Jurisdiction(s):
United Kingdom

Key definition

State aid definition

What does State aid mean? In practice, state aid refers to public financial support that selectively benefits businesses and risks distorting competition or trade. Under EU law (Articles 107-109 TFEU and case law), it covers advantages granted through state resources that favour certain undertakings or goods and affect trade between Member States. Typical measures include grants, loans, guarantees, tax reliefs, equity injections and land or services below market value. Unless covered by the General Block Exemption Regulation or de minimis rules, aid must be notified to and approved by the European Commission; unlawful aid can be recovered with interest. In Great Britain, the EU state aid...

EU State aid overview: principles, notification, GBER, de minimis, sectoral rules, SGEI, MEIP and recovery

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Practice notes

ARCHIVED: This Practice Note is archived and no longer maintained. For further reading on this topic, see: State aid—overview.

State aid—generally

European Union Rules on state aid prevent member states from granting support that distorts, or may distort, competition and trade between states. Consequently, whenever a public authority or publicly funded body (such as a quango) offers financial assistance to an undertaking, they must consider carefully whether that support constitutes state aid, mindful that the European Commission is obliged to recover any unlawfully granted aid, together with applicable interest. The EU nevertheless recognises that state aid can be a legitimate element of public Policy, for example to attract inward investment into underdeveloped regions (often called ‘assisted areas’) or to foster investment in high-technology industries. Article 107(1) of the Treaty on the Functioning of the European Union sets out the primary prohibition on state aid, while TFEU, art 7, paras (2) and (3) describe the categories of aid the EU may allow...

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Web page updated on 21/05/2026

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