De Minimis Funding
(Commission Regulation (EC) No: 1998/2006)
The European Commission (EC) considers public funding up to Euros 200,000 – awarded explicitly as de minimis funding - over a rolling three, fiscal year period, to any single recipient undertaking, not to have an impact on intra-Community trade and competition; therefore no notification to the EC is required. Moreover de minimis funding can be given for virtually any purpose – including operating costs - and is not project related. However the EC’s rules regarding administration of this type of funding must be strictly adhered to. Funding cannot be awarded for export aid (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) or to aid to firms in the following sectors: aquaculture, fisheries and the primary production of agricultural products. De minimis may now be awarded to undertakings in the road transport sector, but only up to Euros 100,000.
Administration of de minimis funding
As stated above, the maximum de minimis funding any single recipient can receive is Euros 200,000 over a rolling, three, fiscal year period. That is, the years used for fiscal purposes by the undertaking in the Member State concerned. This applies to de minimis funding from all sources. Therefore prior to making an award of de minimis funding, the awarding public body must ask potential recipients for details of all other de minimis funding received in the preceding, three, fiscal years, and ensure that by awarding further de minimis the Euros 200,000 limit over three, fiscal years will not be breached e.g. firm X received Euros 50,000 of previous de minimis funding in 2006. Therefore, in 2007, it would only be eligible for a further Euros 150,000 of de minimis funding from any public source.
De minimis funding should not be awarded to an undertaking to top up other aid that the undertaking is receiving towards eligible costs under an approved State aid scheme, e.g. an R&D&I project grant or RSA, where such de minimis funding would result in the beneficiary undertaking receiving an overall aid intensity level exceeding that permitted by the approved scheme. De minimis funding can, however, be awarded to an undertaking in receipt of maximum aid intensity levels under say, an R&D&I project grant, for any costs not eligible for support under the approved grant scheme concerned.
If de minimis funding aid is awarded, a letter of offer should be issued and contain the following paragraph:
“Under EC regulation 1998/2006 (De Minimis Regulation), this award constitutes de minimis funding. There is a ceiling of Euros 200,000 for all de minimis funding provided to any single recipient undertaking over a rolling, three, fiscal year period. De minimis funding awarded to you under this offer letter will be relevant if you wish to apply, or have applied, for any other de minimis funding. You must retain this letter for 10 years from the date on this letter and produce it on any request by the UK public authorities or the EC.”
The offer letter should also state the value of the funding awarded in both £ sterling and Euros. The exchange rate to be used for the conversion of £ sterling to Euros is the rate published in the Official Journal on the day the offer is made to the recipient. The daily exchange rate can be found on the EC’s web page, under block C (Information and Notices).
Granting authorities must now retain full details of de minimis awarded for 10 years from the date of award.
If a third party organisation is to operate a de minimis scheme on a public authority’s behalf, then that authority should ensure that the third party organisation has the necessary systems and procedures in place to comply with the De Minimis regulation.
For further queries regarding the provision or administration of de minimis funding, either as the basis of a grant scheme or as an ad hoc awards, please contact the Scottish Government’s State Aid Unit, 5 Atlantic Quay, 150 Broomielaw, Glasgow, G2 8LU, or through our website.
The full de minimis regulation can be found here.