State Aid Provisions Research Articles

Targeted financing of land reclamation works at agricultural enterprises: Accounting and reporting

Subject. This article discusses the issues of ensuring food security in Russia through improving the quality of agricultural land, which can be achieved through the implementation of reclamation measures on agricultural lands, the financing of which is performed through the provision of State aid. Objectives. The article aims to study the methodology of accounting for State aid to land reclamation works in agriculture, identify problems, and propose ways to solve them. Methods. For the study, I used a dialectical approach, observation, analysis and synthesis, comparison, as well as elements of the accounting method. Results. An analysis of the accounting of budget financing for land reclamation works reveals that different regulatory documents contain different methods. On the basis of this analysis, the article proposes a set of accounting records for State aid, as well as analytical accounts for accounting for budget financing for reclamation work performed for agricultural enterprises. Conclusions and Relevance. The proposed system of analytical accounting and accounting records for accounting of State aid for land reclamation works in agriculture will improve the efficiency of control over the targeted use of allocated budget funds. The results of the study can be applied in the system of accounting and internal control of agricultural organizations.

Оцінка показників надання державної допомоги на подолання наслідків, спричинених пандемією COVID-19

A problematic aspect of the scientific understanding of the methodology for making decisions on providing state aid to enterprises is a certain gap between the norms of legislation and International Financial Reporting Standards. The article identifies and systematizes the information support for assessing the compliance of enterprises with the criteria for providing government aid, taking into account the areas and types of State aid. The methodological and information support for assessing the compliance of business entities with the criteria for providing government aid during the COVID-19 pandemic is grouped into two key areas: social support for insured persons and enterprises for the period of restrictive anti-epidemic measures and assistance to business entities to overcome the consequences of COVID-19. It is established that in 2020 there was a significant increase in the share of state resources for the provision of state aid (up to 54%, compared to 2019, where the share of the state budget was 9% and 4% in 2018). The general indicators for assessing government aid in Ukraine have been identified and calculated, on the basis of which it has been established that the amount of state aid per citizen of Ukraine in 2020 can be estimated at UAH 260.24 per person, or EUR 8.45 per person, which is the highest figure for the period under study. This is due to the intensification of state regulation mechanisms for the provision of state aid to overcome the consequences caused by the coronavirus disease and reduce the macroeconomic shock. The provision of government aid in Ukraine should be carried out in compliance with Ukraine's international obligations under the Association Agreement on state aid and ensure the principles of transparency of such processes.

Article 6 of the Anti Tax Avoidance Directive – Living a Life on Its Own?

Art. 6 of the Anti Tax Avoidance Directive (ATAD) includes a minimum harmonization standard for so-called General Anti Abuse Rules (GAARs) in the field of corporate income taxation. A significant number of Member States has not enacted the provision but referred to their domestic law already fulfilling the demands of the directive. While this is possible, it could point towards a lack of awareness of what ramifications Art. 6 ATAD has on Member States’ tax systems. Against this background, the article aims to shed light on the life Art. 6 ATAD has, as part of EU law, begun to live on its own. In doing so, we will reflect on five dimensions: (i) the impact of the Philip Morris line of case law on Member States’ ability to go beyond the minimum standard included in Art. 6 ATAD, (ii) the relation between Art. 6 ATAD and the EU’s general anti-abuse principle, (iii) the impact of the EU fundamental rights protection on the application of the national implementation of Art. 6 ATAD, as well as (iv) the interpretational insights to be won from other secondary EU and (v) state aid provisions. ATAD, GAAR, abuse, tax avoidance, principle, implementation, interpretation, fundamental rights, unshell, state aid

Illiberal Versus Externally Fomented growth model readjustment: post-GFC state aid in the EU’s semi-periphery

