonable. In this context, the relevant swap rate is viewed as an appropriate rate of return for a risk-free investment. The premium of 100 basis points serves, inter alia, to compensate for liquidity risk related to the provision of capital which is committed for the operation of the service during the period of entrustment. (20) In cases where the undertaking entrusted with a service of general economic interest does not bear a substantial degree of commercial risk, for instance because the costs it incurs in the operation of the service are compensated in full, profits exceeding the benchmark of the relevant swap rate plus 100 basis points should not be viewed as reasonable. (21) Where, by reason of specific circumstances, it is not appropriate to use the rate of return on capital, Member States should be able to rely on other profit level indicators to determine what the reasonable profit should be, such as the average return on equity, return on capital employed, return on assets or return on sales. (22) In determining what constitutes a reasonable profit, the Member States should be able to introduce incentive criteria relating, in particular, to the quality of service provided and gains in productive efficiency. Efficiency gains should not reduce the quality of the service provided. For instance, Member States should be able to define productive efficiency targets in the entrustment act whereby the level of compensation is made dependent upon the extent to which the targets have been met. The entrustment act may provide that if the undertaking does not meet the objectives, the compensation is to be reduced by applying a calculation method specified in the entrustment act, whereas if the undertaking exceeds the objectives, the compensation may be increased by applying a method specified in the entrustment act. Any rewards linked to productive efficiency gains should be set at a level such as to allow balanced sharing of those gains between the undertaking and the Member State and/or the users. (23) Article 93 of the Treaty constitutes a lex specialis with regard to Article 106(2) of the Treaty. It lays down the rules applicable to public service compensation in the land transport sector. Article 93 has been interpreted by Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by road and repealing Council Regulations (EEC) Nos 1191/69 and 1107/70 (5), which lays down the rules applicable to the compensation of public service obligations in public passenger traffic. Its application to inland waterway passenger traffic is at the discretion of the Member States. Regulation (EC) No 1370/2007 exempts from notification pursuant to Article 108(3) of the Treaty all compensation in the land transport sector that fulfils the conditions of that Regulation. In accordance with the judgment in Altmark, compensation in the land transport sector that does not comply with the provisions of Article 93 of the Treaty cannot be declared compatible with the Treaty on the basis of Article 106(2) of the Treaty, or on the basis of any other Treaty provision. Consequently, this Decision does not apply to the land transport sector. (24) Unlike land transport, the maritime and air transport sectors are subject to Article 106(2) of the Treaty. Certain rules applicable to public service compensation in the air and maritime transport sectors are to be found in Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the Community (6) and in Council Regulation (EEC) No 3577/92 of 7 December 1992 applying the principle of freedom to provide services to maritime transport within Member States (maritime cabotage) (7). However, unlike Regulation (EC) No 1370/2007, those Regulations do not refer to the compatibility of the possible State aid elements, nor do they provide for an exemption from the obligation to notify pursuant to Article 108(3) of the Treaty. This Decision should therefore apply to public service compensation in the air and maritime transport sectors provided that, in addition to fulfilling the conditions set out in this Decision, such compensation also complies with the sectoral rules contained in Regulations (EC) No 1008/2008 and (EEC) No 3577/92 where applicable. (25) In the specific cases of public service compensation for air or maritime links to islands and for airports and ports which constitute services of general economic interest as referred to in Article 106(2) of the Treaty, it is appropriate to provide thresholds based on the average annual number of passengers as this more accurately reflects the economic reality of these activities and their character of services of general economic interest. (26) Exemption from the requirement of prior notification for certain services of general economic interest does not rule out the possibility for Member States to notify a specific aid project. In the event of such a notification, or if the Commission assesses the compatibility of a specific aid measure following a complaint or ex officio, the Commission will assess whether the conditions of this Decision are met. If that is not the case, the measure will be assessed in accordance with the principles contained in the Commission Communication on a framework for State aid in the form of public service compensation. (27) This Decision should apply without prejudice to the provisions of Commission Directive 2006/111/EC of 16 November 2006 on the transparency of financial relations between Member States and public undertakings as well as on financial transparency within certain undertakings (8). (28) This Decision should apply without prejudice to the Union provisions in the field of competition, in particular Articles 101 and 102 of the Treaty. (29) This Decision should apply without prejudice to the Union provisions in the field of public procurement. (30) This Decision should apply without