Support Measures And A €33 Million Cypriot Aid Scheme Deferring VAT Payments: State Aid Distorting Competition Or Not?

The Coronavirus crisis has created exceptional circumstances and its related economic challenges have triggered the need for emergency actions to be taken by EU member states to deal with them. Competition law has a vital role to play in assessing the legitimacy of such actions and their effects.

Member states have expressly communicated their strong commitment to supporting companies in need. This can be done by giving guarantees to companies, allowing them to get bank loans more easily, and by delaying payment obligations on taxes and social security contributions.

Many of these measures will fall under the definition of state aid, which is essentially any aid granted selectively by a Member State through state resources in any form whatsoever that distorts competition and affects trade between Member States (Article 107 of the Treaty on the Functioning of the European Union (TFEU)). If these conditions are met, the measure has to be notified to the European