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Planned Changes to the Rules on State Aid Granted by Individual Government Decisions

Planned Changes to the Rules on State Aid Granted by Individual Government Decisions

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The Hungarian Government is planning to amend its investment promotion regulation, therefore, it published the related documentation on 1 February 2023. The amendments would ensure that aid may be granted for primary agricultural production if the subject of the aid is a research and development project relating to primary agricultural production. In addition, aid for research and development would not only be available for investors that qualify as large enterprises, but also for medium-sized enterprises, in case their combined average statistical headcount reaches 100 persons.

A substantial amendment would be that the beneficiary can meet the conditions for receiving the aid with a project split into two parts. In this case, there must be a main investment and an additional energy investment which is in connection with renewable energy production or renewable energy production and storage. In this case, several conditions must be met for these investments. For instance, the eligible costs related to the main investment must exceed half of the total investment value. In case of the additional energy investment, the amount of aid per investment may not exceed 15 million euros and the aid application must be submitted at the same time as the application for the main investment.

In relation to the rescission right of the grantor from the aid agreement, there will be further changes as well. The grantor may not rescind the aid agreement if the investor ensures its obligation to maintain employment in a way that it employs persons on the basis of dual training, student employment contracts, vocational training employment contracts or apprenticeship contracts, and such employment reaches 60 hours per month. Furthermore, while under the current provisions, in case the investor fails to meet its obligations in terms of turnover or wage bill during the mandatory monitoring period, is a reason for rescission by the grantor, the amendment avoids the rescission if the grantor accepts the investor’s certified payment performed based on social responsibility activities in the framework of the co-operation with domestic educational institutions during the same period.

Under the current regulation, the deadline for submitting an application for aid is four months from the date of registration, however, under the planned amendments this period could be extended by further four months by the grantor at the request of the investor.
An additional relief would be that investors would be required to provide security only for at least 100% of the aid instead of the current 120%.

By Lidia Suveges, Attorney at law, KCG Partners Law Firm

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