State aid considerations

State aid is an EU member state’s support – including the giving of tax reliefs – to ‘undertakings’. EU legislation provides that state aid which could distort competition and affect trade by favouring certain parties or the production of certain goods is incompatible with the common market, unless the legislation allows otherwise.

Therefore, all exemptions or relief from the Community Infrastructure Levy (CIL) must be given in accordance with state aid rules. It is for the local authority to determine whether or not giving the exemption or relief would constitute permissible state aid (though if it gets its determination wrong the result might possibly be infraction proceedings).

As mentioned above, it is possible for relief from CIL to be granted in certain cases even if it is state aid, provided it does not need to be notified to the European Commission. Under what is known as the block exemption regulations, de minimis funding need not be notified. The current de minimis threshold is €200,000 over a rolling three fiscal year period.

Accordingly, smaller charities may be able to take advantage of the above de minimis rule. The local authority form Claiming Exemption or Relief contains a questionnaire designed to elicit information that will help the local authority in identifying state aid.

Additionally, the Service of a General Economic Interest (SGEI) Block Exemption is used to give relief from CIL in relation to social housing. The SGEI Block Exemption could also be used in the event that housing provided by charities cannot qualify for relief for social housing. Where such housing qualified for discretionary charitable relief, the local authority could use the SGEI Block Exemption to give relief beyond the de minimis block exemption of €200,000 (see above), since the de minimis for the SGEI Block Exemption is €500k over any three year period (to include aid from all sources, including the €200,000 de minimis block exemption).

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