EC approves €87m Cypriot guarantee scheme for tourism sector

The European Commission on Tuesday announced that it had approved, under EU State aid rules, “an €86.6 million Cypriot scheme to support companies active in the tourism sector (including organisers of package travel, hotel businesses, and car rental companies) affected by the coronavirus outbreak.”

According to a written statement from Brussels, “the Commission found that the scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the Cypriot economy in a period when the normal functioning of the tourism and package travel market is severely disturbed by the coronavirus outbreak”.

The Commission assessed the scheme under Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid measures to remedy a serious disturbance to the economy of a Member State and on this basis, approved the measure under EU State aid rules.

Furthermore, the EC notes that the scheme is in line with the objectives pursued by the Commission Recommendation (EU) 2020/648 of May 13, 2020 aiming at making vouchers an attractive and reliable alternative to cash reimbursements.

According to the EC, “the public support will take the form of public guarantees which aim at covering vouchers (i.e. credit notes) issued by the beneficiaries to either consumers or organisers of package travels for cancelled travel packages or individual touristic services booked prior to 31 October 2020.”

“The scheme aims at supporting service providers in the touristic sector that are experiencing significant losses of revenue and liquidity shortages due to the coronavirus outbreak and the restrictive measures that Cyprus and other governments have had to implement to limit the spread of the virus”, the EC concluded.