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EU approves €1.74 billion compensation scheme for Danish mink farmers

EU Reporter Correspondent

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The European Commission has approved, under EU state aid rules, an approximately €1.74 billion (DKK 13bn) Danish scheme to compensate mink farmers and mink-related businesses for measures taken in the context of the coronavirus outbreak. This follows the receipt of a complete notification from Denmark on 30 March 2021.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “The Danish government took far reaching measures to prevent the spread of new coronavirus variants and new outbreaks among mink, which presented a serious threat to the health of citizens in Denmark and beyond. The DKK 13n scheme approved today (8 April) will enable Denmark to compensate mink farmers and related businesses for damages incurred in this context. We continue to work in close cooperation with member states to ensure that national support measures can be put in place as quickly and effectively as possible, in line with EU rules.”

The Danish support measures

Following the detection and rapid expansion of several mutated variants of the coronavirus among mink in Denmark, at the beginning of November 2020, the Danish authorities announced their intention of culling all mink in Denmark. In order to avoid a similar situation developing in 2021, the Government also issued a ban on the keeping of minks until beginning 2022.

On 30 March 2021, Denmark sent a complete notification to the Commission on a Danish scheme to compensate mink farmers and mink-related businesses in this context, given the significant economic impact and loss of employment caused by these extraordinary measures. The scheme consists of two measures:

  • The first measure, with a budget of approximately €1.2bn (DKK 9bn), will compensate mink farmers for the temporary ban on mink farming.
  • The second measure, with a budget of approximately €538 million (DKK 4bn), will support mink farmers and mink-related businesses who are willing to give up their production capacity to the state.

Support under both measures will take the form of direct grants.

Compensation to mink farmers for temporary ban

The direct grants to compensate for the ban on mink farming will cover all fixed costs for those mink farmers that will temporarily close production until the ban on mink farming is lifted on 1 January 2022. This period may be extended by one year.

The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European (TFEU), which enables the Commission to approve State aid measures granted by Member States to compensate specific companies or specific sectors for the damage directly caused by exceptional occurrences.

The Commission considers that the coronavirus outbreak qualifies as such an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional interventions by member states to avoid the emergence of new coronavirus variants and prevent new outbreaks, such as the temporary ban on mink farming, and the compensation for the damages linked to these interventions are justified.

The Commission found that the Danish measure will compensate the damages suffered by mink farmers that are directly linked to the coronavirus outbreak, since the ban on the keeping of mink until beginning 2022 can be considered as a damage directly linked to the exceptional occurrence.

The Commission also found that the measure is proportionate, as an independent valuation commission, appointed by the Danish Veterinary and Food Administration and directly reporting to them, will make an assessment of necessary fixed costs and maintenance costs on the specific farms during the shutdown period, including by carrying out on-site inspections. This will make sure that the amount of compensation only covers the actual damage suffered by the farmers.

Support to mink farmers and related businesses who will give up their production capacity to the state

This scheme will compensate mink farmers who will give up their production capacity to the Danish State for the long-term, with a view to restructuring an industry prone to the appearance of new coronavirus variants that could threaten to prolong the current crisis and the disturbance to the Danish economy. It will be calculated based on two overall loss items of mink farmers: i) their loss of income for a ten year budget period; and ii) the residual value of the mink farmer's capital stock (buildings, machinery, etc.).

Mink-related businesses that significantly rely on mink production will also be eligible for support under this measure (specialised feed centers and providers, skinning factories, the auctioneer Kopenhagen Fur, etc). A valuation commission will assess that they fulfill a number of conditions, namely that at least 50% of the businesses' turnover in the period 2017-2019 is related to the Danish mink industry and that the business cannot directly convert the production into other activities. The aid will equal the value of the part of the business that cannot directly convert its production into other activities.

A precondition for receiving support under this measure is that the State takes over the assets (all production equipment, stables, machinery, etc.), which will no longer be available to the farmers or to related businesses, respectively.

The Commission assessed the measure under EU State aid rules, and in particular Article 107(3)(b) TFEU, which enables the Commission to approve State aid measures implemented by Member States to remedy a serious disturbance in their economy. The Commission found that the Danish scheme is in line the principles set out in the EU Treaty and is well targeted to remedy to a serious disturbance to the Danish economy.

The Commission found that the Danish measure will offer support that is directly linked to the need to remedy a serious disturbance in the economy of Denmark and safeguard the European and global efforts towards the end of the pandemic also thanks to an effective vaccine, by restructuring an industry that is prone to the appearance of new coronavirus variants. It also found that the measure is proportionate, based on a clear method of calculation and safeguards to ensure that the aid does not exceed what is necessary. In particular, the calculations of the aid are tailored to the mink farming sector and related businesses, based on representative reference data, individual appraisals and acceptable valuation and depreciation methods.

