Updated last 26.03.2021
What is state aid?
„State aid” is any aid, falling within the scope of art. 107(1) of the Treaty on the Functioning of the European Union, granted by the state or by a municipality or through state or municipal resources, directly or through third parties, in any form whatsoever which distorts or threatens to distort competition by favoring certain undertakings or the production or trading of certain goods or the provision of certain services, in so far as it affects trade between EU Member States.
In short, state aid is any interference, which is cumulatively:
- Incorporating transfer of public resources;
- To an enterprise;
- Favoring competitive companies;
- Is selective (such preference does not apply to all economic entities);
Distorting competition and trade on the Common Market.
| Important to know | |
 | Funds under programmes, managed directly by the EC, where national authorities have no powers, are not considered public funds. |
The principle is that the provision state aid (grants) is forbidden by the Treaty on the Functioning of the European Union (TFEU) (incompatible with the Union’s internal market), as exceptions from this ban are allowed only in expressly stipulated cases.
Who may be a state aid administrator?
A person, granting or managing, including development of state aid or de minimis aid, unless otherwise provided for by law.
For more information, about the state aid administrators in Bulgaria and the various measures, which may be eligible to receive aid, please visit the following website.
Who can receive aid?
Receiver of the aid is any enterprise (noted in the regulation as undertaking) [1], for which state aid or de minimis aid is intended, as well as any enterprise, which directly or indirectly benefits from such aid, obtaining any form of economic benefit.
The regimen of the State aid is intended 1) to prevent any granting of State aid, distorting competition through favouring certain enterprises at the expense of others and 2) to make it possible that the state applies support measures, justified from the perspective of the common interest, i.e. measures, encouraging small and medium-sized enterprises, increasing employment, professional qualification, innovations and contributing to the economic development of certain regions and the prosperity of the entire European community. It should be noted, however, that the granting of state aid is compatible with internal market, when the aid:
- Is of a social nature and is provided to individual consumers, without any discrimination, with respect to the origin of the respective products, or
- Is intended for remedying damages, caused by natural disasters or other extraordinary events.
On the other hand, the provision of state aid may be considered compatible with the internal market, if it meets any of the following conditions:
- It encourages the economic development of regions with low living standards or high unemployment rates;
- It supports the implementation of projects of significant economic interest for the European Union or for overcoming significant difficulties in the economy of the Republic of Bulgaria;
- It supports the development of certain economic activities or individual economic regions, unless it affects commercial conditions to an extent, which results in a conflict with the common interest of the European Union;
- It supports the encouragement of culture and the protection of cultural and historical heritage, unless it affects commercial conditions and the competition in the European Union to an extent, which results in a conflict with the common interest of the European Union;
- It is permitted by an act of the Council of the European Union, based on a proposal by the European Commission.
On a national level the monitoring, transparency, coordination and interaction with the European Commission in the area of State aid and the de minimis aid, are provided by two executive bodies:
- Minister of Finance – on a national, regional and municipal level; and
The Minister of Agriculture, Food and Forestry – with special competence in the area of agriculture, agricultural regions development, forestry, hunting and fishing.
| For more information | |
 | For more information please refer to State aid types. |
[1] „Enterprise (undertaking)“ means each and every person, carrying out economic activities, irrespective of its legal organization form, status and method of financing, whether or not it forms and distributes profit. If such a person simultaneously carries out economic and non-economic activities, it may be considered a beneficiary of state aid or de minimis aid only with respect to its economic activity, when:
- the economic and non-economic activities are completely separated financially and in terms of accounting, with respect to the assets, liabilities, revenues and costs for the activities, and/or;
- there is a factual separation of the respective activities, through a separate entity.