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EU Approves Regional Aid Map for Hungary for 2022-2027

EU Approves Regional Aid Map for Hungary for 2022-2027

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The regional aid map is a legal provision that sets the maximum amount of state aid that can be granted as investment aid to companies investing in certain regions of the country, or in the case of developed regions, smaller territorial units.

The Hungarian Government decided about the regional aid map of Hungary in July 2021, and adopted the concept of the regional aid map for the 2022-2027 period.

In the middle of September 2021, the European Commission approved the regional aid map of Hungary under EU state aid rules. The Hungarian regional aid map is one of the first maps approved by the Commission under the revised Regional Aid Guidelines (RAG) which were adopted by the Commission on 19 April 2021 and enter into force on 1 January 2022. The RAG enables Member States to support the least favored European regions in catching up and to reduce disparities in terms of economic well-being, income and unemployment.

According to the European Commission, 82.1% of Hungary’s total population live in regions eligible for regional investment aid. All of these regions are among the most disadvantaged in the European Union, with a gross domestic product (GDP) per capita below 75% of the EU average. The aid intensity is the maximum amount of State aid that can be granted per beneficiary, and is expressed as a percentage of the eligible investment costs.

For large enterprises, the regions of Pest, Dél-Dunántúl, Észak Magyarország, Észak-Alföld and Dél-Alföld are eligible for a maximum aid intensity of 50%, while the regions of Közép-Dunántúl and Nyugat-Dunántúl are eligible for a maximum aid intensity of 30%. Additionally, the maximum aid intensities may be increased by 10 percentage points for investments by medium-sized enterprises and by 20 percentage points for investments by small enterprises in these regions, provided that the eligible costs of the start-up investments of the enterprises concerned do not exceed EUR 50 million.

The Government decree also states that in areas eligible for support from the Just Transition Fund (these are Heves, Baranya and Borsod-Abaúj-ZemplénCounties) the aid intensity for any public funding may be increased by an additional 10 percentage points over and above the maximum intensities described above.

Finally, it is worth to mention that since the European Commission extended the regional aid map expiring on 31 December 2020 by one year, the aid map adopted in 2014 and amended in 2016 will continue to be in force until 31 December 2021, and the newly adopted and approved Hungarian aid map will be in force from 1 January 2022.

By Gabriella Galik, Partner, KCG Partners Law Firm

KCG Partners at a Glance

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The firm has a wealth of knowledge in corporate law, M&A, projects and construction, energy, real estate, tax, employment, litigation, privacy and forensics, securitization, estate planning and capital markets.

To address clients’ regional and international concerns, the firm maintains active working relationships with other outstanding independent law firms in Central and Eastern Europe, whilst senior counsel Mr. Blaise Pásztory brings over 40 years’ of US capital market and fund management experience.

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