A guide to navigating State Aid in Horizon Europe

You might have found yourself wondering if Horizon Europe, the EU’s ambitious initiative boasting a staggering €95.5 billion budget from 2021 to 2027, is another treasure chest waiting to support innovators like yourself, already versed in navigating national public funds waters. Understanding whether this funding qualifies as state aid is crucial to navigate EU regulations and optimize financial strategies effectively.

Understanding State Aid

State Aid, in EU jargon, refers to advantages provided using ‘state resources’ that could potentially throw competition off balance within the EU. However, programs managed centrally by EU heads – think Horizon Europe under the watchful eye of the European Commission – don’t quite fit into this state aid box.

Let’s first see what state aid is. For a measure to be classified as state aid, it must meet the following criteria:

• Involve State Resources: Funding provided directly or indirectly by the state or through state-controlled entities.
• Confer an Advantage: Providing benefits that a recipient would not have received under normal market conditions.
• Selectivity: Target specific enterprises or sectors.
• Affect Trade and Competition: Potentially distort competition and affect trade between EU Member States.

Horizon Europe – so is it state aid or not?

Unlike traditional state aid, Horizon Europe funds operate at the EU level, where fairness and open competition reign supreme through competitive calls for proposals. This approach strives to include everyone across Europe’s innovation landscape, focusing more on excellence and less on national tug-of-wars.

Still, even in this fair playground, interactions between Horizon Europe and state aid rules can pop up from time to time.  National co-funding or the involvement of third-party players can stir the pot, potentially triggering state aid red flags. The conflicting scenarios can be:

• National Co-Funding: When Member States provide additional national co-funding to Horizon Europe projects, this national contribution may be considered state aid. The co-funding must comply with EU state aid rules to ensure it does not distort competition.
• Third-Party Involvement: If beneficiaries of Horizon Europe funding engage third parties or subcontractors, the terms and conditions under which these third parties operate should be scrutinized to ensure compliance with state aid regulations.
• Infrastructure and State Aid: Large infrastructure projects financed by Horizon Europe that provide a competitive advantage to certain enterprises could potentially be scrutinized under state aid rules.

An important aspect to note is that Horizon Europe explicitly excludes the funding of commercial activities, focusing especially on research and innovation projects up to the pre-market stage. This restriction ensures that the program does not directly interfere with market dynamics or distort competition within the EU. By funding only pre-commercial research and development activities, Horizon Europe maintains a neutral stance that promotes innovation without favouring specific companies or sectors in the competitive marketplace.

Better safe than sorry – Check for compliance!

To sail these choppy waters with confidence, Horizon Europe beneficiaries should:

• Know the Rules: Familiarize themselves with Horizon Europe guidelines and EU state aid regulations.
• Call in the Experts: Tap into the wisdom of EU funding and state aid experts to navigate rules and regulations.
• Keep It Transparent: Keep meticulous financial records to prove you are playing by the rules, whether it’s Horizon Europe or state aid requirements.

In conclusion, while Horizon Europe funding dances around state aid definitions with its EU-wide focus and merit-based selection process, staying compliant is still the name of the game.

To explore further:

• Horizon Europe – The Framework Programme for Research and Innovation
• State Aid: Overview by the European Commission

For more insights into navigating EU projects like a pro, visit our blog at Polite.

Reach out to hello@getpolite.eu for more personalized support tailored to your needs. We aim to make navigating EU funding as straightforward as possible!