A subsidy (from the Latin subvenire , 'to come to the aid' , support) is a service from public funds to companies or companies . Subsidies are economic policy interventions in the market, with which a certain behavior of the market participants should be promoted.
The definition of the term subsidy is controversial between lawyers and economists. There is agreement that welfare state transfer payments such as unemployment benefit II , BAföG or pension grants are not subsidies in the legal sense.
An internationally valid definition of the concept of subsidy does not yet exist. This would be desirable in order to clearly differentiate the term from dumping , which is defined as “price discrimination between national markets” or “the placing of goods in one country on the market in another country below their normal value”.
Subsidy within the meaning of this provision is
The concept of aid in TFEU (ex Art. 87 EGV) is characterized by five elements:
- Grant from state resources: In this context it is sufficient if the measure in question can be attributed to the state. The state not only includes all levels of government (federal, state, local), but also institutions established by the state.
- Favoring: The beneficial effect is to be affirmed if the company concerned does not provide a corresponding - customary - consideration for the measure (injection of funds or reduction of the burden).
- Selectivity: certain undertakings or branches of production are favored if a measure is selective and thereby affects the balance between the beneficiary and its competitors in favor of the former. A measure is not selective if it is justified by the nature or general purposes of the system to which it belongs (measure linked to objective criteria and benefiting a very large number of companies).
- Distortion of competition: There is a distortion of competition if the measure actually or potentially intervenes in a competitive relationship and thus changes the course of the competition.
- Trade impairment: In the case of trade impairment, a possible impact on international trade is sufficient.
State aid is present if all of the above criteria are met cumulatively. In prohibition of aid ) Details of the permissibility are related. Regulated.et seq. TFEU (
The StabG stipulates that federal funds for specific purposes in places outside the federal administration are given, especially financial aid should be granted so that the objectives of does not contradict StabG. The HGrG defines grants as "expenditure and commitment authorizations for services outside the administration of the federal or state for the fulfillment of certain purposes" and ties their guarantee to certain conditions: Such may only "be estimated if the federal or state has a considerable interest in the fulfillment by such bodies, which cannot be satisfied or not to the necessary extent without the donations. "
In the political discussion, different terms of subsidy are often used as an instrument of argumentation, which only corresponds to the requirement of political honesty if the respective argumentation basis is disclosed and justified; however, this is mostly not the case.
After all, it can be stated after the above that subsidies are predominantly used by the state as an instrument of economic policy . According to US law, however, private benefits, for example from companies, banks and associations, also count as “subsidies”. This view was probably retained in order to have a handle against the (undesirable) activity of private compensation funds.
In any case, a consideration of their different manifestations and their defining criteria contributes to a better understanding of the nature of the subsidies.
Objective and criteria
Subsidies are economic actions to achieve a political and social goal; they always presuppose a donation, benefit or discount.
- Promotion subsidies
- open up new economic fields z. B. by setting up new companies in economically important future technologies (e.g. biotechnology )
- Adjustment subsidies
- make it possible to adapt to new economic and social forms to which companies may be exposed (e.g. increased use of renewable energies )
- Maintenance subsidies
- for structures worth protecting for cultural or social reasons (e.g. agriculture and mining )
Types of subsidies (economic considerations and terminology)
There are two basic types of subsidies: production subsidies and export subsidies . The production subsidy is a grant to industry to promote the manufacture of a product, regardless of whether the product in question is exported or distributed in the country of manufacture. An export subsidy exists, however, if the grant is tied to the condition that the products in question are exclusively those for export.
Subsidies can be awarded through various procedures:
- Lost grants:
- The direct payment of funds is the classic form of subsidy. Here, due to a political purpose, a company is provided with financial support, which flows directly into its liquid funds . In contrast to loans, these do not have to be repaid.
- Excessive prices:
- Here the state guarantees that the producers receive prices above market prices. Examples are the intervention price in agricultural policy or the feed- in tariffs in the field of energy policy.
- In order to finance entrepreneurial activities independently of private-sector credit regulations, the company can be granted or enabled a publicly subsidized, cheaper loan. Loans on more favorable terms than paying on the market enable the public sector to make an entrepreneurial investment that still works in the market and can also be amortized. The primary task of the Reconstruction Loan Corporation is to provide industrial SMEs, start-ups and private individuals with cheap loans. All loans are granted exclusively for projects in infrastructure, housing construction and energy-saving technologies, but also educational loans, film financing and funds for development cooperation.
- If it is possible for an entrepreneur to obtain a loan under private law, but for which the loan collateral is insufficient, the public sector can provide this collateral with public guarantees. The main application for guarantees is export credit insurance (e.g. Hermes cover ) to promote exports.
- Real funding:
- The award of public contracts can be linked to public goals. In the case of real funding, the public sector foregoes the most favorable market price and accepts additional costs in favor of a political goal. The sale of real assets from the public sector to an entrepreneur at a price that is not customary in the market is also real subsidies (e.g. sale of land to non-profit housing cooperatives ).
- Tax subsidy:
- The tax subsidy (also exemption subsidy, indirect subsidy) is a subsidy in the broader sense. A general tax exemption or a specific tax reduction through a tax exemption also fulfill the essential characteristics of a subsidy: asset performance, lack of market performance, authority and private person.
- Other subsidies:
- Other cases are production reimbursement and export subsidies in the area of agricultural market regulations .
- Assumption of external costs:
- External costs caused by the recipient of the subsidy are borne by the general public. This aspect plays a role especially in environmental policy .
In addition to the subsidies, there are a number of other state interventions in economic life, such as state film funding .
Subsidies for farms that are not product-linked are also known as direct payments .
