Germany

Introduction

Germany has already applied for several programmes by the EU Commission and has been granted approval for these.

In the following we will provide a brief overview of the most important possibilities. These include newly created programmes as well as existing possibilities.

EU State aid law context

National State aid schemes (programs) introduced by EU Member States and individual aid granted by national instances must comply with the applicable EU State aid law. Member States may e.g. notify new programs based on the EU Commission’s Temporary Framework, introduce new programmes or grant aid in individual cases based on the provisions of the Treaty (Art. 107 para 2 TFEU) on aid to recover the damage caused by exceptional occurrences or grant aid to firms in difficulty under the Guidelines for Rescue and Restructuring aid. Please refer to the EU chapter for more details.

National Public Support

Economy stabilisation fund (ESF)

Who is eligible for the aid?

Undertakings which

  • were not undertakings in difficulty* (not UID) on 31 December 2019 and
  • which have at least two of the three following characteristics: a balance sheet total of EUR 43 million, turnover of EUR 50 million and more than 249 employees on average over the course of the year.

Whether or not the aid is granted depends, among other things, on the significance of the undertaking concerned for Germany's economy.

What does the aid consist of?

The fund serves to support the real economy and offers two instruments:

  • The assumption of guarantees for debt instruments and trade payables of undertakings.
  • The possibility of participating in the recapitalisation of undertakings by, among other things, acquiring shares (see the investment of the federal government in Commerzbank during the financial crisis).

Further requirements and conditions will be attached to the payments. Details of the programme need to be regulated by a specific government regulation.

Where to apply for the aid?

Applications must be made to the Federal Ministry for Economic Affairs and Energy. A decision on the application will be made jointly by the Federal Ministry of Finance and the Federal Ministry for Economic Affairs and Energy. The decision can be assigned to the German Development Bank (Kreditanstalt für Wiederaufbau – KfW). 

Is a notification to the EU Commission necessary?

The establishment of the fund has not yet been qualified as an aid scheme. The government may introduce programmes (or framework regulations) which will set out the requirements of support provided under the fund and/or grant aid in individual cases. Both programmes/framework regulations and individual aid require approval by the EU Commission. No State aid may be granted prior to the Commission's approval.

Further remarks

None


Federal scheme loans 2020 (1)

Who is eligible for the aid?

Undertakings which were not in difficulty* (not UID) on 31 December 2019.

What does the aid consist of?         

New loan programme with a low interest rate. The state will take over up to 90 % of a loan provided by a bank to a beneficiary, provided that:

  • The loan amount is less than EUR 1 billion per beneficiary and limited to either twice the annual wage bill for 2019 or alternatively to the last year available, 25% of the annual turnover 2019, or the specific liquidity needs of a beneficiary for the next 12 months (18 months for SMEs). In addition, for loans above EUR 25 million, the loan amount may not exceed 50% of the total debt volume on the beneficiary’s balance sheet;
  • the term of the loan is limited to a maximum of  6 years; for loans up to EUR 800.000 the term is limited to a maximum of 10 years.

Where to apply for the aid?

The loans can be granted by the federal level, on the level of the Bundesländer, on communal level, and by the promotional banks (for example “KfW”) of the federation and the Bundesländer. They are granted through credit institutions and other financial institutions as financial intermediaries as "pass-through" loans. Further information on the services offered by KfW is available here.

Is a notification to the EU Commission necessary?          

No. The scheme has been approved by the EU Commission.

Further remarks

None


Federal scheme loans 2020 (2)

Who is eligible for the aid?

Undertakings which were not in difficulty* (not UID) on 31 December 2019.What does the aid consist of?           

New loan programme with subsidised interest rates provided either directly by a granting authority together with private banks in a consortium to beneficiaries, or indirectly in the form of risk-sub-participations for investment and working capital needs of the beneficiaries, provided that:

  • The granting authority does not assume more than 80% of the risk of any given loan and not more than 50% of the total debt volume on the beneficiary’s balance sheet or 30% of the balance sheet size;
  • the loan amount is less than twice the annual wage bill for 2019 or alternatively to the last year available, 25% of the annual turnover 2019, or the specific liquidity needs of a beneficiary for the next 12 months (18 months for SMEs) based on appropriate justification and self-certification of the beneficiary;
  • the term of the loan is limited to a maximum of 6 years;
  • interest rates provided to the granting authority are the same as for the other participating banks in the consortium and reach a certain minimum rate.

