State aid for rolling stock plays a strategic role in increasing the attractiveness of rail transport services by facilitating the modernization or purchase of modern, more comfortable, and more energy-efficient trains that meet current passenger demands and contribute to reducing carbon emissions.

In this regard, the Guidelines on State Aid for Land and Multimodal Transport (LMT Guidelines), alongside other sectors, including support for investments, establishes the framework and conditions under which such funding may be granted in a manner compatible with the internal market, while ensuring a balance between stimulating the development of the rail sector and maintaining a level playing field.

The Guide is based on the reality that interventions in the form of state aid can play a decisive role in supporting the railway sector, particularly in the context of high investment needs. At the same time, the document highlights that a significant portion of the rolling stock in the European Union is nearing the end of its life cycle, making the renewal process a major challenge.

In this context, it is emphasized that smaller rail operators are often the most affected, as their limited financial resources do not allow them to independently fund the necessary acquisitions or modernizations, making them dependent on public support to remain competitive and ensure service continuity.

In defining the new rules, the European Commission took into account a number of structural realities of the railway sector. First, a large portion of the rolling stock in operation across the European Union is nearing the end of its service life or has already exceeded it, which increases the pressure to renew the rolling stock fleet. At the same time, the lack of sufficient technical standardization among Member States continues to limit interoperability and the cross-border transfer of rolling stock.

Another key issue is the difficulties faced by small and medium-sized enterprises, companies with low market capitalization, and new market entrants. For these categories, the high costs associated with rolling stock acquisition, as well as limited access to financing, constitute major obstacles in the process of modernizing or expanding the rolling stock fleet.

Compared to the 2008 regulations for the railway sector, the new framework has a broader scope, covering sustainable land transport as a whole. In the railway sector, this translates to an expanded scope of beneficiaries, which is no longer limited to railway operators but also includes other relevant actors, ranging from companies that own rolling stock to organizations in the logistics chain—such as transport firms, freight forwarders, or multimodal operators—to the extent that they opt for rail transport as an alternative to road transport.

Here, the new guide notes that the term “railway operator” includes not only “railway undertakings” but also other railway companies that provide rail transport services but not traction services, namely when they must lease locomotives to operate.

The rail sector is affected by low levels of investment in rolling stock, which hinders the full development of rail transport. Thus, the Commission considers that state aid for rolling stock can promote a modal shift toward sustainable land transport by enabling smaller or less established operators—namely railway companies that qualify as SMEs or small enterprises, as well as new entrants entrants in the rail transport sector, to have more convenient access to financing for the purchase of vehicles.

Thus, the European Commission remains committed to further analyzing the compatibility of state aid for rolling stock, particularly in the case of financing for the purchase of low-emission or zero-emission vehicles.

Maintaining an adequate fleet of rolling stock is essential for keeping rail transport competitive with other modes of transport, thereby helping to shift demand toward more sustainable land-based mobility solutions.

However, in practice, limited access to financing for vehicle procurement continues to pose a significant obstacle for both small and medium-sized enterprises and new entrants in the rail sector, affecting their ability to enter the market or expand their operations.

In the rail sector, the main difficulties in acquiring rolling stock are financial in nature, which significantly limits operators’ investment capacity. In particular, SMEs and other mid-sized companies often face restricted access to financing on competitive terms, which puts them at a disadvantage compared to established players.

This disparity in treatment is exacerbated by the fact that traditional operators generally enjoy a stronger market position and, in certain cases—especially when publicly traded—can more easily demonstrate solvency and financial credibility to lenders and investors.

The constraints on railway companies’ ability to acquire rolling stock are primarily financial, and SMEs and small-to-medium-sized enterprises, in particular, may lack access to credit.

The European Commission considers that public support for the acquisition of rolling stock can be effective, particularly when provided in the form of public loan guarantees. These temporary instruments are considered suitable for reducing market imbalances regarding access to financing between traditional operators and smaller or newer entrants to the sector.

Through such mechanisms, SMEs, mid-cap companies, and new entrants could obtain loan terms closer to those typically enjoyed by large, well-established companies. Consequently, public guarantees are seen as a solution that helps cover the high costs associated with the purchase of rail vehicles and thus supports the development and expansion of these operators.

Support provided in the form of public guarantees for the purchase of rolling stock by SMEs or new entrants to the rail market can be considered transparent and proportionate, provided that a clearly defined set of cumulative criteria is met.

In this regard, the mechanism must apply exclusively to new loans taken out for the purchase of vehicles intended for rail transport. The loan amounts may not exceed the eligible costs of the investment, which include not only the purchase price of the vehicles, whether new or used, but also expenses related to delivery, design, consulting, or engineering services, provided that these are directly linked to the project and are not already covered by other forms of public aid.

Furthermore, the guarantee level is capped at a maximum of 90% of the principal loan amount. Regarding the cost of the guarantee, it must start at a minimum fee of 50 basis points in cases where the issuing Member State has a sovereign rating between AAA and A, while for other countries there is greater flexibility in setting the fee level.

Last but not least, the duration of these guarantees is capped at a maximum of 15 years to ensure their time-limited nature and strict focus on facilitating investments in rolling stock.

Support for the purchase of rolling stock may be combined with other forms of financing dedicated to increasing interoperability or technical modernization, provided that these additional cost components are not included in the eligible costs.

In this context, net expenditure related to interoperability or technical adaptation is determined as the difference between the total cost of a purchased vehicle already equipped with the relevant systems and the total purchase cost of a vehicle that is not equipped or requires retrofitting or technical adaptation.