EUROPEAN COMMISSION Brussels, 01.12.2008 C (2008) 7715 PUBLIC VERSION WORKING LANGUAGE This document is made available for information purposes only. Subject: N 93 /2008 Italy (Sardinia) – Direct grants for investment projects Sir, 1. PROCEDURE (1) By electronic notification of 25 February 2008, registered at the Commission on the same day (A/3670) the Italian authorities notified the Commission of the above-mentioned measure concerning regional investment aid. (2) By letters dated 17 March 2008 (D/51302), 27 June 2008 (D/52566) and 10 September 2008 (D/53499) the Commission requested additional information on the measure in question. The Italian authorities provided the information by e-mails dated 6 May 2008 (A/8505), 16 July (A/14643) and 27 October 2008 (A/22572). 2. DESCRIPTION OF THE AID MEASURE 2.1. Objective of the aid scheme (3) The notified measures pursue a regional development objective. The notified scheme provides for investment aid towards small and medium-sized enterprises in the industrial and handicraft sectors which are active in the areas of region Sardinia satisfying the conditions set forth in the derogation provided by Article 87(3)(c) EC Treaty, in conformity with the Commission decision of 28 November 2007 on the Italian regional aid map 2007-2013.1 1 State Aid N 324/2007 Italy – " Regional aid map 2007-2013" S.E. On. Franco FRATTINI Ministro degli Affari esteri P.le della Farnesina 1 I - 00194 Roma Commission européenne, B-1049 Bruxelles / Europese Commissie, B-1049 Brussel - Belgium. Telephone: (32-2) 299 11 11. 2.2. Legal basis (4) The legal base of the scheme is: – Art. 30 lett. a) of Regional Law n 17 of 20 April 1993 – Implementing acts adopted by Decision (Deliberazione della Giunta regionale) n 48/28 of 29.11.2007. 2.3. Administration of the scheme (5) The scheme will be operated by Regione Sardinia. 2.4. Geographical scope of the scheme (6) The scheme is applicable to the assisted areas in the province of Nuoro, the province of Ogliastra, the province of Oristano except the coast municipalities and the following communes: Budoni, San Teodoro, Anela, Benetutti, Bono, Bottida, Bultei, Burgos, Esporlatu, Illorai, Nule, Escalaplano, Escolca, Esterzili, Gergei, Isili, Nuragus, Nurallao, Nurri, Orroli, Sadali, Serri, Seulo, Villanovatulo provided that they qualify, under the derogation laid down in Article 87 (3) (c) of the EC treaty, as assisted areas of Sardinia as defined in the regional map in force at the time of aid awarding. 2.5. Duration of scheme (7) Under the notified scheme aid can be granted from the date of the approval of the measure by the Commission until 31 December 2013. 2.6. Budget of scheme (8) The estimated yearly budget amounts at EUR 6 million until 31.12.2013 (overall budget to EUR 36 million). 2.7. Beneficiaries (9) The beneficiaries of the scheme are small and medium enterprises, as defined by Commission recommendation 2003/361/CE of 6 May 2003, OJ L 124 of 20.5.2003. The foreseen number of beneficiaries is in the range of 11 to 50. (10) The scheme provides aid to firms active in the following sectors: processing and marketing of agricultural products listed in annex I of the EC Treaty2 mining and quarrying, manufacturing industry, textiles, pulp and paper, chemical and pharmaceutical industry, industrial machinery, electrical and optical equipment, motor vehicles, transport, computer and related activities, as well as research and development, technical testing and analysis, other business and activities (as defined by NACE code rev 1.1 n° 74.87.5 and 74.87.7) 2 The Italian authorities confirmed that the scheme applies to the sector of processing and marketing of agricultural products listed in annex I of the EC Treaty only to the extent laid down in the Community guidelines for State aid in the agriculture and forestry sector 2007-2013 (OJ C 319, 27 December 2006, p.1) 2 (11) The scheme does not apply to undertakings that are in difficulty in the meaning of the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty3, as well as to the following sectors: production of agricultural products listed in annex I of the EC Treaty, coal and steel, shipbuilding, synthetic fibres, transport, fisheries and aquaculture. Furthermore, it does not apply to export- related activities, namely aid directly linked to the quantities exported, to the establishment and operation of a distribution network or to other current expenditure linked to the export activity to aid contingent upon the use of domestic over imported goods. 2.8. Nature and form of the aid (12) The aid will be awarded for initial investment projects in the form of direct grants, which are granted on a discretionary basis. 