The European Commission has formally notified member states of the entry into force of a revised regulatory framework on state aid compensation for public service obligations, replacing and amending Decision 2012/21/EU of December 20, 2011.
According to an announcement by the Office of the Commissioner for State Aid Control, the most significant change to the Services of General Economic Interest framework concerns the eligibility of compensation for affordable housing. The objective is to increase the supply of housing, either for rent or owner occupation, at accessible prices.
Support for investment costs
Under the new framework, state aid may be granted to market operators to cover investment costs related to the construction, renovation or conversion of apartments or buildings. Eligible expenses also include compliance with accessibility requirements and adaptations aimed at improving resilience to climate change.
Beneficiaries providing affordable housing services must be identified primarily on the basis of household income relative to housing market prices and household composition. Where necessary, additional criteria may be applied, including the provision of housing to individuals performing essential social roles, persons with disabilities, older people, students or single parent households.
Safeguards and affordability criteria
The decision includes an annex setting out safeguards designed to limit distortions of competition in the relevant economic sector. It also introduces income related affordability indicators and qualitative housing standards. At the same time, existing provisions allowing compensation for social housing services to disadvantaged households or less favoured social groups remain in force.
Higher thresholds and exemptions
Beyond housing related changes, the annual compensation ceiling for services of general economic interest increases from €15 million to €20 million. Affordable housing, however, is excluded from this cap.
Exemptions continue to apply for social housing, hospital services, services addressing social needs, air and maritime links to islands, as well as compensation linked to airports and ports. For the latter two categories, the passenger traffic thresholds are revised upwards in relation to the previous two years.
Transparency and transition period
The cumulative elements required in an act assigning public service obligations remain unchanged. These include the scope and duration of obligations, the compensation mechanism, calculation and review parameters, provisions for reasonable profit and safeguards against overcompensation, including recovery mechanisms.
From January 1, 2028, transparency requirements will be strengthened, making it mandatory to record compensation exceeding €1 million per undertaking and per service in a central national or EU level register.
Finally, transitional provisions allow state aid measures adopted under the existing framework to remain valid for an additional two years following the entry into force of the new decision.
The decision enters into force on the twentieth day following its publication in the Official Journal of the European Union.
Source: CNA