The Commission therefore concluded that the measure will contribute to managing the economic impact of the coronavirus in Denmark. It is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state, in line with Article 107(3)(b) TFEU and the general principles set out in the Temporary Framework.

On this basis, the Commission concluded that the two Danish measures are in line with EU state aid rules.

Background

These measures are complementary to those already taken by the Danish authorities under Article 26 of the Agricultural Block Exemption Regulation (ABER), by which direct grants will be awarded for the culling of minks on public health grounds, as well as an “additional” bonus for their rapid culling. See SA.61782 for more information.

Financial support from EU or national funds granted to health services or other public services to tackle the coronavirus situation falls outside the scope of State aid control. The same applies to any public financial support given directly to citizens. Similarly, public support measures that are available to all companies such as for example wage subsidies and suspension of payments of corporate and value added taxes or social contributions do not fall under State aid control and do not require the Commission's approval under EU State aid rules. In all these cases, Member States can act immediately. When State aid rules are applicable, Member States can design ample aid measures to support specific companies or sectors suffering from the consequences of the coronavirus outbreak in line with the existing EU State aid framework.

On 13 March 2020, the Commission adopted a Communication on a Coordinated economic response to the COVID-19 outbreak setting out these possibilities.

In this respect, for example:

  • Member states can compensate specific companies or specific sectors (in the form of schemes) for the damage suffered due and directly caused by exceptional occurrences, such as those caused by the coronavirus outbreak. This is foreseen by Article 107(2)(b)TFEU.
  • State aid rules based on Article 107(3)(c) TFEU enable member states to help companies cope with liquidity shortages and needing urgent rescue aid.
  • This can be complemented by a variety of additional measures, such as under the de minimis Regulations and the Block Exemption Regulations, which can also be put in place by member states immediately, without involvement of the Commission.

In case of particularly severe economic situations, such as the one currently faced by all Member States due the coronavirus outbreak, EU state aid rules allow member states to grant support to remedy a serious disturbance to their economy. This is foreseen by Article 107(3)(b) TFEU of the Treaty on the Functioning of the European Union.

On 19 March 2020, the Commission adopted a state aid Temporary Framework based on Article 107(3)(b) TFEU to enable member states to use the full flexibility foreseen under State aid rules to support the economy in the context of the coronavirus outbreak. The Temporary Framework, as amended on 3 April, 8 May, 29 June13 October 2020 and 28 January 2021, provides for the following types of aid, which can be granted by member states: (i) Direct grants, equity injections, selective tax advantages and advance payments; (ii) State guarantees for loans taken by companies; (iii) Subsidized public loans to companies, including subordinated loans; (iv) Safeguards for banks that channel State aid to the real economy; (v) Public short-term export credit insurance;(vi) Support for coronavirus related research and development (R&D); (vii) Support for the construction and upscaling of testing facilities; (viii) Support for the production of products relevant to tackle the coronavirus outbreak; (ix) Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions; (x) Targeted support in the form of wage subsidies for employees; (xi) Targeted support in the form of equity and/or hybrid capital instruments; (xii) Support for uncovered fixed costs for companies facing a decline in turnover in the context of the coronavirus outbreak.

The Temporary Framework will be in place until the end of December 2021. With a view to ensuring legal certainty, the Commission will assess before this date if it needs to be extended.

The non-confidential version of the decision will be made available under the case number SA.61945 in the state aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.

More information on the Temporary Framework and other action the Commission has taken to address the economic impact of the coronavirus pandemic can be found here.

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Germany wants to use Regeneron's COVID-19 antibody therapy more broadly

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Germany would like to use Regeneron’s COVID-19 monoclonal antibody cocktail as a treatment for this disease more broadly but needs to finalize some details on reimbursement, Health Minister Jens Spahn said on Thursday (15 April), writes Caroline Copley.

“The drug is available in Germany, we need it much more and we want it much more and we are working on rolling it out across the nation,” he told a weekly news conference.

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President von der Leyen on developments in the Vaccines Strategy

