EUROPEAN COMMISSION. The Commission has based its decision on the following considerations:
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1 EUROPEAN COMMISSION Brussels, C(2017) 693 final Subject: State aid Germany SA (2016/N-2) Saxony Natural heritage: nature protection related public relation and education activities Sir, The European Commission ("the Commission") wishes to inform Germany that, having examined the information supplied by your authorities on the State aid scheme referred to above, it has decided not to raise any objections to the relevant scheme as it is compatible with the internal market pursuant to Article 107(3)(c) of the Treaty on the Functioning of the European Union ("TFEU"). The Commission has based its decision on the following considerations: 1. PROCEDURE (1) By letter of 15 December 2015, registered by the Commission on the same day, Germany pre-notified the above mentioned aid scheme. The Commission sent a request for additional information to the German authorities on 8 February 2016 which the German authorities answered by letter of 1 March 2016, registered by the Commission on the same day. (2) By letter of 19 October 2016, registered by the Commission on the same day, Germany notified, according to Article 108(3) TFEU, the above mentioned aid scheme. The Commission sent a request for additional information to the German authorities on 23 November 2016 which the German authorities answered by letter of 19 December 2016, registered by the Commission on the same day. Seiner Exzellenz Herrn Frank-Walter STEINMEIER Bundesminister des Auswärtigen Werderscher Markt 1D Berlin DEUTSCHLAND Commission européenne/europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË
2 2. DESCRIPTION 2.1. Title (3) Saxony Natural heritage: nature protection related public relation and education activities 2.2. Objective (4) The purpose of the aid scheme is to support, based on the Rural Development Programme (RDP) of the Free State of Saxony for the programming period , the sustainable protection of natural biodiversity and the natural rural heritage including the conservation of historical diversity of the cultural landscape. The focal points of the support are the habitats and the species under Directive 92/43/EEC 1 and Directive 2009/147/EC 2 and other protected and vulnerable habitats and species in Saxony Legal basis (5) The legal basis is the Directive of the Saxon State Ministry of the Environment and Agriculture on support for measures to protect natural biodiversity and the natural rural heritage in Saxony Duration (6) From the date of approval by the Commission until 31 December Budget (7) Overall budget is 4,5 Mio Euro/annual budget is Euro Beneficiaries (8) Beneficiaries are undertakings who are natural persons or legal persons governed by private or public law (such as for example service providers, nature protection organisations, education facilities, museums, visitor's centres and others). Both, large enterprises and small and medium-sized enterprises, can be beneficiaries under the present notified aid scheme. (9) The aid will not be granted to undertakings: a) in difficulty within the meaning of point (35)(15) of the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to (hereinafter "the Guidelines"); b) subject to an outstanding recovery order following a previous Commission decision declaring an aid illegal and incompatible with the internal market. 1 Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora, OJ L 206, , p. 7 2 Directive 2009/147/EC of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds, OJ L 20, , p. 7 3 OJ C 204 of , p. 1, amended by the Notice published in OJ C 390, , p. 4, and by the Corrigendum published in OJ C 265, , p. 5. 2
3 2.7. Description of the aid scheme (10) The RDP of Saxony includes EAFRD co-financed measures devoted to nature protection related public relation and education activities and projects under its Chapter and LEADER. The current notified aid scheme covers nature protection related public relation and education activities and projects under those co-financed measures. (11) The following activities and projects are supported under the present notified aid scheme: awareness raising and education activities related to nature conservation projects, in particular preparation and publication of brochures, leaflets, books, organisation of information events and trainings, establishment and maintenance of offices to provide information to the public (especially about species and projects that involve potential conflict between stakeholders and parties), exhibitions, explanations about products derived from ecological production methods, educational and information projects for visitors and tourists in protected areas, as well as conflict management, animation and follow-up of communication processes related to maintaining biodiversity. (12) The eligible activities and projects must relate to formally recognised natural heritage as follows: habitats recognised under Directive 92/43/EEC and Directive 2009/147/EC (categorised in 1, 2 and 3 categories); biotypes recognised under the Biotopes Red List of the Free State of Saxony as category "R" (extreme rare) or category "V" (warning list). (13) The aid is granted in form of direct grant. (14) The eligible costs are the following costs directly linked to the supported activities and projects referred to in recital 11: personnel and office costs, costs for planning, management and project implementation; investments in tangible and intangible assets like acquisition or rent of land, buildings, equipment and machinery. However, VAT is not eligible except where it is not recoverable under national VAT legislation. 3