prejudice to stricter provisions relating to public service obligations that are contained in sectoral Union legislation. (31) Transitional provisions should be laid down for individual aid that was granted before the entry into force of this Decision. Aid schemes put into effect in accordance with Decision 2005/842/EC before the entry into force of this Decision should continue to be compatible with the internal market and exempt from the notification requirement for a further period of 2 years. Aid put into effect before the entry into force of this Decision that was not awarded in accordance with Decision 2005/842/EC but fulfils the conditions laid down in this Decision should be compatible with the internal market and exempt from the notification requirement. (32) The Commission intends to carry out a review of this Decision 5 years after its entry into force, HAS ADOPTED THIS DECISION: Article 1 Subject matter This Decision sets out the conditions under which State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest is compatible with the internal market and exempt from the requirement of notification laid down in Article 108(3) of the Treaty. Article 2 Scope 1. This Decision applies to State aid in the form of public service compensation, granted to undertakings entrusted with the operation of services of general economic interest as referred to in Article 106(2) of the Treaty, which falls within one of the following categories: (a) compensation not exceeding an annual amount of EUR 15 million for the provision of services of general economic interest in areas other than transport and transport infrastructure; where the amount of compensation varies over the duration of the entrustment, the annual amount shall be calculated as average of the annual amounts of compensation expected to be made over the entrustment period; (b) compensation for the provision of services of general economic interest by hospitals providing medical care, including, where applicable, emergency services; the pursuit of ancillary activities directly related to the main activities, notably in the field of research, does not, however, prevent the application of this paragraph; (c) compensation for the provision of services of general economic interest meeting social needs as regards health and long term care, childcare, access to and reintegration into the labour market, social housing and the care and social inclusion of vulnerable groups; (d) compensation for the provision of services of general economic interest as regards air or maritime links to islands on which the average annual traffic during the 2 financial years preceding that in which the service of general economic interest was assigned does not exceed 300 000 passengers; (e) compensation for the provision of services of general economic interest as regards airports and ports for which the average annual traffic during the 2 financial years preceding that in which the service of general economic interest was assigned does not exceed 200 000 passengers, in the case of airports, and 300 000 passengers, in the case of ports. 2. This Decision only applies where the period for which the undertaking is entrusted with the operation of the service of general economic interest does not exceed 10 years. Where the period of entrustment exceeds 10 years, this Decision only applies to the extent that a significant investment is required from the service provider that needs to be amortised over a longer period in accordance with generally accepted accounting principles. 3. If during the duration of the entrustment the conditions for the application of this Decision cease to be met, the aid shall be notified in accordance with Article 108(3) of the Treaty. 4. In the field of air and maritime transport, this Decision only applies to State aid in the form of public service compensation, granted to undertakings entrusted with the operation of services of general economic interest as referred to in Article 106(2) of the Treaty, which complies with Regulation (EC) No 1008/2008 and, respectively, Regulation (EEC) No 3577/92 where applicable. 5. This Decision does not apply to State aid in the form of public service compensation granted to undertakings in the field of land transport. Article 3 Compatibility and exemption from notification State aid in the form of public service compensation that meets the conditions laid down in this Decision shall be compatible with the internal market and shall be exempt from the prior notification obligation provided for in Article 108(3) of the Treaty provided that it also complies with the requirements flowing from the Treaty or from sectoral Union legislation. Article 4 Entrustment Operation of the service of general economic interest shall be entrusted to the undertaking concerned by way of one or more acts, the form of which may be determined by each Member State. The act or acts shall include, in particular: (a) the content and duration of the public service obligations; (b) the undertaking and, where applicable, the territory concerned; (c) the nature of any exclusive or special rights assigned to the undertaking by the granting authority; (d) a description of the compensation mechanism and the parameters for calculating, controlling and reviewing the compensation; (e) the arrangements for avoiding and recovering any overcompensation; and (f) a reference to this Decision. Article 5 Compensation 1. The amount of compensation shall not exceed what is necessary to cover the net cost incurred in discharging the public service obligations, including a reasonable profit. 2. The net cost may be calculated as the difference between costs as defined in paragraph 3 and revenues as defined in paragraph 4. Alternatively, it may be calculated as the difference between the net cost for the undertaking of operating with the public service obligation and the net cost or profit of the same undertaking operating without the public service obligation. 