“State aid and EU funding – Are they compatible?” Miriam Fernández Jutz Advisor to audit Director DG Regional and Urban Policy CONT Hearing Brussels, 25 June 2018

Introduction State aid rules apply to an increasing share of Cohesion Policy spending State aid was reported as an important source of errors by ECA but improvements were noted In 2014: 20% of the reported error rate related to State aid In 2015: 5,8% or the reported error rate related to State aid In 2016 no quantified errors with regards to State aid rules Main reasons for errors reported by ECA: Interpretation of the EU legislation until the Leipzig- Halle case Lack of notification to the EC No incentive effect Aid intensity limits not respected

Actions at the EU level to target state aid errors in ESI Funds State aid ex-ante conditionality for 2014 –2020 programmes fulfilled by all Member States except five at the start of implementation – now fulfilled by all MS Adoption of a REGIO-COMP State aid action plan in 2015 Legislative simplification: GBER Regulation 2014 Clarifications to Member State by COMP through the "notice on the notion of State aid"

State aid action plan – guidance and strategic training Training for Member State authorities Practical guides for national authorities on scope of EU state aid control Strategic sector oriented training programme Pilot initiative "pool of State aid experts" Need for identifying and disseminating good practices such as: - Central register for de minimis aid in CZ - Greece

Co-operation between DG COMP and DG REGIO Checklists used by Commission auditors prepared with DG COMP support and shared with national auditors Consult COMP on compliance of projects with Commission State aid decisions, GBER and in cases of major projects Exchanges between DG COMP and DG REGIO to ensure qualitative outcomes (Memorandum of Understanding, inter-service consultations) To coordinate as much as possible the monitoring/audit plans even if both procedures have different objectifs

Typology of errors Source Annual control reports 2018 (expenditure 1/7/2016 to 30/6/2017) Audit authorities audited 7.500 operations or parts of operations 35 errors reported were related to State aid Monitoring requirements State aid not notified Misapplication of the aid scheme De Minimis threshold exceeded

Conclusions State aid and Cohesion Policy funding are not only compatible but closely linked to ensure the functioning of the Single Market But Complexity for programme authorities Schemes financed by Cohesion Policy are subject to significant number of checks (national, EC and ECA audits) Distinct and complementary procedures REGIO/COMP Therefore Continue and intensify capacity building of programme authorities Continue enhanced cooperation between various actors involved

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