EU Reporter Correspondent

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In a press statement on 14 April, President of the European Commission, Ursula von der Leyen, announced an agreement with BioNTech-Pfizer to accelerate the delivery of 50 million vaccine doses to the second quarter of this year, starting this month: “We are in a race against time. The faster we reach our target of having 70% of adults in the European Union vaccinated, the better chances we have of containing the virus. And the good news is: Vaccination is picking up speed across Europe! Member states have received over 126 million doses of vaccines as of yesterday (13 April). And I am happy to say that today we have reached 100 million vaccinations in the EU. This is a milestone that we can be proud of. Of these 100 million vaccinations, more than a quarter are second doses – which means that we have now more than 27 million people fully vaccinated I am pleased to announce that we have reached an agreement with BioNTech-Pfizer to, once again, speed up the delivery of vaccines. 50 million additional doses of BioNTech-Pfizer vaccines will be delivered in quarter 2 of this year, starting in April. This will bring the total doses delivered by BioNTech-Pfizer to 250 million doses in the second quarter. These doses will be distributed pro-rata to the population, among all the member states. This will substantially help consolidate the roll-out of our vaccination campaigns.” As part of preparations for the medium term, the Commission is also entering into a negotiation with BioNTech-Pfizer for a third contract, to foresee the delivery of 1.8 billion doses of vaccine over the period of 2021 to 2023. This contract will entail that not only the production of the vaccines, but also all essential components, will be based in the EU. The President's full statement is available online in English, and French and shortly in German. You can watch it here.

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Coronavirus response: Commission proposes to exempt vital goods and services distributed by the EU from VAT in times of crisis

EU Reporter Correspondent

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The European Commission has proposed to exempt from Value Added Tax (VAT) goods and services made available by the European Commission, EU bodies and agencies to Member States and citizens during times of crisis. This responds to the experience gained  during the course of the Coronavirus pandemic. Among other things, it has shown that the VAT charged on some transactions ends up being a cost factor in procurement operations that strains limited budgets. Therefore, today'sinitiative will maximise the efficiency of EU funds used in the public interest to respond to crises, such as natural disasters and public health emergencies. It will also strengthen EU-level disaster and crisis management bodies, such as those falling under the EU's Health Union and the EU Civil Protection Mechanism.

Once in place, the new measures will allow the Commission and other EU agencies and bodies to import and purchase goods and services VAT-free when those purchases are being distributed during an emergency response in the EU. The recipients might be Member States or third parties, such as national authorities or institutions (for example, a hospital, a national health or disaster response authority). Goods and services covered under the proposed exemption include, for instance:

  • Diagnostic tests and testing materials, and laboratory equipment;
  • personal protective equipment (PPE) like gloves, respirators, masks, gowns, disinfection products and equipment;
  • tents, camp beds, clothing and food;
  • search and rescue equipment, sandbags, life jackets and inflatable boats;
  • antimicrobials and antibiotics, chemical threat antidotes, treatments for radiation injury, antitoxins, iodine tablets;
  • blood products or antibodies;
  • radiation measuring devices, and;
  • development, production and procurement of necessary products, research and innovation activities, strategic stockpiling of products; pharmaceutical licences, quarantine facilities, clinical trials, disinfection of premises, etc.

Economy Commissioner Paolo Gentiloni said: “The COVID-19 pandemic has taught us that these kinds of crises are multifaceted  and have a wide-ranging impact on our societies. A rapid and efficient response is essential, and we need to provide the best response now in order to prepare for the future. Today's proposal supports the EU's goal to react to crises and emergencies in the EU. It will also ensure that the financial impact of EU-level relief efforts to fight the pandemic and support the recovery is maximized.”

Next steps

The legislative proposal, which will amend the VAT directive, will now be submitted to the European Parliament for its opinion, and to the Council for adoption.

Member States shall adopt and publish, by 30 April 2021 the laws regulations and administrative provisions necessary to comply with this Directive. They shall apply those measures from 1 January 2021.

Background

The Coronavirus pandemic has thrown into sharp light the importance of coherent, decisive and centralised EU-level preparation and response in times of crisis. In the context of the Coronavirus pandemic, the von der Leyen Commission has already outlined plans to strengthen EU preparedness and management for cross-border health threats, and presented the building blocks of a stronger European Health Union. At the same time, the Commission has proposed to strengthen cooperation between EU Member States through the EU Civil Protection Mechanism with the aim of improving responses to future natural or man-made disasters. For instance, in the context of the new European Health Union, the Commission announced the creation of the Health Emergency Response Authority (HERA) to deploy rapidly the most advanced medical and other measures in the event of a health emergency, by covering the whole value chain from conception to distribution and use.

The EU has already taken action in the field of taxation and customs to support the fight against and the recovery from the coronavirus pandemic. In April 2020, the EU agreed to waive customs and VAT charges for imports of masks and other protective equipment needed to fight the pandemic. This waiver remains in place and plans are underway for its extension. In December 2020, EU member states agreed on new measures proposed by the Commission to allow a temporary VAT exemption for vaccines and testing kits being sold to hospitals, doctors and individuals, as well as closely related services. Under the amended Directive, member states can apply either reduced or zero rates to both vaccines and testing kits if they so choose. 

More information

Commission proposes to exempt vital goods and services distributed by the EU in times of crisis

Council directive amending Council Directive 2006/112/EC as regards exemptions on importations and on certain supplies, in respect of Union measures in the public interest

COVID-19 response in the field of taxation and customs

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