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Commission adopts new guidelines on state aid for SMEs

The European Commission has decided to amend and clarify its guidelines for the examination of aid granted, by Member States, to small and medium-sized enterprises (SMEs).

The original Commission guidelines in this area were first adopted in May 1992 (OJ No C 213 of 19.8.1992...
The European Commission has decided to amend and clarify its guidelines for the examination of aid granted, by Member States, to small and medium-sized enterprises (SMEs).

The original Commission guidelines in this area were first adopted in May 1992 (OJ No C 213 of 19.8.1992). In the updated guidelines, the Commission maintains its sympathetic attitude to aid to SMEs on the grounds that such aid may be necessary to offset certain handicaps which may slow down their development, in particular the difficulty of obtaining access to credit and information.

The guidelines have notably been adapted to take account of the new common definition of SMEs adopted by the Commission in its Recommendation of 7 February 1996 (see RCN 5509). The main change, however, concerns intangible investment in the form of transfers of technology, which will henceforth benefit from the same favourable treatment as tangible investment.

The Commission White Paper on Growth, Competitiveness and Employment stresses the important role which the promotion of intangible investment has to play in a general policy on competitiveness and recommends that the guidelines on the acceptability of aid to industry be reviewed in order to eliminate the bias in favour of tangible investment. The levels of aid applicable for the acquisition of patent rights, licences, know-how or unpatented technical knowledge will, from now on, be the same as for tangible investment (i.e. 15% for small enterprises and 7.5% for medium-sized enterprises).

The Commission has also clarified the concept of tangible investment to which these thresholds refer. As in the case of regional aid, the investment must be in land, buildings or plant as part of the creation of a new establishment, the extension of an existing establishment, or engaging in an activity involving a fundamental change in the product or production process, or as part of the take-over of an establishment which has closed or which would have closed had such take-over not taken place.

Finally, the Commission has retained the specifications of the 1992 guidelines with regard to aid to support SMEs in the use of consultancy services and in staff training activities. Such activities may be allowed aid of up to 50% providing that they are not continuous or periodic (e.g. routine tax consultancy services, regular legal services or advertising).
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