Most foreign capital-led, export-oriented Eastern EU member states and the consumption-driven Southern European countries suffered a heavy blow during the Global Financial Crisis (GFC) in 2008–09. The GFC exposed the vulnerability of these economies to external shocks and raised the need for readjustment of their growth models through state intervention. While the rise of illiberal governments drove readjustment in the East, the main driver was externally fomented in the South. This article focuses on state aid, a particular instrument of industrial policy, which has been a main vehicle for growth model readjustment. We seek to explore whether the provision of state aid in the two European semi-peripheries contributes to long-term post-crisis recovery by promoting competitive investments in two Eastern (Hungary and Poland) and two Southern EU members (Portugal and Spain). Relying on the European Commission’s state aid database, we show that after 2013, in the consumption-driven South, governments aimed to strengthen supply through aid, while in the export-oriented East, they were more concerned about promoting exporting firms. The article thus reveals how state aid may preserve and reinforce existing growth models in the semi-periphery even if strategic aims and rhetoric target readjustment.

Some Ethical and Legal Challenges in Effective Long-Term Care System Development

The Russian social protection system of recent years has been characterized by the chaotic nature of the ongoing reforms, which sometimes have the main task of solving momentary economic problems. An increase in the level of social benefits or the introduction of new ones occurs, as a rule, for the most active and dissatisfied part of the population. Thus, in 2019, under the influence of public associations of parents of disabled children, the compensation payment for this category of citizens was increased to 10,000 rubles, while the payment to caregivers for other categories of people in need (for example, elderly relatives) remained at the level of 1,200 rubles per month.The obvious lack of general principles for the provision of state aid based on ethical norms understandable to society causes discontent and distrust of the population. The paper attempts to point out the inconsistency of legislation with moral and ethical standards in the field of long-term care, identify shortcomings and develop some proposals for improving the current legislation.The author suggests the following: 1) to support the idea implemented in pilot projects of a number of subjects of the Russian Federation to endow persons caring for relatives with the status of social workers; 2) to raise the amount of payments to unemployed able-bodied caregivers to the minimum wage, since compensation payments by their nature are designed to replace missing earnings; 3) to eliminate unjustified differentiation of payments depending on the status of persons in need of care; 4) to provide for the possibility of working on a part-time basis when providing care, setting fair limits taking into account the amount of compensation payments and income received, etc.

To be or not to be specific?

This article analyses how EU institutions have defined the so-called specificity of sport and the extent to which its recognition might have affected the application of internal market and competition law to sport after the adoption of Article 165 TFEU. The article relies on qualitative and inductive thematic analysis of 83 sport-related documents adopted by EU institutions. Four main themes have been identified: Definition of sports specificity, categorisation of sporting exceptions, contribution of sporting exceptions to the specificity of sport, and the impact of Article 165 TFEU in the application of EU sports law. Our findings suggest that the EU has defined the specificity of sport around a set of unique characteristics that differentiates sport from other industries. While the formal recognition of the specific structures of sport in the Treaties had little effect on the application of free movement and anti-trust provisions to sport, it seems to have had some impact in the recent application of state aid provisions to sport. Our findings are of relevance for existing debates on the regulation and governance of sport in Europe and the development of the so-called European Model of Sport.

ECONOMIC RESPONSE OF THE EUROPEAN COUNTRIES TO THE FIRST WAVE OF COVID-19

COVID-19 pandemic has caused the deepest crisis since the World War II. Many countries have slid into recession due to continuous GDP fall. Lockdown has an impact on unemployment growth, while the provision of health systems and state aid to vulnerable sectors and population are deepening fiscal deficits. Based on the example of 31 European countries (27 EU members and several countries with which the Union has different agreements), this research determines impact of key economic and social variables in period of the First wave of COVID-19 pandemic on the “Economic stimulus”, which is represented by composite index CESI. It is about a combination of variables: Democracy Index, Stringency Index, Final Consumption, Gross Investment, Health Expenditure, and Hospital Beds per Thousand People. Using the median method, the total sample has been divided into two groups, the one with less and the one with more infected people. The results of cross section regression analysis show that 52% variations in the Economic stimulus in the total sample is determined by predictor variables in the model. Analysis for the countries with less infected people shows that more than 75% variations in the Economic stimulus is determined by joint trends of the predictor variables, while the Analysis with more infected cases shows coefficient of determination (R2) over 71%. In general, the results of econometric analysis unambiguously show that democracy contributes to the economic policy response to pandemic in all three observed cases. Stringency index contributes to democracy in an inversely proportional sense, especially in the case of countries with larger number of infected persons. The same could be said for the variable Final Consumption in the case of the total sample of countries, where markedly reduced final consumption requires stronger economic reaction and the governmental aid of all the countries included in the sample.