2.9. Mechanism of granting the aid (13) Applicants for aid submit applications to the Region. The Region approves the application for aid in the light of a preliminary assessment of the respect of the conditions of the scheme. The aid granting takes places within 30 day from completing the verification of the financial technical and economic aspects of the project. The aid will be paid out in maximum five instalments, the first of which when the project starts and the others on the basis of the progress in the project execution. 2.10. Eligible expenses (14) Only projects for which expenses are incurred after the date of publication of the final scheme on the internet are eligible for receiving aid under the scheme. (15) Eligible expenses are costs related to the setting up of a new establishment, the extension of an existing establishment, the diversification of the output of an establishment into new, additional products, a fundamental change in the overall production process of an existing establishment and the acquisition by an independent investor of capital assets directly linked to an establishment which had closed or which would have closed had it not been purchased. (16) The eligible costs for initial investment include value of lands, buildings, and machineries, costs of construction, infrastructure and technical equipment exclusively related to the project. To be eligible, the assets acquired have to be new. (17) Replacement investment is excluded from the scheme. (18) The lease of assets different from land and buildings can be taken for costs related to the acquisition of tangible or intangible assets in case the lease takes the form of financial leasing and only if the contract contains an obligation to purchase the asset at the expiry of the term of the lease. 3 OJ C 244, 1.10.2004. 3 (19) The costs of lease of land and buildings can be included within costs eligible for receiving the aid at the condition that the lease continues for at least five years after the completion of the investment project. (20) Since the beneficiaries qualify as small and medium-sized enterprises, the costs of preparatory studies and consultancy costs linked to the investment are eligible costs. Moreover, the scheme provides that consultancy costs are limited to an aid intensity up to 50% of the actual costs incurred. (21) The total amount of eligible expense for a single project cannot be lower than EUR 250.000. 2.11. Applicability to large investment projects and individual notification requirement (22) The present scheme does not cover aid for large investment projects, as defined in section 4.3 of the Guidelines on national regional aid4 (hereinafter "regional guidelines"), which are subject to individual notification obligation. 2.12. Aid intensity (23) Aid is calculated in reference to material and immaterial investment costs resulting from the initial investment project. (24) Aid granted under the scheme cannot in any case exceed 40% of the amount of eligible expenses. (25) In addition, aid amount under the scheme cannot exceed maximum aid intensities as provided for in the applicable regional map in force at the time of awarding of the aid, and those intensities have to be also respected in case of cumulation of aid granted under the scheme with any other aid, i.e.: Until 2010 Standard Top- up Applicable Intensity ceiling intensity Small firms 25 + 20 GGE 45% GGE Medium firms 25 + 10 GGE 35% GGE 2011-2013 Standard Top- up Applicable Intensity ceiling intensity Small firms 15 + 20 GGE 35% GGE Medium firms 15 + 10 GGE 25% GGE The maximum allowed aid intensity does not exceed the applicable regional aid ceiling determined in the regional aid map for Italy. The maximum allowed aid intensity established for large enterprises varies according to the above-mentioned map from 25% Gross Grant Equivalent until 31.12.2010 to 15% Gross Grant 4 Guidelines on national regional aid for 2007-2013, OJ C 54, 4.03.2006 4 Equivalent from 1.1.2011 until 31.12.2013. Small and medium sized enterprises5 (with the exception of SMEs in transport sector) are eligible for a further bonus of 20%-point and 10%-point Gross Grant Equivalent, respectively. (26) Intensities of aid granted under the scheme will be expressed in gross grant equivalent which is the discounted value of the aid expressed as a percentage of the discounted value of the eligible costs. 2.13. Starting date of the project and incentive effect principle (27) The scheme identifies as starting date of the project the day when the construction works have started or when the first commitment to order equipment is placed, excluding preliminary feasibility studies. (28) Under the present scheme aid may be granted if the works on the project start only if: (i) the aid beneficiary has submitted an application for aid; and (ii) the Regional administration has subsequently confirmed in writing that, subject to detailed verification of the financial technical and economic aspects, the project in principle meets the condition of eligibility (sector of activity, size of the beneficiary firm and aid ceilings) laid down by the scheme before the start of works on the project.