4 (15) The personnel and office costs are based on standard unit costs that are established by the Saxony Office for Environment, Agriculture and Geology (Sächsische Landesamt für Umwelt, Landwirtschaft und Geologie) and verified by isw Institut für Strukturpolitik und Wirtschaftsförderung ggmbh. The standard unit costs are approved as part of the RDP of Saxony and the ex-ante evaluation is annexed to the program. (16) In case of acquisition of land the eligible costs of such acquisition are limited to 10% of the total eligible costs. (17) The potential beneficiaries have to submit an application before the start of the activity or the project. The application includes data on the applicant and the size of the undertaking, a description of the activity/project, including its location and start and end dates, the amount of aid needed to carry it out and the eligible costs. The official template has to be used. (18) Applicants who are large enterprises shall submit in addition a counterfactual scenario. The description of the counterfactual scenario has to be supported by documentary evidence. The granting authority will perform credibility check of the counterfactual scenario and confirm the presence of the incentive effect. The counterfactual scenario is plausible, in so far as the factors are described that were relevant for the beneficiary regarding the concrete project. (19) The aid for investments granted to large enterprises amounts to the net extra costs for the implementation of the investment, compared to the counterfactual in the absence of aid. The aid shall in that case cover only the minimum necessary to render the project sufficiently profitable. The maximum level of support shall be calculated on the basis of the minimum necessary to render the project sufficiently profitable and the maximum aid intensities. (20) The investment projects must correspond to the local development strategies or to the development plans of the municipalities and the villages concerned. (21) The aid intensity is limited to the following: projects and activities in biotypes recognised under the Biotopes Red List of the Free State of Saxony up to 80% of the eligible costs; projects and activities in category 3 biotypes recognised under Directive 92/43/EEC and Directive 2009/147/EC up to 90% of the eligible costs; projects and activities in categories 1 and 2 biotypes recognised under Directive 92/43/EEC and Directive 2009/147/EC up to 100% of the eligible costs; LEADER projects and activities - up to 80% of the eligible costs; projects and activities carried out by municipalities and communal entities up to 90% of the eligible costs. (22) The net revenues will be deducted from the eligible costs. The deduction follows the rules established in Article 61 of Regulation (EU) No 1303/ The beneficiary has 4 Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the 4
5 to describe in the aid application which operations would lead to revenues. In case of revenues during the implementation of the aided activities and projects those revenues are deducted from the eligible costs. This condition is included in the aid granting act. The final off-set is done with the final payment's application. In case of revenues after the completion of the aided activities and projects the principle is that all revenues identifiable in advance will be deducted from the eligible costs ex ante. Where this is not possible the granting act will include a clause that obliges the beneficiary to present report about all incomes and expenses for the three-year period after the completion of the aided activity and project and following this to pay back the amount exceeding the eligible costs reduced by the revenues. (23) The potential negative effects of the aid on competition and trade are overcome by its positive effects on the rural development in Saxony for the following reasons: The aid is operated in the framework of the RDP of Saxony which targets the cross sectorial rural development. There will be no single benefit for one sector but economic operators active in different sub-sectors will benefit which do not stay in direct competition like for example service providers (engineering offices, landscape offices), nature protection organisations, education facilities, museums, visitors' centres. Moreover, the aid is primarily devoted to nature protection related public relation and education activities the investment component of which is very narrow. In addition, the overall budget for the whole period of implementation is rather low (4.5 mio EUR) and it is expected that about 70 projects will be supported. (24) The project and the activities financed under the current notified scheme shall not receive any other public support. (25) The granting authority is the Saxony Office for Environment, Agriculture and Geology (das Sächsische Landesamt für Umwelt, Landwirtschaft und Geologie). (26) The aid scheme and the individual aid grants above EUR/ EUR will be published on the following web page: 3. ASSESSMENT 3.1. Existence of aid - Application of Article 107(1) TFEU (27) According to Article 107(1) of the TFEU, "[s]ave as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market". (28) The qualification of a measure as aid within the meaning of this provision therefore requires the following cumulative conditions to be met: (i) the measure must be imputable to the State and financed through State resources; (ii) it must confer an Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006, OJ L 347, , p
