27.04.2020

Competitiveness subsidy for investments

Hungarian state could cover up to 50% of investment costs

Competitiveness subsidy for investments

Medium-sized and large companies in Hungary could receive up to EUR 800,000 in a non-repayable competitiveness subsidy for their investments if they are experiencing economic difficulties caused by the coronavirus pandemic. This cash aid available as an advance is an option for companies in the sectors specified in the relevant legislation.

Terms and conditions

The detailed rules governing the competitiveness subsidy that has become necessary on account of the coronavirus pandemic are contained in Decree 7/2020 (IV.16) of the Minister of Foreign Affairs and Trade, which was promulgated on 16 April 2020 in the Hungarian Gazette. Below we summarise the most important points of this decree.

Type of investment subsidy

The competitiveness subsidy is granted as a non-repayable budgetary subsidy.

Eligible activities

The competitiveness subsidy can be granted in any industry and economic area, except for

  • steel industry activity,
  • shipbuilding activity,
  • coal industry activity,
  • synthetic fibre industry activity,
  • passenger or goods transportation services carried out by air, sea, road, rail and inland water for reward, gain or profit,
  • primary agricultural production,
  • projects in the fishery and aquaculture sector under the scope of Regulation (EU) 1379/2013/EU,
  • energy production and energy service projects,
  • commercial activity,
  • projects implementing activities subject to a concession,
  • tourism activity projects,
  • export-related activities, namely in relation to developing and operating sales networks, or other current expenditure arising in association with export activity.
Grounds for exclusion

The competitiveness subsidy cannot be granted

  • to applicants who are absent from the database of taxpayers with no public debts when submitting their application, or who do not submit a statement with full probative force that they have no public debts and requesting their inclusion in the database of taxpayers with no public debts,
  • to applicants who do not meet the requirement of lawful employment conditions when submitting their application,
  • to applicants or to related entities of companies that, in accordance with the European Commission’s resolution previously addressed to Hungary, received aid declared unlawful and incompatible with the common market and therefore were obliged to repay the aid, but did not comply with this repayment obligation,
  • if incompatibility rules defined in separate legislation are breached,
  • to applicants currently under liquidation, bankruptcy or voluntary liquidation proceedings ordered in a final resolution, or other proceedings defined in law and targeting the applicant’s termination,
  • to applicants that provided incorrect, false or misleading data, or made such a statement, that substantively affected the content of the subsidy decision,
  • to applicants that do not have the defined level of own funds as required by the subsidy provider or by law, and does not verify such, or does not make a statement on this as provided for by law, or
  • to applicants that do not provide the statements or submit the documents specified by law or in this Decree of the Minister of Foreign Affairs and Trade as conditions for entering into the subsidy contract, or that withdraw any statements made.
Who is eligible?

A competitiveness subsidy can be granted to business entities with a registered office, permanent establishment or branch office in Hungary.

Competitiveness subsidies can be used by medium-sized and large companies which

  • prove they were not a business in difficulty as of 31 December 2019, but became such as a consequence of the coronavirus pandemic, or have been blighted by other financial or economic difficulties,
  • prove their net sales revenue or order volume has fallen by at least 25% on account of the coronavirus pandemic and there is a direct causal link here,
  • state they are not responsible for the economic decline and that they acted with due care,
  • state that they have no insurance for the accumulated losses, or based on their insurance there is no opportunity to reclaim the losses in full,
  • agree to maintain their headcount until the end of the investment period, but at least until 31 December 2020,
  • agree to implement at least a EUR 150,000 investment project in Hungary by 30 June 2021,
  • state that this investment did not commence prior to the submission of the application.
Level of competitiveness subsidy

The aid content of the competitiveness subsidy together with other aid may not exceed the forint equivalent of EUR 800,000 per company, including the related companies of the enterprise in the given Member State, and the subsidy is aligned to the value of the investment.

If the value of the investment is

  • between EUR 150,000 and EUR 300,000, the competitiveness subsidy amounts to 30% of the investment value,
  • between EUR 300,001 and EUR 500,000, the competitiveness subsidy amounts to 40% of the investment value,
  • is more than EUR 500,000, the competitiveness subsidy amounts to 50% of the investment value.

These amounts are converted into forints using the exchange rate published by the National Bank of Hungary on the last working day of the month before the submission of the application.

Call for applications

The competitiveness subsidy is granted on a tender basis. The call for applications has already been published on the websites of the Ministry of Foreign Affairs and Trade and HIPA Nonprofit Zrt. The signed applications must be submitted to HIPA Nonprofit Zrt.

Deadline

The competitiveness subsidy can be provided to companies until 31 December 2020.

WTS Klient Hungary is doing everything it can to provide up-to-date information on the further details of the economy protection action plan launched as a result of the state of emergency, and to help its clients in these tough times too. If you have any questions on how the new measures will impact on your business, and what opportunities the current regulation brings with regard to tax payments for instance, feel free to contact us.

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