3. The costs to be taken into consideration shall comprise all the costs incurred in operating the service of general economic interest. They shall be calculated on the basis of generally accepted cost accounting principles, as follows: (a) where the activities of the undertaking in question are confined to the service of general economic interest, all its costs may be taken into consideration; (b) where the undertaking also carries out activities falling outside the scope of the service of general economic interest, only the costs related to the service of general economic interest shall be taken into consideration; (c) the costs allocated to the service of general economic interest may cover all the direct costs incurred in operating the service of general economic interest and an appropriate contribution to costs common to both the service of general economic interest and other activities; (d) the costs linked with investments, notably concerning infrastructure, may be taken into account when necessary for the operation of the service of general economic interest. 4. The revenue to be taken into consideration shall include at least the entire revenue earned from the service of general economic interest, regardless of whether the revenue is classified as State aid within the meaning of Article 107 of the Treaty. If the undertaking in question holds special or exclusive rights linked to activities, other than the service of general economic interest for which the aid is granted, that generate profits in excess of the reasonable profit, or benefits from other advantages granted by the State, these shall be included in its revenue, irrespective of their classification for the purposes of Article 107 of the Treaty. The Member State concerned may decide that the profits accruing from other activities outside the scope of the service of general economic interest in question are to be assigned in whole or in part to the financing of the service of general economic interest. 5. For the purposes of this Decision, ‘reasonable profit’ means the rate of return on capital that would be required by a typical undertaking considering whether or not to provide the service of general economic interest for the whole period of entrustment, taking into account the level of risk. The ‘rate of return on capital’ means the internal rate of return that the undertaking makes on its invested capital over the duration of the period of entrustment. The level of risk depends on the sector concerned, the type of service and the characteristics of the compensation. 6. In determining what constitutes a reasonable profit, Member States may introduce incentive criteria relating, in particular, to the quality of service provided and gains in productive efficiency. Efficiency gains shall not reduce the quality of the service provided. Any rewards linked to productive efficiency gains shall be set at a level such as to allow balanced sharing of those gains between the undertaking and the Member State and/or the users. 7. For the purposes of this Decision, a rate of return on capital that does not exceed the relevant swap rate plus a premium of 100 basis points shall be regarded as reasonable in any event. The relevant swap rate shall be the swap rate the maturity and currency of which correspond to the duration and currency of the entrustment act. Where the provision of the service of general economic interest is not connected with a substantial commercial or contractual risk, in particular when the net cost incurred in providing the service of general economic interest is essentially compensated ex post in full, the reasonable profit may not exceed the relevant swap rate plus a premium of 100 basis points. 8. Where, by reasons of specific circumstances, it is not appropriate to use the rate of return on capital, Member States may rely on profit level indicators other than the rate of return on capital to determine what the reasonable profit should be, such as the average return on equity, return on capital employed, return on assets or return on sales. The ‘return’ means the earnings before interests and taxes in that year. The average return is computed using the discount factor over the life of the contract as specified by the Communication from the Commission on the revision of the method for setting the reference and discount rates (9). Whatever indicator is chosen, the Member State shall be able to provide the Commission upon request with evidence that the profit does not exceed what would be required by a typical undertaking considering whether or not to provide the service, for instance by providing references to returns achieved on similar types of contracts awarded under competitive conditions. 9. Where an undertaking carries out activities falling both inside and outside the scope of the service of general economic interest, the internal accounts shall show separately the costs and receipts associated with the service of general economic interest and those of other services, as well as the parameters for allocating costs and revenues. The costs linked to any activities outside the scope of the service of general economic interest shall cover all the direct costs, an appropriate contribution to the common costs and an adequate return on capital. No compensation shall be granted in respect of those costs. 10. Member States shall require the undertaking concerned to repay any overcompensation received. Article 6 Control of overcompensation 1. Member States shall ensure that the compensation granted for the operation of the service of general economic interest meets the requirements set out in this Decision and in particular that the undertaking does not receive compensation in excess of the amount determined in accordance with Article 5. They shall provide evidence upon request from the Commission. They shall carry out regular checks, or ensure that such checks are carried out, at least every 3 years during the period of entrustment and at the end of that period. 