6 advantage on its recipient; (iii) that advantage must be selective; and (iv) the measure must distort or threaten to distort competition and affect trade between Member States. (29) The scheme in question confers an advantage on its recipients. This advantage is granted through State resources, namely EAFRD and national co-financing (see recital 10) and it favours the undertakings active in the rural economy (see recital 8). According to the case law of the Court of Justice, the mere fact that the competitive position of an undertaking is strengthened compared to other competing undertakings, by giving it an economic benefit which it would not otherwise have received in the normal course of its business, points to a possible distortion of competition. 5 (30) Pursuant to the case law of the Court of Justice, aid to an undertaking appears to affect trade between Member States where that undertaking operates in a market open to intra- EU trade. 6 The beneficiaries of aid operate on the market of provision of services like nature protection related public relation and education activities in the rural areas, where intra-eu trade takes place. 7. The sector concerned is open to competition at EU level and therefore sensitive to any measure in favour of the production in one or more Member States. Therefore, the present scheme is liable to distort competition and to affect trade between Member States. (31) In light of the above, the conditions of Article 107(1) of the TFEU are fulfilled. It can therefore be concluded that the proposed scheme constitutes State aid within the meaning of that Article. The aid may only be considered compatible with the internal market if it can benefit from one of the derogations provided for in the TFEU Lawfulness of the aid Application of Article 108(3) TFEU (32) The aid scheme was notified to the Commission on 19 October It has not been implemented yet. Therefore, Germany has complied with its obligation under Article 108(3) TFEU Compatibility of the aid Application of Article 107(3)(c) TFEU (33) Under Article 107(3)(c) TFEU, an aid may be considered compatible with the internal market, if it is found to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest. (34) For this derogation to be applicable, the aid must comply with the relevant Union State aid rules. 5 Judgment of the Court of 17 September 1980 in Case 730/79 Philip Morris Holland BV v Commission of the European Communities, ECLI:EU:C:1980: See in particular the judgment of the Court of 13 July 1988 in Case 102/87 French Republic v Commission of the European Communities, ECLI:EU:C:1988: In 2011 the service sector accounted for 64.6% of GVA in the predominantly rural regions (GVA is defined as the value of output less the value of intermediate consumption. Output is valued at basic prices, GVA is valued at basic prices and intermediate consumption is valued at purchasers prices), Source: "CAP context indicators : Structure of the economy", DG Agriculture and Rural Development. 6
7 Application of the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to 2020 (35) As regards the notified aid scheme, Part II, Chapter 3.2. Aid for basic services and village renewal in rural areas of the Guidelines is applicable. Thus, the Commission will examine below whether the notified scheme complies with the common assessment principles as well as the specific conditions in Part II, Chapter 3.2 of the Guidelines Common Assessment Principles Contribution to a common objective (36) Pursuant to point (46) of the Guidelines the Commission considers that measures, implemented pursuant to and in conformity with Regulation (EU) No 1305/ in the framework of a rural development programme, are per se consistent with and contribute to the objectives of rural development. The notified aid scheme is part of the RDP of Saxony for the period (see recital 10) and therefore the requirement for contribution to a common objective is complied with. Need for State intervention (37) Since the present scheme fulfils the specific conditions laid down in the relevant sections of Part II of the Guidelines, as analysed below under section , the Commission considers, in line with point (55) of the Guidelines, that the aid is necessary to address the objective of common interest. Appropriateness of aid (38) According to point (57) of the Guidelines the Commission considers that aid granted in the rural areas which fulfils the specific conditions laid down in the relevant Sections of Part II of these Guidelines is an appropriate policy instrument. The current aid scheme fulfils the specific conditions laid down in Chapter 3.2 of Part II of the Guidelines, as shown below under section (39) According to point (61) of the Guidelines the Commission further considers as regards rural development measures, co-financed by EAFRD that aid granted in the form provided for in the respective rural development measure is an appropriate aid instrument. The aid under the current scheme is granted in a form of direct grant, the same as the form of support provided under the RDP of Saxony for the period (40) Therefore, the principle of appropriateness of the aid is complied with. Incentive effect and need for aid (41) The aid will be granted only for activities and projects that start after the submission of the application form (see recital 17). (42) The application form contains the data required under point (71) of the Guidelines (see recital 17). 8 Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005, OJ L 347, , p
