State aid rules after EU exit

The United Kingdom left the European Union on 31 January 2020, and the transition period ended on 31 December 2020. The UK and EU agreed to terms on a Comprehensive Free Trade Agreement on 24 December 2020 and the UK-EU Trade and Cooperation Agreement received Royal Assent on 31 December 2020.

From 1 January 2021, all subsidies provided by public authorities in Northern Ireland must comply with either the EU State aid rules or the subsidy control chapter of the EU-UK Trade and Cooperation Agreement and any other international subsidy commitments. Public authorities should note that in some cases both regimes could apply to a scheme if beneficiary companies are from sectors both within and outside the scope of the NI Protocol.

State aid in Northern Ireland from 1 January 2021

Any aid granted to companies in Northern Ireland from 1 January 2021 which falls under Article 10 of the Northern Ireland Protocol that is, in respect of measures which affect trade in goods between Northern Ireland and the European Union will have to follow the EU State aid rules.  

The EU State aid rules will no longer apply to most aid provided by government departments and other public authorities in England, Scotland and Wales, unless this relates to Northern Ireland companies and is within the scope of Article 10 of the Northern Ireland Protocol.

The UK-EU Trade and Cooperation Agreement

The UK and EU have agreed to terms on a Comprehensive Free Trade Agreement. Chapter 3 of this agreement contains provisions related to subsidy control from 1 January 2021, aid providers must comply with these, except for aid that falls under Article 10 of the Northern Ireland Protocol. Aid providers also have to comply with World Trade Organisation (WTO) subsidy rules in respect of 'goods based' activities and the other international commitments.

Subsidy control guidance

The Department for Business Energy and Industrial Strategy (BEIS) has provided guidance - gov.uk website on the subsidies chapter of the UK-EU Trade and Cooperation Agreement (TCA), WTO rules on subsidies, and other international subsidy commitments.

The guidance has been drafted to assist public authorities assess how individual subsidies comply with the subsidy control chapter of the TCA. The guidance also covers the interpretation of Article 10 of the Northern Ireland Protocol on the EC's State aid rules

Please note that BEIS strongly recommends that public authorities complete the table at Annex 2 of the guidance to demonstrate a scheme complies with the 6 principles set out in Article 366 of the TCA and retain this for their records, as this information could be requested by the EU or by an interested party considering a domestic challenge. 

De minimis aid to service sector companies

As set out above the EU State aid rules are only applicable to beneficiary companies that are within the scope of Article 10 of the NI Protocol. This means that the de minimis rules do not apply when support is being provided to service sector companies. If you are considering using the de minimis rules for State aid cover and your scheme supports, or partially supports service sector companies,  please contact DfE State aid unit for further advice and guidance on the requirements under Article 363(4) of the TCA.

BEIS consultation on subsidy control in the UK

On 3 February 2021 BEIS published the consultation document Subsidy Control: Designing a new approach for the UK. The closing date for responses was 31 March 2021. BEIS has now analysed the responses and published the outcome on 30 June 2021.

The Subsidy Control Bill

The Subsidy Control Bill was introduced to Parliament on 30 June 2021. It sets out the government’s legislative proposal for a new UK subsidy control regime. You can find the subsidy control policy papers and more detail about the Subsidy Control Bill on the GOV.UK website.

Please note that the proposed UK subsidy control regime does not replace the EU State aid rules in respect of measures which affect trade in goods between Northern Ireland and the European Union which will still have to follow the EU State aid rules.  

Role of the DfE State aid Unit

The DfE State aid unit (SAU) will continue to provide advice and guidance to Northern Ireland government departments and their arm's length bodies on the application of the EU State aid rules, the TCA and WTO rules on subsidies, and other international subsidy commitments.

If you have any questions on any aspect of the new arrangements please contact the State aid Unit by e-mailing stateaid@economy-ni.gov.uk

 

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