European Commission Approves €260m Aid Schemes for Luxembourg Companies Affected by COVID-19 Pandemic

The European Commission has approved two Luxembourg aid schemes for a total amount estimated at €260 million, in order to support certain companies hard hit by the COVID-19 pandemic.

These schemes were authorised under the temporary framework for State aid adopted by the Commission on 19 March 2020, as amended on 3 April and 8 May 2020.

Under the two schemes, the aid will be granted under the form of direct grants. The first scheme, with an estimated budget of €200 million, will be open to companies of all sizes operating in certain sectors defined by Luxembourg (including hotels, restaurants and travel and tourism and event agencies). These companies can benefit if they have experienced a drop in their turnover of at least 25% due to the COVID-19 pandemic during the first half of 2020 and if this situation is likely to continue during the second half of 2020.

The second aid scheme, with an estimated budget of €60 million, will be open to micro-, small and medium-sized enterprises (SMEs) operating retail stores or offering certain defined categories of services by Luxembourg (such as hairdressers, opticians, stylists and dry cleaning and laundry services). These companies can benefit if they have had to suspend their activities or recorded a drop in their turnover of at least 50% between March and May 2020 due to the pandemic.

The objective of these aid schemes is to meet the sudden liquidity needs faced by certain businesses as a result of the pandemic and thereby help them to continue their activities during and after it.

The Commission considered that the plans proposed by Luxembourg complied with the conditions set out in the temporary framework. In particular, the aid does not exceed €800,000 per company. The Commission concluded that the measures were necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in accordance with Article 107 (3) (b) TFEU and under the conditions set out in temporary supervision. On this basis, the Commission authorised the measures under EU state aid rules.