GRANTING STATE AID IN THE AGRICULTURE SECTOR

The economic aid granted in the agricultural environment is the subsystem of State Aid, that represents the economic instrument for the strengthening of competitiveness of agriculture and for creating new jobs in the agricultural sector. State Aid promoting the economic development of the agricultural and forestry sectors and of rural areas is embedded in the broader Common Agricultural Policy. State Aid or subsidies is a legal term for money given from the state budget in direct or indirect form. However, despite a general prohibition of granting State Aid by national authorities in EU member states , State Aid may be necessary to address market failures in order to ensure a well-functioning EU internal market. State Aid can only be justified if it is in line with the principles of the internal market and with the principles of Common Agricultural Policy. This paper aims to provide an overview of the conditions and criteria for granting State Aid in the agriculture sector from the Government. The analysis also includes the conditions for the provision of State Aid during the COVID-19 pandemic. The paper concludes with an analysis of the measures of the Slovak Republic supporting the competitiveness of economic entities operating in the agricultural sector.

POSITION OF CENTRAL EUROPEAN REGIONAL AIRPORTS

This article focuses on the position of regional airports in the countries of Central Europe, with a focus on the airports of the Visegrad Group, especially the airports in Slovakia and the Czech Republic. The authors explain the financing of the airports and provision of state aid to these entities according to European legislation. This article reports differences in the national implementation processes of the same Europeans rules in the V4 Member State and compares the regime of financing of the regional airports. Subsequently, we analyse the economic situation of regional airports and their state based on financial indicators. In general, the current COVID-19 pandemic has exacerbated their situation. Many countries still adhere to strict regulations or international travel bans so as not to spread the virus. The sharp decline in the number of passengers and flights has begun to have an impact on the financial viability of regional airports;therefore, financial assistance for regional airports will be more than necessary in the coming years.

EU Health Union and State Aid Policy: With Great(er) Power Comes Great Responsibility

This contribution evaluates whether European Union State aid policy could play a role in achieving deeper and more solidary integration in the area of public health. According to Article 107 TFEU, the powers of Member States to grant aid to help their economies are seriously limited. Exceptions to the general prohibition to grant State aid are authorised by the European Commission, which enjoys wide discretion in weighing national objectives against European integration goals. The area of public health has been shielded from the application of these rules, with activities such as the provision of health insurance failing to be considered of economic nature (see most recently the Dôvera judgment). The COVID-19 experience shows that, in cases of major health crises, State aid provisions are practically suspended, with interventions allowed in the name of the fight against the pandemic. The eventual creation of a Health Union will require the re-evaluation of the application of the State aid rules to healthcare. This paper questions whether these rules should evolve as a reflective function of strengthened competences in healthcare or whether existing regulatory powers are enough to determine the interaction between national spending policies, a solidary European Health Union and fair competition.

