European Commission rent compensation scheme to support companies affected by the coronavirus outbreak for Slovakia

One of the COVID-19 decisions for prevention and spread minimization imposed by the Slovak government in the context of the coronavirus outbreak was to limit the activities of many companies renting premises.

These companies had to close business in the premises, interrupt teaching (in schools and school facilities) or exclude the presence of the public from the establishment due to the coronavirus outbreak.

The European Commission approved a €200 million Slovak scheme to support these companies and the scheme was approved under the State aid Temporary Framework adopted by the Commission on 19 March 2020, as amended on 3 April 2020 and 8 May 2020.

The support will be in the form of direct grants and is meant to cover the reduction of the rent negotiated with the landlord, up to a maximum amount of 50% of the original rent.

That translates to the case were a tenant can negotiate up to 25% of the rent with the landlord, and the State will pay another up 25% of the rent to the landlord, on behalf of the tenant, thereby reducing the rent by up to 50% for the tenant.

The approved scheme goal is to mitigate the sudden liquidity shortages that the affected companies are facing due to the measures taken by the Slovak authorities to limit the spread of the coronavirus. The European Commission concluded that the Slovak scheme is necessary, appropriate and proportionate to fight the health crisis, in line with Article 107(3)(b) TFEU, and the conditions set out in the Temporary Framework. In particular, (i) the support per company will not exceed the limits as set out in the Temporary Framework; and (ii) the scheme will run until 31 December 2020. On this basis, the Commission approved the measure under EU State aid rules. Further information on the Temporary Framework and other actions taken by the Commission to address the economic impact of the coronavirus pandemic can be found at https://ec.europa.eu/competition/state_aid/what_is_new/covid_19.html.

Given that the COVID-19 rent problem has similar effects across the EU, the deployment of rent compensation schemes analogous to Slovakia’s in order to support companies affected by the coronavirus outbreak can represent a great tool for most member states in the fight against coronavirus.

It is also very important to note that comparable to the case of Slovakia, State Aid measures helping both landlords and tenants affected by the coronavirus outbreak have been approved by the European Commission for Sweden and Czech Republic.

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