Where to apply for the aid?

The aid may be granted by public bodies, such as federal authorities and regional authorities. For instance, the German Promotional Bank (“KfW”) offers these loans. They need to be applied for through the main bank. Further information on the services offered by KfW is available here.

Is a notification to the EU Commission necessary?

No. The scheme has been approved by the EU Commission.

Further remarks

None


KfW rapid loan 2020

Who is eligible for the aid?

Small and medium-sized undertakings which

  • had a profit in 2019 or on average over the last three years (or since they have been active on the market, if the period is shorter), and
  • were not in difficulty* (no UID) on 31 December 2019, and
  • have more than 10 employees, and
  • have been active on the market at least since 1 January 2019, and
  • have an orderly financial situation.

What does the aid consist of?         

New loan programme. The bank receives a 100% indemnity from the KfW, secured by a guarantee from the federal government.

  • The loan volume per enterprise amounts to up to 3 months' turnover in 2019, maximum EUR 800,000 for undertakings with more than 50 employees, maximum EUR 500,000 for undertakings with up to 50 employees.
  • The interest rate is currently 3% with a term of 10 years.
  • The loan is approved without further credit risk assessment by the bank or KfW. This allows the loan to be approved quickly.

Where to apply for the aid?

The KfW loans must be applied for through the main bank. You can find further information on KfW services here.

Is a notification to the EU Commission necessary?

No. The scheme has been approved by the EU Commission.

Further remarks

None


Federal scheme State Guarantees 2020

Who is eligible for the aid?

Undertakings which are not in difficulty* (not UID) or which only got into difficulty after 31 December 2019 owing to the coronavirus crisis can apply.

What does the aid consist of?         

New loan guarantee scheme:

  • The annual guarantee premiums are set at 25 basis points ("bps") for SMEs and 50 bps for large undertakings for the first year. For years two and three, they are set at 50 bps for SMEs and 100 bps for large undertakings. For the years four to six, they are set at 100 bps for SMEs and 200 bps for larger undertakings.
  • The maximum term of the guarantees is 6 years. 
  • For guaranteed loans with a maturity beyond 31 December 2020 the loan amount is limited to either twice the annual wage bill for 2019, 25% of the annual turnover 2019 or the specific liquidity needs of the beneficiary for the next 12 months (18 months for SMEs) based on appropriate justification and self-certification by the beneficiary of its liquidity needs.
  • For guaranteed loans with a maturity until 31 December 2020, the amount of the loan principal may be higher with appropriate justification and proportionality of the aid. 
  • The public guarantee may not exceed: (i) 90% of the loan principal where losses are sustained proportionally by the credit institutions and the State or (ii) 35% of the loan principal where losses are first attributed to the State and only then to credit institutions and (iii) for both cases where the loan decreases over time, the guaranteed amount has to decrease proportionally 

Where to apply for the aid?

The aid may be granted by public bodies, such as federal authorities and regional authorities or the guarantee banks.

Is a notification to the EU Commission necessary?          

No. The scheme has been approved by the EU Commission.

Further remarks

None.


Federal scheme aid for research, development and investment 

Who is eligible for the aid?

The scheme is open to all undertakings able to engage in COVID-19 relevant research, make available relevant testing and upscaling infrastructures, or produce COVID-19 relevant products, irrespective of their sector of activity.

Aid may only be granted to undertakings that were not in difficulty* (UID) before 1 January 2020.

What does the aid consist of?

The following aid may be granted in the form of direct grants, repayable advances and tax advantages:

  • R&D aid for COVID-19 relevant research and development projects. Support is possible for fundamental research, industrial research and experimental development and a wide scope of activities including clinical trials and validating and defending patents.     

The maximum allowable aid intensity is 100% for fundamental research and 80% for industrial research and experimental development. A bonus of up to 15% is granted for industrial research and experimental development activities that are supported by more than one Member State, or that are carried out in cross-border collaboration with research organisations or other undertakings. 

Aid is available for projects that have started as of 1 February 2020 or where the aid is necessary to accelerate works or to widen the scope of a project which started before 1 February 2020. The supported undertaking has to commit to grant non-exclusive licences under non-discriminatory market conditions to third parties in the European Economic Area. 