Tax subsidies for entrepreneurs in case of property tax

In Polish tax law, real estate is subject to taxation. Property tax rates depend not only on the type of property but also on the taxable person. Thus, as far as persons conducting business activity are concerned, real estate in their possession is taxed at a higher rate than that of natural persons. The amount of the tax payable annually may exceed the income of the trader concerned, since it does not depend on the taxable person's financial situation (as is the case with other taxes, e.g. personal income tax). Due to this fact, a catalog of tax reliefs and exemptions, i.e. the so-called tax subsidies, as well as the possibility of spreading the tax in instalments and deferring its payment date is an important role in real estate tax. The state, including municipalities, may create this form of aid, as long as it does not conflict with the provisions of the Act on State Aid and similar provisions in force in the European Union, which are designed to observe free competition in the market. The purpose of this Article is to indicate what are the current forms of assistance to entrepreneurs on the example of property tax.

EU State Aid Law and Consumer Protection: An Unsettled Relationship in Times of Crisis

As a result of the global lockdown, countries around the globe are now facing multiple crises at the same time: a health crisis, a financial crisis, and a collapse in commodity prices, which all interact in complex ways. As a reaction governments and policymakers are providing unparalleled support to firms, financial markets, and households. The effectiveness of these policies is considered central to project worse consequences. In order to coordinate the economic response of the Member States and to mitigate the negative repercussions on the EU economy, the European Commission has adopted a Temporary Framework, which enables Member States to use the full flexibility foreseen under EU state aid rules to support the economy in the context of the COVID-19 outbreak. However, in the current crisis the world economy and national economies are also shuttered in their micro-elements, at the demand side. As a result of the measures taken by governments to contain the virus, consumers have seen retail choices limited with hundreds of thousands of shops being required to close their doors, a situation that has exposed consumers to a floodgate of unfair, misleading or abusive business practices. Price gouging for essential consumer products coupled with unfair commercial practices have amplified forcing governments to take various measures, for example introducing price caps. Nevertheless, besides these unfair practices more indirect forms of consumer harm is taking place as a result of some of the current state aid measures that many policy makers may not have immediately realized and acted upon.The current flexibility offered in the State Aid law Temporary Framework has been used by some governments also to tolerate non-compliance with consumer protection rules by undertakings. Such exceptions in fact lead to double burden for consumers. Once as consumers and purchasers of, for example, travel or transport services and second, as taxpayers financing the state aid. Moreover, this may lead to a violation of EU law that lays down the obligation to take consumer protection requirements “into account in defining and implementing other Union policies and activities” (Article 12 TFEU), a principle also laid down in the EU Charter of Fundamental Rights (Article 38). This normative precedent creates a constitutional basis for considering the requirements of consumer protection in the whole body of EU competition law and policy including the Treaty’s state aid provisions. The main question this article aims to answer is how state aid law and consumer protection rules interact in EU law and what lessons these interactions provide for managing the current economic crisis in a coordinated and balanced way that takes equal account of interests on the supply and demand side. While the interaction between consumer law and competition law has been subject to various legal and economic studies in the past, the relationship between state aid rules and consumer protection has not been studied so far. This article fills this gap, by making three novel contributions. First, the article sets out the EU law framework that structures the analysis of how state aid rules and consumer protection interact. It analyses the goals of these two legal areas and how these goals complement or conflict. Second, by presenting two case studies (air transport and energy) it explains and illustrates the constituents of the interaction between these two legal fields and offers an illustration why these intersections should be analyzed in-depth. Third, the article offers policy recommendations that can be applied not only in the current crisis but also beyond, on the coordination and enforcement of these two policies and legal fields.

In Pursuit of Fair Tax Competition: The Linkage Between PTA, WTO Subsidies and EU State Aid Rules

The EU is entering into multiple Preferential Trade Agreements (PTAs) with a view to promote free trade and, in the field of taxation, to tackle harmful tax practices. In order to achieve the latter goal, the block is pushing for the inclusion of state aid clauses in its new PTAs. This article checks these state aid provisions, seeking to establish whether their concrete characteristics are actually suitable to achieve their goals. The article also checks the potential side effects of including state aid clauses in PTAs, in connection with the fragmentation of international trade law and the possible consequences for developing countries.

