De minimis aid? Don’t forget the declaration!

Under certain conditions, limited aid—known as “de minimis aid”—does not have to be considered state aid. This applies to aid of up to €300,000 per company over a three-year period, or even up to €750,000 for services of general economic interest. Notification to the European Commission is then not required, and the government can proceed directly with granting the aid. In practice, this often provides a solution.

The mandatory de minimis declaration

However, it is important to note that state aid rules require the government to obtain a so-called de minimis declaration before granting the aid. In this declaration, the beneficiary company states the amount of de minimis aid it has already received over the past three years.

European Court: Declaration is a strict requirement

A recent ruling by the European Court of Justice establishes that this prior declaration is a strict prerequisite for granting de minimis aid. That ruling concerned de minimis aid in the agricultural sector, but the rules in this regard are comparable to the standard de minimis rules. The Court ruled that, in order to grant new de minimis aid, a de minimis declaration must first be obtained. After all, that declaration is necessary for the relevant government authority to verify whether the conditions of the de minimis regulation are met.

In other words: without a declaration, the government cannot determine whether the recipient company meets the conditions and still has room to receive de minimis aid. For example, if the company already received €250,000 in de minimis aid the previous year, only €50,000 remains available.

When is the statement due?

It is therefore of great importance to have a de minimis declaration in place before the aid is granted. This is the moment when the beneficiary company acquires a definitive right to the aid (for example, based on an agreement or a grant decision). This may occur earlier than the moment of payment. Incidentally, the declaration may still be provided after the original aid application (such as a grant application), as long as this is before the aid is granted, according to the Court.

Risks if the statement is missing

Submitting a de minimis declaration in a timely manner is in the interest of both the government and the recipient company. Without such a declaration, the aid does not qualify as de minimis aid and will, in principle, be classified as “ordinary” state aid. Without an exemption or approval from the European Commission, the granting of state aid is unlawful. Unlawful aid may result in recovery or even the nullification of the agreement.

The foregoing also means that, without a de minimis declaration, it is highly unlikely that it can be argued retroactively that certain aid is permissible in any case because it remained below the de minimis threshold. In a ruling by the Arnhem-Leeuwarden Court of Appeal on March 10 of this year, the question arose as to whether the municipality had granted state aid by assuming the costs of insulating a former farmhouse that it sold. The court held that it did not view this as state aid, “if only because the de minimis threshold is not exceeded and the measure is otherwise of a purely local nature.” This reasoning regarding the de minimis threshold is difficult to reconcile with the judgment of the European Court. After all, it follows from that judgment that if the prior declaration is lacking, the aid cannot subsequently be classified as de minimis aid.

The declaration will remain required through the end of 2028

The de minimis declaration will remain mandatory at least until the end of 2028. By that time, the de minimis register will have been operational for three years and will contain a record of all de minimis aid granted.

Do you have questions about state aid? Please contact our EU & State Aid team.