The Fit for Future (F4F) Platform, a group of high-level experts whose goal is to help the Commission in its efforts to simplify EU laws and to reduce related unnecessary costs, held its eighth plenary meeting on 27th November 2023 chaired by the European Commission Executive Vice-President Maroš Šefčovič. The meeting was dedicated to the presentation and adoption of the opinions of the Platform’s 2023 work programme and to the adoption of the 2024 work programme.
All the eight 2023 opinions are now adopted (one opinion was fast-tracked and adopted already in June). These opinions will lead to positive effect, as they aim at reducing administrative formalities and modernising EU legislation.
ENSIE was glad to contribute to the opinion on “Social economy entities and their access to finance, state aid, public procurement and taxation”, which gives the European Commission good suggestions for work and analysis on the field of social economy.
In particular, the opinion suggests to:
- Assess the SME definition, currently enshrined in the Commission Recommendation 2003/361/EC in relation to social economy entities: While recent evaluations affirm its overall relevance, the current definition inadvertently hinders access to funds and administrative burden reductions for certain social economy entities. The headcount and public ownership criteria often exclude these entities from SME benefits, despite their societal contributions. The opinion suggests conducting this reassessment within the framework of the SME Relief package published by the Commission in September 2023, addressing the limitations highlighted by the 2021 evaluation in light of evolving economic challenges.
- Provide clarity on the legal basis for State aid: Due to the diverse State aid rules, national authorities might opt for safer options, like de minimis aid, potentially limiting support for social economy organizations. The Commission should provide clarity, guiding national authorities in choosing the right legal basis for State aid. Adequate support hinges on this choice, and uncertainty should not restrict grants. The Commission should also offer guidance on selecting the proper legal basis, or assessing whether a measure falls under Article 107 (1) of the TFEU criteria. A clearer guidance will ensure funding without recovery risks.
- Reevaluate ceilings for de minimis and SGEI de minimis aid: De minimis aid, exempt from state aid control, has set ceilings outlined in regulations applicable to various sectors, including social economy enterprises. Despite their societal contributions, social economy entities, driven by social value rather than profit, merit unique consideration. The Commission should regularly assess and adjust de minimis ceilings for these entities, aligning state aid measures with their distinct characteristics. Raising awareness of specific state aid rules for services of general economic interest (SGEI) can reduce administrative burdens, fostering the growth and societal impact of social economy entities.
- Leverage the General Block Exemption Regulation (GBER) for social innovation: While the General Block Exemption Regulation (GBER) supports investments in small and medium enterprises, its limitations hinder its full use for social economy organisations. The GBER exemptions, particularly the exclusion of aid for undertakings in difficulty, pose challenges for social economy actors, especially those driving social innovation. The Commission should reconsider the definition of "undertakings in difficulty," considering the unique financing preferences of social economy organizations. In the ongoing GBER Regulation revision, easing rules for social enterprises' access to finance and hiring disadvantaged workers, as in the Social Economy Action Plan, should be explored. This would allow public authorities to develop specific financial instruments for greater support.
- Recognize social economy entities' limited profitability: The document highlights a gap in EU law's recognition of the unique nature of the social economy, particularly its distinct profit approach. As the Article 54 of the TFEU classifies all profit-making entities alike, it is suggested to draft an interpretative communication to clarify the "not-for-profit" concept in EU law. For instance, introducing the concept of “limited profitability” would encompass enterprises making a profit but not intending to distribute it to owners, aligning instead with solidarity or general interest purposes. This would open avenues for preferential tax treatment akin to cooperatives, in line with CJEU positions.
ENSIE would like to forward their congratulations to Valeria Ronzitti, General Secretary of SGI Europe, and member of the F4F platform, who worked as rapporteur for this important and ambitious document.
Now our attention turns to the European Commission: it is their turn to address, discuss, and hopefully implement the suggestions featured in the adopted document. Also, ENSIE looks forward to monitor and contribute to the work of the platform in 2024.
Stay tuned and follow our website and social media channels for more information about ENSIE’s contributions to the Platform’s work and its outcomes.