8 (43) Large enterprises are required to submit counterfactual scenario and documentary evidence which will be verified by the granting authority, in compliance with points (72) and (73) of the Guidelines (see recital 18). (44) Therefore, the incentive effect requirements of the Guidelines are complied with. Proportionality of the aid (45) The notified aid scheme respects the eligible costs and the aid intensities as provided for in Chapter 3.2 of Part II of the Guidelines (see recitals below). VAT is not eligible, except where it is not recoverable under national VAT legislation (see recital 14). (46) As regards cumulation, any other public support for projects and activities under the current notified scheme is excluded (see recital 24). (47) As regards aid to large undertakings the aid will correspond to the net extra costs for the implementation of the investment, compared to the counterfactual in the absence of aid (see recital 19). (48) Therefore, the principle of proportionality of aid is complied with. Avoidance of undue negative effects on competition and trade (49) The German authorities demonstrated that the negative effects will be limited taking into account the cumulative aid amount, the expected beneficiaries and the characteristics of the targeted sectors (see recital 23). Based on this the Commission concludes that the negative effects are overweighed by the positive effects in terms of contribution to the objectives of the rural development policy in Saxony. Transparency (50) The transparency requirement is complied with as shown in recital Specific assessment according to the category of aid (Part II, Chapter 3.2. of the Guidelines) (51) According to point (631) of the Guidelines, the aid must be granted in the framework of a rural development programme either as aid co-financed by the EAFRD or as additional national financing to such aid. The notified scheme forms part of the RDP of Saxony for the period and is co-financed by the EAFRD (see recital 10). Therefore, point (631) of the Guidelines is complied with. (52) The aid covers investments and environmental awareness actions associated with rural landscapes and high nature value sites. The aid activities fall under point (644)(e) of the Guidelines. (53) According to point (645) of the Guidelines investments under this aid scheme are eligible where the relevant operations are implemented in accordance with plans for the development of municipalities and villages in rural areas and their basic services, where such plans exist and must be consistent with any relevant local development strategy. The German authorities demonstrated that the investments under the notified scheme have to be implemented in accordance with the local development strategies or the 8
9 development plans of the municipalities and the villages concerned (see recital 20). Therefore, the condition of point (645) of the Guidelines is fulfilled. (54) According to point (646) of the Guidelines the aid should be granted for heritage which is formally recognised as cultural or natural heritage. The notified aid scheme covers actions and investments in habitats and biotopes that are recognised as natural heritage (see recital 12). Therefore the condition of point (646) of the Guidelines is fulfilled. (55) The eligible costs under the notified aid scheme cover investment costs for tangible and intangible assets and costs linked to environmental awareness actions (see recital 14). Therefore the conditions of point (647) of the Guidelines are fulfilled. (56) Furthermore, as regards the investment costs for tangible and intangible assets point (635) of the Guidelines applies. The aid towards land acquisition complies with the 10% limit (see recital 16). (57) As regards the aid intensity point (649) of the Guidelines provides for that it must not exceed 100 % of the eligible costs and that the net revenues must be deducted from the eligible costs ex ante or through a clawback mechanism. The aid intensities under the notified aid scheme vary between 80 % and 100 % (see recital 21). As regards the deduction of the net revenues the German authorities explained that such deduction mechanism is foreseen based on Article 61 of Regulation (EU) No 1303/2013 either during the implementation of the aided activities or projects or after their completion in three-year period (see recital 22). Therefore, the conditions of point (649) of the Guidelines are fulfilled Other general conditions (58) The legal basis excludes from the scope of the beneficiaries undertakings in difficulty within the meaning of point (35)(15) of the Guidelines and undertakings which are subject to an outstanding recovery order following a previous Commission decision declaring an aid illegal and incompatible with the internal market (recital 9). Therefore, the conditions of points (26) and (27) of the Guidelines are fulfilled. 4. CONCLUSION The Commission has accordingly decided not to raise objections to the notified aid scheme on the grounds that it is compatible with the internal market pursuant to Article 107(3)(c) TFEU. If any parts of this letter are covered by the obligation of professional secrecy according to the Commission communication on professional secrecy in State aid decisions 9 and should not be published, please inform the Commission within fifteen working days of notification of this letter. If the Commission does not receive a reasoned request by that deadline Germany will be deemed to agree to the publication of the full text of this letter. If Germany wishes certain information to be covered by the obligation of professional secrecy please indicate the parts and provide a justification in respect of each part for which non-disclosure is requested. 9 Commission communication C(2003) 4582 of 1 December 2003 on professional secrecy in State aid decisions, OJ C 297, , p. 6. 9
10 Your request should be sent electronically via the secured system Public Key Infrastructure (PKI) in accordance with Article 3(3) of Commission Regulation (EC) No 794/ , to the following address: For the Commission Phil HOGAN Member of the Commission 10 Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EU) 2015/1589 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ L 140, , p. 1). 10
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