EU Commission - Dutch Guarantee Scheme Does Not Constitute Illegal State Aid

; posted on
July 10th, 2018

The European Commission has decided that the "Growth Facility", a Dutch scheme to improve access to finance for small and medium-sized enterprises (SMEs), does not constitute illegal State Aid within the meaning of EU rules.

The Scheme Considered as Self-financing

Under the Growth Facility scheme (GF Scheme), the Dutch competent authority provides guarantees on 50% of new subordinated loans and equity to these companies, for up to 12 years. Loans guaranteed under the scheme can range from €2.5 million to €25 million. The Commission found that the fees paid in exchange for the guarantees give the Dutch State an appropriate remuneration level, ensuring that the scheme is self-financing, including administrative costs and the remuneration of virtual capital. This is the capital that a company operating on market terms would set aside as a precaution if it issued such a guarantee. Therefore, the Commission concluded that the GF Scheme does not constitute State Aid to the banks, nor to the borrowing companies.

Recent Cases on State Aid

In March 2018, the Commission approved a similar measure, the "Extended Growth Facility" (also known as GO Scheme), which is also a Dutch guarantee scheme but to support medium and large companies. But a few months earlier, the EU Commission found the Dutch government in breach of the EU State aid rules by granting illegal aid to IKEA, which confers a selective tax advantage to specific companies that can distort competition within the EU's Single Market.

Source: EU Commission

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