What is a ‘subsidy’ (formerly referred to as State Aid)?
A subsidy is any advantage granted by public authorities through state resources on a selective basis to any organisations that could potentially distort competition and trade in the European Union (EU) and Northern Ireland.
The definition is very broad because ‘an advantage’ can take many forms. It is anything which an undertaking (an organisation engaged in economic activity) could not get on the open market. Under the Trade and Co-operation Agreement with the EU (TCA), a ‘subsidy’ is broadly similar to what was previously referred to as ‘State Aid’.
The EU State aid rules no longer apply to subsidies granted in the UK following the end of the transition period, which ended on 31 December 2020.
This does not impact the limited circumstances in which State aid rules still apply under the Withdrawal Agreement, specifically Article 10 of the Northern Ireland Protocol.
The United Kingdom remains bound by its international commitments, including subsidy obligations set out in the Trade and Cooperation Agreement (TCA) with the EU.
BEIS Guidance for public authorities explaining the subsidies chapter of the TCA, World Trade Organisation rules on subsidies, and other international commitments can be found on the
GOV.UK website.
On Thursday 4 March government introduced new subsidy allowances for the COVID-19 business grants schemes, on the basis of the principles set out in Article 3.4 of the TCA.