LEGAL ENFORCEMENT OF STATE AID CONTROL IN THE FIELD OF HEALTHCARE: EXPERIENCE OF UKRAINE IN THE CONTEXT OF EUROPEAN INTEGRATION

The aim: The purpose of this article is to concretize the directions of improving legal support of control over the state aid in the field of health care. Materials and methods: The study analyzed the sources of the European Union law and legislative acts of Ukraine on the provision of state aid to business entities, relevant materials of the Antimonopoly Committee of Ukraine, including more than 20 decisions taken by this body based on the notification review results of the state aid provision in the field of health care. The methodological basis of the research consists of general and special methods of scientific research, in particular, dialectical, analytical-synthetic, system-structural, formal-logical, comparative legal methods. Conclusions: Based on the results of the study directions for improving legal support for state aid control in public health sector have been proposed, in particular, legal qualification of the activities of health care providers, determining whether certain types of public health activities belong to those that constitute a common economic interest and finalizing the criteria used to assess admissibility of state aid in this area.

Exploring the Impact of EU Law on Energy and Environmental Taxation

This chapter shows that EU law has shaped – and continues to shape – the development of environmental tax measures at both EU and Member State level. Firstly, at the EU level, the EU’s institutional framework has actually inhibited the harmonisation of environmentally-driven taxes. An analysis of the historical development of EU provisions surrounding energy taxation illustrates this point (sections 2.1. & 2.2). So far, the energy taxation directive remains largely disconnected from the EU’s climate policy, including the EU Emissions Trading Scheme (section 2.3). Secondly, EU substantive law has had an ambiguous impact on Member States’ environmental tax policy (section 3). On the one hand, EU substantive law has been interpreted by the EU Court of Justice in a way that encourages Member States to adopt environmental tax measures that are environmentally-driven and structured accordingly. Indeed, the environmental purpose of Member States’ tax measures seems to play a positive role in the assessment of their compatibility with EU law, including State aid provisions (section 3.1), the fundamental freedoms (section 3.2) and the energy taxation directive (section 3.3). On the other hand, in some instances, EU law strictly limits Member States’ ability to adopt environmentally-driven tax measures. Moreover, EU secondary law disregards the purpose of environmental taxes in order to classify them for statistical purposes (section 3.4). The broad picture that emerges from the analysis of existing legislation, case-law and literature highlights that institutional and substantive EU law has shaped the use of environmental tax measures in a way that does not ensure the alignment of these taxes with the EU’s and Member States’ environmental and climate ambitions. Therefore, the last section of this chapter suggests new areas of research, which could improve the consistency of environmental tax policy at both EU and Member State levels (section 4).

Comparative Analysis of State Aid and Competitiveness of the Republic of Serbia and the Neighbouring Countries

Abstract This paper analyses state aid, as a type of measure for intervention in the economy, which should aim to improve competition in market. State aid was analysed in terms of its volume and structure in the Republic of Serbia, as well as comparatively in some neighbouring countries from the region. Special attention was given to specifics of Serbian state aid in the context of the European Union accession, as well as to efficiency of the state aid and its impact on the national competitiveness. The main objective of the paper is to point out the necessity of state aid measures, especially in the case of developing countries, as well as the necessity of more efficient and effective use of state aid. Also, the paper will point out weaknesses that occur when decisions about provision and implementation of state aid are made, and to stress out the need to improve horizontal, sectoral and regional allocation of state aid in order to achieve positive effects on the competitiveness of economy in Serbia, Montenegro, and Bosnia and Herzegovina. Finally, the paper emphasizes the importance of building an efficient state aid control system in the process of fulfilling the pre-accession obligations of the observed countries in the EU accession process.

