The SGEI decision revised - a solution to the housing cirsis?
On 16 December 2025, the European Commission adopted the revised version of the Exemption Decision for state aid for services of general economic interest (“SGEI Decision”). The SGEI Decision makes it possible to grant aid for services that cannot usually be provided profitably on the market without the need to notify the aid to the European Commission. This SGEI Decision has now been updated by the European Commission, partly with the aim of stimulating housing construction and combating the housing crisis. What exactly has changed? And what consequences does this have for you? You can read all about it in the blog below!
What is state aid?
State aid law aims to protect competition by preventing governments from unfairly favouring certain companies. This is achieved through the prohibition of state aid in Article 107 of the Treaty on the Functioning of the European Union (TFEU). Under Article 107(1) TFEU, state aid is deemed to exist if the following five cumulative conditions are met:
The aid is granted to an undertaking engaged in an economic activity;
The aid is financed from state resources;
The aid confers on the undertaking an economic advantage that it would not have obtained under normal market conditions (non-market conformity);
The aid is selective: it applies to one or more specific undertakings or a specific sector/region;
The aid may distort competition and adversely affect trade between Member States of the European Union.
If all of the above conditions are met, the aid is prohibited unless it is approved by the European Commission or a successful appeal can be made on the basis of an exception. One of these exceptions is aid for services of general economic interest (“SGEI“).
Services of general economic interest
SGEIs are economic activities that serve the general interest but cannot usually be offered profitably on the market. State aid is therefore required to be able to offer these services to citizens on the market under the desired conditions or quality. This may concern, for example, social housing or the operation of economically inefficient bus services. Public authorities have a certain degree of discretion in determining which services they qualify as SGEIs.
The SGEI Decision
The European Commission has developed a number of instruments on the basis of which SGEI aid can be lawfully granted to undertakings. One of these instruments is the SGEI Decision. On the basis of the SGEI Decision, public authorities may compensate undertakings entrusted with the operation of a SGEI for the provision of the SGEI in question, provided that the following conditions are met:
The service qualifies as an SGEI;
The compensation does not exceed €20 million per year or falls within the other categories of SGEIs covered by the scope of the SGEI Decision in accordance with Article 2(1) of the SGEI Decision;
The period for which the undertaking is charged with the SGEI does not exceed 10 years;
The amount of compensation does not exceed what is necessary to cover the net costs of implementing the SGEI, including a reasonable profit, i.e., there must be no overcompensation;
The undertaking that will perform the SGEI is entrusted with the performance of the SGEI in an entrustment decision setting out the SGEI, the compensation mechanism and other relevant aspects as prescribed in the SGEI Decision;
The administrative conditions (control of overcompensation, transparency) are met.
Why revise?
The European Commission has conducted an evaluation of (the application of) the ‘old’ SGEI Decision in practice. This has led to the conclusion that the current state aid rules do not provide sufficient guidance for Member States to tackle the housing crisis that the entire European Union is facing. The ‘old’ SGEI Decision was also in need of updating, clarification and simplification of the administrative conditions in certain areas. For these reasons, the European Commission has adopted a revised version of the SGEI Decision, which incorporates experiences from the old decision, economic changes (including the housing crisis) and market developments. The revision is part of the European Commission’s ‘European Plan for Affordable Housing’.
SGEI Decision: new vs. old
The European Commission has made the following changes to the revised SGEI Decision with regard to the following topics:
Increase in compensation ceiling
In view of inflation since the entry into force of the ‘old’ SGEI Decision in 2012, the Commission has raised the general compensation ceiling. Based on the revised SGEI Decision, it is possible to grant up to €20 million per year in aid under the general compensation ceiling. Under the “old” SGEI Decision, this ceiling was €15 million.
Social and affordable housing as SGEI
In order to combat the housing crisis in Europe, the European Commission has further elaborated/relaxed the frameworks for SGEI aid for social housing. It has also added affordable housing as a category of aid. SGEI aid for social and affordable housing is not subject to the general compensation ceiling and may therefore exceed €20 million per year, provided that this does not lead to overcompensation.
The European Commission has set out the main definitions and conditions for housing aid in the annex to the revised SGEI Decision. An SGEI in the field of social housing is defined as a service for disadvantaged households or socially disadvantaged groups, including the homeless. SGEIs for affordable housing mainly concern households that are not disadvantaged but which, due to market developments, in particular market failure, do not have access to housing on affordable terms. Examples include first-time buyers, the elderly or single parents.
In the annex to the revised SGEI Decision, the Commission sets out, among other things, the following conditions (in addition to the general conditions of the SGEI Decision) that must be met when granting aid for social and/or affordable housing:
Quality, environmental and accessibility requirements: social and affordable housing must be of adequate quality and accessibility, comply with environmental standards and be adapted to the needs of households.
Duration: in principle, social and affordable housing must be used for that purpose for at least 20 years to prevent subsidised housing from being sold quickly on the commercial market.
Eligible costs: the annex contains a broad list of costs that are eligible for coverage by SGEI aid.
With regard to affordable housing, requirements are also imposed on the prices charged that can be charged. These must be set in a transparent manner and remain below market prices, but not lower than necessary to achieve the objective pursued. The dwellings in question must also actually be used as affordable housing (and not, for example, as second homes) and the allocation of dwellings must be based on open systems.
New/amended aid categories
Critical medicines have been added as a possible aid category in the revised DAEB Exemption Decision. The frameworks for airports, air connections, maritime connections with islands and ports have also been amended.
Control of overcompensation
The European Commission has relaxed the regime with regard to the control of overcompensation. Under the ‘old’ SGEI Decision, control of overcompensation had to take place every three years and at the end of the SGEI. In the revised SGEI Decision, this frequency has been reduced to once every five years. Furthermore, ex post monitoring is no longer required if the beneficiary does not carry out any activities other than the SGEI and is legally obliged to reinvest all profits in the SGEI.
Reporting and transparency obligations
Under the ‘old’ SGEI Decision, Member States were subject to a biennial reporting obligation. This obligation will be abolished in 2026. Transparency will be ensured from 2028 onwards by means of a registration obligation. From 1 January 2028, all state aid under the SGEI Decision exceeding €1 million per undertaking will have to be registered in a central register within 20 working days of the aid being granted.
Entry into force
The above changes will enter into force on the twentieth day following the publication of the revised SGEI Decision in the Official Journal of the European Union.
Practical impact
Although the revised version of the SGEI Decision introduces a large number of changes at first glance, the essence of the decision remains largely the same in practice. The basic principles, such as the requirement for an allocation decision and the prohibition of overcompensation, remain in full force. These basic principles are supplemented by concrete guidelines that public authorities can use to tackle the housing shortage in a more flexible and efficient manner.
The practical implications are currently limited to incorporating the new frameworks for social and affordable housing when granting support to this type of SGEI. Governments will be relieved of the biennial reporting obligation and will need to check for overcompensation less frequently. As of 1 January 2028, aid providers will be required to register aid grants exceeding €1 million per undertaking per SGEI in a central register.
The extent to which these changes will solve the housing crisis remains to be seen in practice.
Contact
Do you have any questions about this topic? Or do you have other questions about state aid law? Please feel free to contact Monika Beck or one of our other state aid specialists.