2. Where an undertaking has received compensation in excess of the amount determined in accordance with Article 5, the Member State shall require the undertaking concerned to repay any overcompensation received. The parameters for the calculation of the compensation shall be updated for the future. Where the amount of overcompensation does not exceed 10 % of the amount of the average annual compensation, such overcompensation may be carried forward to the next period and deducted from the amount of compensation payable in respect of that period. Article 7 Transparency For compensation above EUR 15 million granted to an undertaking which also has activities outside the scope of the service of general economic interest, the Member State concerned shall publish the following information on the Internet or by other appropriate means: (a) the entrustment act or a summary which includes the elements listed in Article 4; (b) the amounts of aid granted to the undertaking on a yearly basis. Article 8 Availability of information The Member States shall keep available, during the period of entrustment and for at least 10 years from the end of the period of entrustment, all the information necessary to determine whether the compensation granted is compatible with this Decision. On written request by the Commission, Member States shall provide the Commission with all the information that the latter considers necessary to determine whether the compensation measures in force are compatible with this Decision. Article 9 Reports Each Member State shall submit a report on the implementation of this Decision to the Commission every 2 years. The reports shall provide a detailed overview of the application of this Decision for the different categories of services referred to in Article 2(1), including: (a) a description of the application of this Decision to the services falling within its scope, including in-house activities; (b) the total amount of aid granted in accordance with this Decision, with a breakdown by the economic sector of the beneficiaries; (c) an indication of whether, for a particular type of service, the application of this Decision has given rise to difficulties or complaints by third parties; and (d) any other information concerning the application of this Decision required by the Commission and to be specified in due time before the report is to be submitted. The first report shall be submitted by 30 June 2014. Article 10 Transitional provisions This Decision shall apply to individual aid and aid schemes as follows: (a) any aid scheme put into effect before the entry into force of this Decision that was compatible with the internal market and exempted from the notification requirement in accordance with Decision 2005/842/EC shall continue to be compatible with the internal market and exempt from the notification requirement for a further period of 2 years; (b) any aid put into effect before the entry into force of this Decision that was not compatible with the internal market nor exempted from the notification requirement in accordance with Decision 2005/842/EC but fulfils the conditions laid down in this Decision shall be compatible with the internal market and exempt from the requirement of prior notification. Article 11 Repeal Decision 2005/842/EC is hereby repealed. Article 12 Entry into force This Decision shall enter into force on 31 January 2012. Article 13 Addressees This Decision is addressed to the Member States. Done at Brussels, 20 December 2011. For the Commission Joaquín ALMUNIA Vice-President (1) Case C-280/00 Altmark Trans and Regierungspräsidium Magdeburg v Nahverkehrsgesellschaft Altmark [2003] ECR I-7747. (2) OJ C 8, 11.1.2012, p. 4. (3) OJ C 8, 11.1.2012, p. 15. (4) OJ L 312, 29.11.2005, p. 67. (5) OJ L 315, 3.12.2007, p. 1. (6) OJ L 293, 31.10.2008, p. 3. (7) OJ L 364, 12.12.1992, p. 7. (8) OJ L 318, 17.11.2006, p. 17. (9) OJ C 14, 19.1.2008, p. 6.

Summary: State aid — application of rules for services of general economic interest (SGEI) State aid — application of rules for services of general economic interest (SGEI) SUMMARY OF: Communication on the application of the EU State aid rules to compensation granted for the provision of services of general economic interest Decision 2012/21/EU — application of Article 106(2) of the Treaty on the Functioning of the European Union to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest Communication — EU framework for State aid in the form of public service compensation WHAT IS THE AIM OF THE DECISION AND COMMUNICATIONS? The communication on the application of the EU State aid rules clarifies the key concepts related to State aid for services of general economic interest (public services). The decision defines the conditions under which public service compensation is compatible with the internal market and does not need to be notified to the European Commission. The communication on the framework for State aid sets the conditions for assessing large compensation amounts that do not fall under the scope of the decision. Those cases have to be notified to the Commission and may be declared compatible if they meet certain criteria. KEY POINTS Services of general economic interest (SGEI) Services of general economic interest are economic activities, such as transport networks and postal and social services, regarded by public authorities as being particularly important to citizens, and that would not be supplied (or would be supplied under different conditions) if there were no public