Assessment / criticism
- Subsidies support income or production.
- Intervention in the market
- Subsidies can lower or increase market prices (example: promotion of housing construction with fixed rental prices by means of cheap public loans to lower the rental price level) or increase (example: set-aside premiums to reduce agricultural production and increase or stabilize market prices for agricultural products).
- Political purpose
- A politically desired purpose can be promoted through subsidies.
- Subsidized companies have competitive advantages over the others.
- Location loyalty
- Nationally subsidized companies are given an incentive not to relocate abroad.
- Malfunction (incorrect resource allocation )
- Sometimes subsidies continue to be paid when the original political purpose no longer exists.
- Companies that move to other locations often do not repay the subsidies they receive.
- Determining the optimal level of subsidies is often a problem.
- Lobbies get unjustified payments.
An intervention in the market, which is brought about by subsidies, becomes a legal problem when free trade is legally secured, as is the case within the European Union and between the signatory states of the World Trade Union (WTO). For this reason, TFEU contains a general prohibition of aid, which, however, is broken by a number of exceptions ( European state aid law ). If a Member State grants subsidies that contravene this prohibition, the European Commission can declare the granting of subsidies to be contrary to Union law and take a decision according to which the Member State must reclaim the subsidies. If a member state intends to grant subsidies, it is obliged under (3) sentence 1 TFEU to report this to the European Commission ( notification obligation ). Within the World Trade Organization, the Agreement on Subsidies and Countervailing Measures severely restricts the permissibility of subsidies, including tax subsidies. Both within the European Community and between the contracting states of the World Trade Organization, there are often conflicts over export subsidies granted by individual states in order to give their domestic economies a competitive advantage. Export subsidies contained in tax laws are a special case.
In a number of countries there is regular subsidy reporting by the government or the relevant ministry.
According to the Stability and Growth Act, the federal government is obliged to report to the Bundestag on federal subsidies every two years.
|Electoral term||from ... to||BT printed matter||Subsidy report|
|18th||2013-2016||BT-Drs. 18/5940||25th subsidy report of the federal government (PDF; 2.9 MB)|
|17th||2011-2014||BT-Drs. 17/14621||24th Federal Government Subsidy Report|
|17th||2009–2012||23. Federal Government Subsidy Report|
|16-17||2007-2010||22nd subsidy report of the federal government|
|16||2005-2008||BT-Drs. 16/6275||21st subsidy report of the federal government (PDF; 2.5 MB)|
|16||2003-2006||BT-Drs. 16/1020||20th subsidy report of the federal government (PDF; 2.6 MB)|
|15th||2001-2004||BT-Drs. 15/1635||19th subsidy report of the federal government (PDF; 2.6 MB)|
|14th||1999-2002||BT-Drs. 14/6748||18th subsidy report of the federal government (PDF; 1.4 MB)|
Note: The definition of the term “subsidy” is also discussed in the 20th subsidy report.
There is also subsidy reporting by individual federal states:
- Financial aid report from the Hessian Ministry of Finance
- the subsidy report of the Free State of Thuringia
- the subsidy report of the state of Lower Saxony
- the subsidy report (Baden-Württemberg)
The Austrian federal government reports on the subsidies in the funding report
There are also compilations of subsidies from scientific and other non-governmental institutions such as the Kiel subsidy report of the Institute for World Economy at the University of Kiel .
- Cross-subsidy , first served basis , thinly , lawnmower principle
- EU funding programs , export refunds
- meritorious goods
- Public Social Private Partnership
- State interventionism
- Anti-subsidy measures
- Subsidy Code
- Safeguard Code
- Arbitration and dispute settlement procedures
- Walter Kortmann: Subsidies: The unrecognized side effects . In: Economic Service . H. 7/2004, pp. 462-472 (PDF; 83 kB).
- Recipients of the EU agricultural funds - Publication by the Federal Office for Agriculture and Food
- On the history of subsidies in Switzerland 1848–1959 . In: Berner Zeitung. May 15, 2010
- Federal subsidy database (Switzerland)
- Johannes-Friedrich Beseler: The defense against dumping and subsidies by the European Communities (= series of publications on the European economy. Vol. 109). Nomos-Verlags-Gesellschaft, Baden-Baden 1980, ISBN 3-7890-0592-4 , p. 41.
- Art. VI Para. 1 GATT .
- Christian Müller-Gugenberg, Klaus Bieneck (ed.): White collar crime. Manual of white-collar crime and administrative offenses law. 4th, revised and expanded edition. Publishing house Dr. Otto Schmidt, Cologne 2006, ISBN 3-504-40045-5 .
- aid law 2009 .
- Vijay Laxman Kelkar: GATT, Export Subsidies and Developing Countries. In: Journal of World Trade. Vol. 14, No. 4, 1980, , pp. 368-373.
- Section 303 of the US Tariff Act of 1930.
- Trade Act of 1974, Section 331, and Trade Agreements Act of 1979, Section 101.
- John H. Jackson : Legal Problems of International Economic Relations. Cases, Materials and Texts on the national and international Regulation of transnational economic Relations. West Publishing, St. Paul MN 1977, p. 754.
- Peter Friedrich Bultmann: State aid law and procurement law. Aid and public procurement as functionally equivalent instruments of economic control. A comparison of performance (= Jus publicum. Vol. 109). Mohr Siebeck, Tübingen 2004, ISBN 3-16-148437-1 (Also: Berlin, Humboldt University, habilitation paper, 2004).
- Official Journal of the European Communities . Series L, No. 336, 1994, p. 156. In:
- Swiss subsidy database and report