State aid exemption

The European Union (EU) aims to create equal competitive conditions for all businesses in the internal market. State aid is prohibited as a matter of principle since it may disrupt competition in the European market.

State aid that may affect competition within the EU is therefore not allowed. Conduct that is in conflict with the European rules on state aid could lead to recovery of the funding provided. Grants provided by ZonMw are earmarked as financial aid from the state. Despite it possibly being financial aid from the state, ZonMw can still provide a grant in many cases by applying ’state aid instruments’: de minimis, AGVV and DAEB. The calls for grant applications specify which scheme(s) apply. We provide an outline of the various instruments below.

An ‘undertaking’ is any entity that performs an economic activity, regardless of its legal form and financing method. Whether an undertaking is a for-profit business is irrelevant in this context. Economic activity is understood to mean any activity that involves offering goods or services on the market.

A grant may also benefit organisations other than the grant recipient when part of the grant is transferred to these other organisations. This yields an indirect benefit if it has a negative impact on competition within the EU. 

De-minimis

Under the de minimis regulation, an undertaking is allowed to receive a maximum of €200,000 in grant funding from different government agencies over a period of three years without it constituting unlawful state aid.

What does this mean if you submit an application to ZonMw?

Every funded undertaking in your project must state what de minimis aid it has received in the previous three years. You can find the de minimis statement in the call for grant applications. To be clear, this involves all state funding the undertaking received under the de minimis scheme, not just ZonMw grants. ZonMw assumes that the de minimis statements are complete and truthful. When undertakings exceed the de minimis limit, they are in violation of the European state aid regulations. In that case, we cannot provide a grant.

General Block Exemption Regulation (AGVV)

Based on the General Block Exemption Regulation, ZonMw is allowed to provide state aid in the form of a grant for research, development and innovation (R&D&I) for the following activities. There are provisions regarding:

• The maximum expenditure percentage that can be supported using public resources
• The maximum value of the aid provided
• What costs are eligible for aid

The activities funded under the AGW conditions must always be established with additional funding if they do not involve fundamental research. In addition to these specific conditions for different activities, there are also a number of general conditions.

You must provide a statement (included with the call for grant applications) certifying that:

• You will not start the activities until after submitting the grant application. One condition of the AGVV is that the aid must have a stimulating effect and this is not the case if the activities have already started.
• You do not exceed the maximum aid sum that you are allowed to receive. When other government bodies have granted funding for the same costs, the total sum must not exceed the allowed sum.
• No order to refund unlawful state aid has been issued for your undertaking.
• Your undertaking is not in financial difficulties. One condition of the AGVV is that aid cannot be provided to undertakings in financial difficulties.

Services of General Economic Interest (DAEB)

ZonMw can provide lawful state aid to undertakings on the basis of a DAEB exemption decree. Services of General Economic Interest (DAEB) are economic activities that serve a public interest. State aid for such activities is necessary because the market does not pick up these activities automatically or does not provide them under socially acceptable conditions. Such ‘socially acceptable conditions’ relate to aspects like quality, safety, affordability, equal treatment, or general accessibility to large groups of citizens.

Government bodies are allowed to earmark specific services as DAEB and fund their execution. This means that ZonMw can request an undertaking to execute a task serving the public interest to the extent that the status quo of the internal market is not disrupted unduly. ZonMw does so by means of a designation decree[A1] . The call for grant applications specifies whether a DAEB may apply.

What does this mean if you submit an application to ZonMw?

Only activities described and budgeted in the project proposal can be executed under the DAEB. So you must specify and budget the activities very accurately. The requested grant sum must not exceed the net cost of the planned project activities. You will have to refund any overcompensation to ZonMw. ZonMw conducts an interim overcompensation check for projects running for more than three years.

What does this mean for undertakings tasked with a DAEB?

Prior to providing a grant, ZonMw tasks undertakings that will execute activities under the project with a DAEB via a designation decree. Each undertaking receives its own designation decree. Undertakings are required to separate the costs and benefits associated with such DAEB activities from other operations in their accounting systems.

• Consult your company’s legal department

• Questions: Contact the ZonMw programme manager for the call for grant applications.