intervention. Compensation for SGEI According to the 2003 Altmark judgment of the Court of Justice of the European Union (CJEU), public service compensation does not constitute State aid when 4 cumulative conditions are met: the recipient service provider must have clearly defined public service obligations; the method for calculating the compensation must be objective, transparent and set out in advance; the compensation cannot exceed the relevant costs and a reasonable profit, i.e. no overcompensation; and the provider is either chosen through a public procurement procedure or the level of compensation is calculated based on an analysis of the costs of an average ‘well-run’ business in the sector concerned. Where 1 or more of these conditions is not fulfilled, the public service compensation will be examined under State aid rules. Reform of State aid rules for SGEI A 4-document SGEI package aims to clarify and simplify State aid rules for SGEI. Communication on the application of EU State aid rules explains two types of notions: general State aid concepts and SGEI-specific concepts; clarifies the conditions under which public service compensation does not constitute State aid owing to the absence of any advantage; sets out the different requirements for the operation of an SGEI the entrustment act, a public service assignment that defines the obligations of the service provider(s) and of the public authoritythe method for calculating the compensation, which has to be established in advance in an objective and transparent manner. No specific formula is required, but how the compensation will be calculated must be clear from the outsetavoiding overcompensation — the level of compensation must not exceed what is necessary to cover all or part of the costs and a reasonable profit andthe selection of provider and the calculation of the compensation, either under an appropriate tendering procedure or through a benchmarking exercise. The decision and the framework referred to below define the conditions under which a State aid measure is deemed to be or can be found compatible with the internal market on the basis of Article 106(2). Decision 2012/21/EU The decision allows unlimited spending in the area of social services: social housing and hospitals;services meeting social needs as regards health and long-term care;childcare;access to and reintegration into the labour market; andthe care and social inclusion of vulnerable groups. For all other SGEI activities, the compensation threshold is €15 million per year. Any funding given above this threshold would have to be notified to the Commission under the SGEI framework. The period of entrustment with an SGEI provider does not exceed 10 years. In the area of transport, compensation can be given: for air and maritime links to islands where the average annual traffic does not exceed 300,000 passengers;to ports where the average annual traffic does not exceed 300,000 passengers; andto airports where the average annual traffic does not exceed 200,000 passengers. EU framework The framework: gives a more precise methodology for calculating the amount of compensation allowable; requires EU countries to introduce efficiency incentives to encourage the service provider to do so in the most efficient manner; reinforces transparency requirements; introduces the requirement for SGEI to comply with EU public procurement rules; introduces a ‘no discrimination’ requirement — when there are multiple organisations providing an SGEI, the compensation must be calculated in the same way to avoid discrimination. Reporting EU countries must report to the Commission on the implementation of the decision and on the compliance with the framework every 2 years. Transparency EU countries must publish details on funding an SGEI within the scope of the decision (for compensation above €15 million granted to an undertaking that also has activities outside the scope of the SGEI) or the framework on an annual basis: on the Commission’s State aid transparency website; or on their national or regional transparency website. Guidelines The Commission has prepared guidelines on the application of State aid rules to SGEIs. FROM WHEN DOES THE DECISION APPLY? It has applied since 31 January 2012. BACKGROUND Services of general economic interest (European Commission). MAIN DOCUMENTS Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest (OJ C 8, 11.1.2012, pp. 4-14) Commission Decision 2012/21/EU of 20 December 2011 on the application of Article 106(2) of the Treaty on the Functioning of the European Union to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (OJ L 7, 11.1.2012, pp. 3-10) Communication from the Commission — European Union framework for State aid in the form of public service compensation (2011) (OJ C 8, 11.1.2012, pp. 15-22) RELATED DOCUMENTS Consolidated version of the Treaty on the Functioning of the European Union — Part Three — Union policies and internal actions — Title VII — Common rules on competition, taxation and approximation of laws — Chapter 1 — Rules on competition — Section 1 — Rules applying to undertakings — Article 106 (ex Article 86 TEC) (OJ C 202, 7.6.2016, pp. 90-91) Commission Staff Working Document — Guide to the application of the European Union rules on state aid, public procurement and the internal market to services of general economic interest, and in particular to social services of general interest (SWD(2013) 53 final/2, 29.4.2013) Commission Regulation (EU) No 360/2012 of 25 April 2012 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid granted to undertakings providing services of general economic interest (OJ L 114, 26.4.2012, pp. 8-13) Successive amendments to Regulation (EU) No 360/2012 have been incorporated into the original text. This consolidated version is of documentary value only. last update 09.09.2019