The aid may be cumulated with other aid for the same eligible costs provided the combined aid does not exceed the allowable aid intensity mentioned before.

  • Investment aid for the construction and upgrade of testing and upscaling infrastructures required to develop, test and upscale COVID-19 relevant products.    

The maximum allowable aid intensity is 75% of the eligible costs. A bonus of up to 15% may be granted if the project is completed within 2 months of the decision. 

Aid is available for investment projects that have started as of1 February 2020, as well as investment projects on which works had started before that date, provided the aid serves to accelerate their implementation or to extend their scope

The investment project must be completed within 6 months. If that deadline is not met, for reasons attributable to the undertaking, 25% of the support granted in the form of direct grants or tax advantages shall be reimbursed. Where the deadline is respected, aid in the form of repayable advances is transformed into direct grants. The repayable advance is reimbursed within 5 years. 

The undertaking must commit to grant open access to the infrastructure to several users based on non-discriminatory market terms and transparent conditions. 

Such aid cannot be cumulated with other investment aid for the same eligible costs. 

  • Investment aid to manufacture COVID-19 relevant products and services. 

The maximum allowable aid intensity is 80% of the eligible costs. A bonus of up to 15% may be granted if the investment is concluded within 2 months after the aid granting or date of application of the tax advantage or if the support comes from more than one Member State. 

The aid is available for investment projects that have started as of 1 February 2020, as well as investment projects on which works had started before that date, provided the aid serves to accelerate their implementation or to extend their scope. 

The investment projects have to be completed within 6 months. If that deadline is not met, 25% of the support granted in the form of direct grants or tax advantages shall be reimbursed. Where the deadline is respected, aid in the form of repayable advances is transformed into direct grants. 

The repayable advance has to be reimbursed within 5 years. The aid cannot be cumulated with other investment aid for the same eligible costs.

Regarding the two investment measures, also a loss cover guarantee may be granted in addition to a direct grant, tax advantage or repayable advance, or as an independent aid measure. The amount of loss to be compensated is established five years after completion of the investment. The compensation amount is calculated as the difference between the sum of investment costs, reasonable profit and operating cost, on the one hand, and the sum of the direct grant received, revenues, and the terminal value of the project, on the other hand.

Where to apply for the aid?

The aid may be granted by all public bodies at federal, regional and local level.

Is a notification to the EU Commission necessary?

No. The scheme has been approved by the EU Commission.

Further remarks

None


State guarantee scheme for trade credit insurance

Who is eligible for the aid?

All undertakings active in the trade credit insurance sector in Germany that were not in difficulty* (not UID) on 31 December 2019.

What does the aid consist of?

The state assumes a guarantee of up to EUR 30 billion for indemnification payments by credit insurers for the year 2020. The credit insurers bear the losses up to an amount of EUR 500 million themselves and assume the default risks that exceed the guarantee of the Federal Government.

The participating trade credit insurers will pay 65% of annual gross premiums for the year 2020 to Germany.

The measure covers purchasers inside and outside of Germany and claims related to the delivery of goods or services that take place between 1 January 2020 and 31 December 2020, provided that the trade credit insurer participates in the measure. Claims that have been notified before 1 March 2020 are excluded.

Germany received a binding commitment from the trade credit insurers active in Germany participating in this measure to retain their existing credit limits at least up to the levels at the time of the agreement.

Where to apply for the aid?

The Federal Ministry of Finance is responsible for the measure and the conclusion of individual agreements with the credit insurers.

Is a notification to the EU Commission necessary?

No. The scheme has been approved by the EU Commission.

Further remarks

None


Further programmes

Who is eligible for the aid?

The federal government and many federal states (Länder) have introduced further subsidy programmes which are mostly aimed at solopreneurs and small businesses.

What does the aid consist of?         

Usually these programmes offer subsidies between EUR 15,000 and EUR 50,000 per undertaking.

Where to apply for the aid?

An overview of the subsidisation programmes of the federal government, the federal states and the European Union can be found at www.foerderdatenbank.de.

Is a notification to the EU Commission necessary?

This may depend on the program.

Further remarks

None

 

*For example, a private limited company is, inter alia, a company in difficulty (UID) if more than half of its subscribed share capital has been lost as a result of losses. If the Ltd is a SME, special rules apply.

Authors

Michael Bauer
Dr. Michael Bauer
Global Head of Competition & EU Group, CMS
Helmer Krane