The Social Dimension of EU State Aid Law and Policy

AbstractTraditionally, EU state aid law has been attached to the goals of maintaining free competition and preventing the distortionary effects of Member States’ economic intervention, while social considerations have been considered immaterial to state aid control. However, in more recent years, EU state aid law has acquired a clearer ‘social dimension’, indirectly streamlining national subsidies towards social goals. The entry into force of the Treaty of Lisbon, and particularly of Articles 3(3) TEU and 9 TFEU, has had an impact on the way in which social goals have been taken into account in the application of the state aid provisions. In the last decade, the European Commission has sought out a more appropriate balance between the main objective of preserving competition in the internal market on the one hand, and social objectives, also enshrined nowadays in the Treaties, on the other. This ‘social dimension’ is still underdeveloped, but emerges to varying degrees when looking respectively at the definition of state aid under Article 107(1) TFEU, at the scope of the derogations under Articles 107(2) and 107(3) TFEU and at the secondary legislation adopted for their implementation.

Ensuring a Level Playing Field Post-Brexit: State Aid Control

This paper aims to analyse some of the main economic, legal and institutional factors that will have been relevant in the formulation of the State aid provisions in the Withdrawal Agreement (and the White Paper previously submitted by the UK Government). It compares these provisions with other models, in particular the EEA system (and its variations). In addition, it considers the extent to which the model enshrined in the Withdrawal Agreement will be maintained in any future trade agreement concluded between the EU and the UK.

Banking Communication Non-binding and Burden-sharing Approved: Kotnik

Case note on Judgment of the Court (Grand Chamber) 19 July 2016, Tadej Kotnik and Others v Državni zbor Republike Slovenij (526/14) On 19 July 2016, the CJEU decided the Kotnik case concerning State aid, EU soft law, corporate law and insolvency law. The wide spectre of legal subjects touched upon shows that the case is important not only for constitutional and State aid law, but also for the research field on regulatory private law. It impacts banking contracts throughout the EU. The importance of the case is underlined by the fact that the CJEU decided the case in the Grand Chamber. In short, the CJEU ruled that the Commission’s Banking Communication from 2013 is not binding on Member States. It considered the Banking Communication’s provisions on burden-sharing to comply with EU primary law including State aid provisions, the right to property and the principle of protection of legitimate expectations. The CJEU also found that the burden-sharing regime is compatible with Directive 2012/30/EU which generally requires that a capital alteration be decided by the general shareholder meeting. However, the burden- sharing regime is limited by the principle of proportionality since it may not exceed what is necessary to counter the capital shortfall. After a short outline of the facts and legal background, this case note will address each of the CJEU’s findings and discuss their implications for other areas of EU law.

The cooperation between enterprises: significant part of the innovation process – a case study of the czech machinery industry

In recent years, we have been able to see the growing importance of knowledge in the context of the emerging knowledge-based global economy. It is commonly accepted that (i) innovations are brought forward through an interactive process of knowledge generation, diffusion, and application; (ii) innovations are increasingly seen as fundamental to the competitiveness of enterprises and economies; and (iii) knowledge is critical to the process of innovation. The relative importance of cooperation on innovative activity varies and depends upon a number of factors, i.e., the number of cooperative ties and the context in which network relations exist. The determinants of R&D cooperation differ depending on the types of cooperation: (i) the positive impact of enterprise size, R&D intensity, and incoming source-specific spillovers is weaker for competitor cooperation, reflecting greater concerns about appropriability and (ii) institutional spillovers are more generic in nature and positively impact all types of cooperation. The question is the effectiveness of different types and subjects of cooperation. This article aims to analyze the impact of (i) the cooperation and participation in the group of enterprises; (ii) cooperation with universities; (iii) the provision of state aid; on overall enterprises' performance. Analysis was performed on data from Community Innovation Survey (CIS) carried out in the Czech Republic between the period 2010-2012 by using own multiple linear regression models. The results confirm the importance of cooperation between enterprises and the positive impact of participation of enterprises in the enterprise groups. Cooperation with universities and research organizations also has a positive impact on the performance of enterprises in the machinery industry in the Czech Republic. We also show that there were inefficient provisions of public aid in machinery industry in the Czech Republic.