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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure LU-2021-14/1797 Updated – measures in Luxembourg

Extension of aid scheme to stimulate investment in the COVID-19 era and increased aid amount

Prolongation du régime d'aide pour stimuler l'investissement dans l'ère COVID-19 et augmentation du montant de l'aid

Country Luxembourg , applies nationwide
Time period Temporary, 02 April 2021 – 31 December 2021
Context COVID-19, Green Transition, Digital Transformation
Type Legislations or other statutory regulations
Category Promoting the economic, labour market and social recovery
– Support for spending, stimulus packages
Author Patrick Thill (LISER) and Eurofound
Measure added 29 March 2021 (updated 25 January 2022)

Background information

This instrument aims to encourage companies to carry out economic development, digitalisation or environmental protection projects despite the current crisis, with the financial aid of up to 50% of eligible costs. The existing measure has been extended until the end of 2021, and the amount of aid significantly increased. The Ministry of the Economic set up the investment aid for companies affected by the crisis COVID-19 in the government's "Neistart" programme. Legal reference: Law of July 24, 2020 aiming at the stimulating of investments (Loi du 24 juillet 2020 visant à stimuler les investissements des entreprises dans l’ère du COVID-19, Mémorial A 640 du 24/07/2020).

Content of measure

The revamped aid offers higher amounts than in regular times, especially for projects involving the circular economy's development. Initially scheduled to expire on 30 June 2021, this investment aid will be extended until the end of the year.

The aid scheme is aimed at companies that have suffered a significant drop in turnover during the crisis and provides for three types of aid:

  • Investment aid for development projects, up to 30% of the cost of the project (depending on the size of the company), with an increase in aid of 20% for projects that are part of the circular economy;
  • Investment grants for process and organisational innovation projects up to 50% of the project cost;
  • Investment grants for energy efficiency projects or projects exceeding standards up to 50% of the project cost. While the maximum aid intensity is maintained at a maximum of 50% of eligible costs, the maximum amount offered per company could reach €1,800,000 for applications submitted after the entry into force of the draft law, compared to €800,000 currently, which is a significant increase of the offered investment aid.

Updates

The following updates to this measure have been made after it came into effect.

30 June 2021

This measure was initially scheduled to expire on 30 June 2021, but it has been extended until the end of the year. Companies can submit an application until the end of October at the latest, while aid can be granted until the end of December 2021.

In addition to the extension, the maximum amount of aid per company is increased to €1,800,000 from the current €800,000, while the maximum aid intensity is maintained at a maximum of 50% of eligible costs.

21 June 2021

The Ministry of the Economy extends the aid scheme to stimulate investment in the COVID-19 era and the maximum amount of aid granted per company increases to €1.8 million. Initially scheduled to expire on 30 June 2021, this investment aid scheme is also extended until the end of the year. In practice, companies will be able to submit a file until the end of October at the latest, while the aid can be granted until the end of December 2021

Use of measure

Under the old scheme, 207 such applications have already been approved by my services, for a total amount of aid of €62 million.

Until 22 September 2021, 257 applications were eligible and processed with an total amount of €76,761,187.

Target groups

Workers Businesses Citizens
Does not apply to workers Applies to all businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Unknown Unknown
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • Unknown
  • Main level of involvement: N/A

Involvement

Unknown.

Views and reactions

Unknown.

Sources

Citation

Eurofound (2021), Extension of aid scheme to stimulate investment in the COVID-19 era and increased aid amount, measure LU-2021-14/1797 (measures in Luxembourg), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/LU-2021-14_1797.html

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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.