State Aid

When taxpayer-funded resources are used to provide assistance to one or more organisations in a way that gives an advantage to them over their competitors. Some state aid is illegal under EU rules because it distorts competition in a way that is harmful to citizens and companies in the EU. But where it is unavoidable, state aid can be given legally by:

  • using one of a set of approved EU mechanisms for state aid
  • by getting approval for the particular scheme from the EU Commission

Notified State Aid

A notified State aid is a State aid that has been notified to and approved by, the European Commission.

De Minimis Aid 

If a company receives aid of less than €200,000 over three years, this aid may qualify for De Minimis aid under the De Minimis Regulation. This aid does not require prior notification or approval from the Commission as small amounts of aid are considered unlikely to distort competition.

Effect of notified State Aid rules on the SME R&D tax relief

If a company receives Notified State aid, it can not use SME scheme. However, it can claim the large company tax relief or the RDEC. Companies can also claim for qualifying R&D costs funded by the grant.

Effect of De Minimis State Aid rules on the SME R&D tax relief

A company can claim SME relief or payable credit for costs of the project not funded by De Minimis aid. A company cannot claim SME R&D tax credit for costs within a project that are funded by De Minimis aid.