On Friday 3 April, the European Commission (the "Commission") published an amendment to its Temporary Framework for State aid measures to support the economy of Member States in the current Covid-19 outbreak (the "Temporary Framework"). Among the amendments introduced was a new "Section 3.6 – Aid for COVID-19 relevant research and development".
Under this section the Commission will consider compatible with the internal market, aid for R&D projects carrying out COVID-19 and other antiviral relevant research including projects having received a COVID-19-specific Seal of Excellence quality label under the Horizon 2020 SME-instrument provided certain conditions are met. The aid may take the form of direct grants, repayable advances or tax advantages.
Permitted aid intensities
The maximum aid intensities that may be granted to a recipient are:
- 100% of eligible costs for fundamental research; and
- 80% of eligible costs for industrial research and experimental development.
The aid intensity for industrial research and experimental development may be increased by 15% if any of the following criteria are met:
- more than one Member State supports the research project; or
- the research project is carried on in collaboration with research organisations or other undertakings in other member states.
Aid measures under Temporary Framework may be combined with support from other sources (e.g. General Block Exemption or De Minimis Regulation) provided the combined aid does not exceed the above ceilings.
Eligible cost will comprise costs necessary for the R&D project and include personnel costs, costs for digital and computing equipment, for diagnostic tools, for data collection and processing tools, for R&D services, for pre-clinical and clinical trials (trial phases I-IV), for obtaining, validating and defending patents and other intangible assets, for obtaining the conformity assessments and/or authorisations necessary for the marketing of new and improved vaccines and medicinal products, medical devices, hospital and medical equipment, disinfectants, and personal protective equipment.
Timing considerations
Aid for research projects under the Temporary Framework must be granted prior to 31 December 2020 and will apply to projects commenced on or after 1 February 2020. For projects commenced prior to that date, aid will be permissible where it is necessary to accelerate widen the scope of the project in which case additional costs in relation to that acceleration or increased scope will be eligible for aid.
Clinical trials
The costs of pre-clinical trials and phases I to IV of clinical trials will be considered "eligible costs" for the purposes of the Temporary Framework. Phase-IV clinical trials will only be eligible as long as they allow further scientific or technological advance.
The Irish context
This extension to the Temporary Framework is timely in light of the recent joint rapid response call by Science Foundation Ireland, Enterprise Ireland and IDA Ireland and the rapid response call launched by the Health Research Board and Irish Research Council, and provides an additional legal basis for the provision of State funding to business undertaking COVID-19 related research projects.
Funding of Research Performing Organisations ("RPOs") will continue to be subject to State aid rules, in particular the Commission's 2014 Framework for State aid for research and development and innovation, and any indirect aid to businesses through the publicly-funded research activities of RPOs would need to be taken into account to ensure that the permitted aid intensities to businesses are not exceeded.
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