The European Commission has approved, under EU State aid rules, Danish measures to set-up Denmark's Export and Investment Fund ('the Fund'), with a total estimated value of over €4 billion. The Fund aims at supporting economic development, competitiveness, innovation and growth for Danish companies.
The Danish measure
Denmark notified the Commission its plans to set up an export and investment Fund, with initial capital of up to €807 million (DKK 6 billion). The Fund will be established as a new, fully State-owned entity gathering three existing State-owned entities: (i) the Danish Growth Fund ('Vækstfonden'), (ii) the EKF Denmark's Export Credit Agency ('EKF Danmarks Eksportkredit'), and (iii) the Danish Green Investment Fund ('Danmarks Grønne Investeringsfond').
The aid will take the form of: (i) a €3.3 billion (DKK 24.8 billion) contribution in kind of the three existing State-owned entities, (ii) a capital injection of up to €807 million (DKK 6 billion), (iii) State guarantees valued approximately in €1.3 million (DKK 10 million) per year, and (iv) an exemption from paying corporate income tax, with an estimated average value of approximately €38.6 million (DKK 287 million) per year.
The Fund will be entrusted with addressing market failures and supporting economic development and investment opportunities. It will intervene to ensure access to financing in areas where companies cannot receive sufficient support from the market. The Fund will operate with a focus on providing funding to small and medium sized companies, in particular in the field of green and sustainable finance, which is already a key concern to all three existing entities.
The Commission's assessment
The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union, which allows State aid to facilitate the development of certain economic activities or of certain economic areas.
The Commission found that:
- The measure facilitates the development of certain economic activities in a variety of sectors that face difficulties in obtaining sufficient finance in the market.
- The measure minimises the distortions of competition and trade within the EU. In particular, the measure is necessary and appropriate to improve access to finance for sectors or companies that have difficulties in obtaining sufficient finance from the market. The measure is also proportionate as the activities conducted by the Fund will be proportionate and the Fund's estimated balance sheet remains relatively small compared to those of other promotional institutions in the EU.
- The measure has sufficient safeguards to avoid undue negative effects on competition and trade in the EU. In particular, the Fund's financing activities will be subject to measures ensuring that private investors are not crowded out, should they be willing to provide financing to companies. The Commission has approved the Fund's activities until 30 April 2030. Any further prolongation would need to be notified to and reviewed by the Commission for approval.
On this basis, the Commission approved the Danish measure under EU State aid rules.
