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Examples of State Aid




























Some Examples of State Aid

It is important to note that the European Court of Justice has sole competence over what is and what isn't a State aid.  The only way we can determine for certain that State aid is present is to notify a measure to the European Commission for legal certainty.  However the State Aid Unit is able to provide advice based on case precedents from the European Court, as well as direct guidance from the EC itself.

Please see the table below for some examples:

Likely to constitute State aid:

Unlikely to be State aid:

  • Grants to firms for investment, research and development, employee training, etc.
  • Loans and guarantees below market rates
  • Free or subsidised consultancy advice
  • Cash injections to, and writing off losses of, public enterprises
  • Sale or lease of public land or property at discounted rates
  • Selectively promoting companies using public funding
  • Contracts not open to competitive tendering
  • Discretionary deferral of or exemption from tax, social security and other payments to the State
  • Legislation to protect or guarantee market share
  • Funding/cash injections to social enterprises and charitable organisations who are engaged in economic activity
  • Public funding of privately owned infrastructure


  • Aid to individuals, charities, organisations and public bodies not involved in an economic activity (see definition of economic activity here)
  • Commercial payments for services rendered, where a company is contracted by a public body in accordance with Scottish & EU competitive tendering requirements
  • General measures, which can apply to all firms throughout the UK, with no discretionary power e.g. the Modern Apprenticeship Programme.



Minimising the risk of State aid being present:

(There may be options available to enable us to minimise the State aid risk at programme level)

  • In each case consider whether there is a robust argument that one or more of the four State aid tests are not met. For example, the activity being funded under the programme may not be economic in nature or may serve only a distinct, very local, market, with minimal possibility of intra-community trade or competition being distorted. If one of the tests is not met, then the measure is unlikely to be State aid.


  • Procure openly for providers – this could resolve a number of issues around business advice and employability services . If a service is being provided under a contract for services and at a market rate following an open procurement then there is no state aid.


  • Notify a scheme under the General Block Exemption Regulation (GBER). This Regulation permits State aid for particular types of activity, for example training or investment in energy efficiency – however, aid awarded under the GBER is subject to aid intensities (limits) which represent the maximum public funding that can be awarded for an activity and not just the funding that one body is offering. Therefore this option may not help those organisations who are highly dependent on a variety of state funding sources.


  • Consider whether the activity might be classed as a Service of General Economic Interest (SGEI). SGEI are services of an economic nature that public authorities identify as being of particular importance to citizens, but which are not supplied by market forces alone, or at least not to the extent and under the conditions required by society. Their provision may therefore require public intervention.



If you think you may be dealing with a State aid ask yourself the 4 key questions and contact the State Aid Unit for further advice.  The potential presence of State aid does not necessarily mean that your project cannot proceed, provided that it is awarded in compliance with EC State aid regulations.


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