Recovery of State aid: what “recovery” really means

“Recovery” is the word that worries beneficiaries the most. And for good reason. Recovery is not a fine or a political sanction. It is a restorative mechanism: its purpose is to re-establish the situation that would have existed on the market if the aid had never been granted.

This has two key consequences. First, recovery targets the advantage, not the intent. Second, it is normally accompanied by interest, designed to neutralise the benefit for the entire period during which the undertaking had the funds or favourable terms at its disposal.

The classic scenario is a negative Commission decision finding unlawful and incompatible aid and requiring the Member State to recover it—unless recovery would conflict with a general principle of EU law.

But recovery is not “only the Commission”. Member States must implement recovery without delay, using national procedures that allow immediate and effective execution.

Interest is not punitive. It is part of restoring the status quo. EU rules require interest from the moment the aid was first at the beneficiary’s disposal until it is actually recovered.

The method matters because the goal is full neutralisation, which explains why compound interest and detailed implementing rules may apply.

A common confusion arises where aid is procedurally unlawful (standstill breach) but may later be found compatible. Compatibility does not automatically erase the unlawful period. Commentary and case law discussion indicate that even where full recovery is no longer required after a positive decision, illegality interest may still be due for the period of unlawful availability.

General information, not legal advice.