EU Eases Rules on State Aid Provided to Companies by Member States... 'COVID-19 Measures'

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[Asia Economy Reporter Ki-min Lee] As the novel coronavirus disease (COVID-19) crisis sweeps across Europe, the European Commission, the executive branch of the European Union (EU), has decided to relax state aid rules to allow member countries to support businesses in coping with the economic fallout.

On the 20th (local time), according to the EU, the Commission adopted a temporary framework the day before to provide flexibility in state aid rules, enabling member states to further support their economies amid the spread of COVID-19.

Margrethe Vestager, the Commissioner for Competition, said, "The economic impact caused by COVID-19 is severe," adding, "This new temporary framework is intended to help member states support their economies during these difficult times."

Accordingly, EU member state governments can provide subsidies of up to 800,000 euros (approximately 1.07 billion KRW), tax benefits, and advance payments to companies hit by COVID-19, supplying urgent liquidity.

Member states can also provide state guarantees when companies take out bank loans and offer low-interest subsidized loans to businesses. Additionally, member states can utilize banks' lending capacity to support companies and provide short-term export credit insurance.

The EU Commission plans to apply this policy until December of this year and will assess whether an extension is necessary before the deadline.

This content was produced with the assistance of AI translation services.