The European Commission has approved under EU state aid rules Estonia's map for granting regional development aid between 2014 and 2020. The map is based on the new regional aid guidelines adopted by the Commission in June 2013 (see IP/13/569), which set out the conditions under which Member States can grant state aid to businesses for regional development purposes. The guidelines aim to foster growth and greater cohesion in the Single Market.
Commission Vice President in charge of competition policy Joaquín Almunia said: “The new regional aid map establishes a clear framework allowing the Estonian authorities to support businesses throughout the country. In addition, the map facilitates the preparation and implementation of regional development programmes co-financed by European Structural Funds.”
Under Estonia's regional aid map, the entire territory of Estonia will be eligible for regional aid. The map also sets the maximum aid levels (so-called "aid intensities") for large companies carrying out projects in the country at 25% of the total investment cost. These percentages can be increased by 10 percentage points for medium sized and by 20 percentage points for small companies. The map will be in force between 1 July 2014 and 31 December 2020. As compared to the previous map, the aid intensities have decreased by between 20 and 25%, because of the growth of the Estonian GDP on the one hand and the overall reduction of aid intensities by 5% on the other hand.
Under the regional guidelines, areas with a GDP per capita below 75% of the EU average are eligible in priority for regional investment aid, as the main purpose of regional aid is to foster the development of the less advantaged regions of Europe. Estonia has a GDP per capita of 65% of the EU average.
The regional aid guidelines set out the rules under which Member States can grant state aid to companies to support investments in new production facilities in the less advantaged regions of Europe, or to extend or modernise existing facilities. The ultimate purpose of regional state aid is to support economic development and employment.
The regional aid guidelines contain rules on the basis of which Member States can draw up regional aid maps valid throughout the guidelines' period of validity. The maps identify in which geographical areas companies can receive regional state aid and at what proportion of the eligible investment costs (aid intensity). Eligible costs are the part of the total investment costs that may be taken into account for the calculation of the aid. On the basis of the guidelines, the Commission adopts a regional aid map for each Member State.
Article 107(3)(a) of the Treaty on the Functioning of the European Union (TFEU) allows Member States to grant state aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment. The regional aid guidelines define these as regions with a GDP per capita below 75% of EU average and outermost regions.