According to the official justification, the amendment seeks to attract high value-added, innovative investments, promote industrial development in Hungary’s southern regions and smaller municipalities, strengthen the role of domestic suppliers in international value chains, and to encourage collaboration between investor companies and universities.

“Invented in Hungary”

This marks one of the most significant steps in the strategic direction long promoted by the Hungarian Ministry of Foreign Affairs and Trade and HIPA Nonprofit Plc., aiming to transition from “Made in Hungary” investments to the “Invented in Hungary” model.

On one hand, a new form of state aid has been introduced fordeveloping rural R&D centres, available to medium-sized and large enterprises employing at least 50 people. Eligible applicants must undertake to create at least ten new R&D jobs and enter into a formal cooperation agreement with a Hungarian university. Under the scheme, the eligible costs may be either the two-year wage costs of the newly created R&D positions or, alternatively, capital expenditures related to the investment project (e.g., construction, machinery, software).

On the other hand, the existing support mechanism for R&D projects remains available, with the eligibility threshold now lowered from 100 to 50 employees. Projects are still required to obtain an R&D certification; however, a new incentive element has been added: companies that commit to file patent applications with priority claimed in Hungary may benefit from extra amount of cash subsidy under the regulations of EKD Decree.

“From Békés to Baranya”

However, it would be premature to conclude that the government’s focus has shifted exclusively to research and development activities; there is still work to be done in the area of traditional capacity-expanding investments. The primary goal of Hungary’s investment incentive framework remains to channel foreign direct investments (FDI) primarily to the southern part of the country, where the largest mobilisable labour reserves are located. It is no coincidence that István Joó, CEO of HIPA, stated in a recent interview with public television that “there’s still work to do from Békés to Baranya.”

The international competition for foreign investments is intensifying, and Hungary must continue to position itself as an attractive destination. Moreover, nearly all funding for significant investment projects – particularly those planned by SMEs – must now come from the domestic budget. In light of this, the EKD Decree has significantly lowered the minimum required investment value to EUR 2 million in 11 of Hungary’s least developed counties (excluding county seats).

Following the amendment, four different minimum thresholds apply depending on the investment’s location:

• EUR 10 million: in Győr, Székesfehérvár, Tatabánya, Kecskemét, Szombathely, Veszprém, Zalaegerszeg, Debrecen, Szeged, and Eger
• EUR 5 million: in Salgótarján, Miskolc, Nyíregyháza, Békéscsaba, Pécs, Kaposvár, Szolnok, Szekszárd, and district seats in Hajdú-Bihar, Jász-Nagykun-Szolnok, Pest, Fejér, Komárom-Esztergom, Veszprém, Győr-Moson-Sopron, and Vas counties
• EUR 3 million: in other settlements in the above counties
• EUR 2 million: in Borsod-Abaúj-Zemplén, Heves, Nógrád, Szabolcs-Szatmár-Bereg, Bács-Kiskun, Békés, Csongrád-Csanád, Baranya, Somogy, Tolna, and Zala counties, excluding county seats

New mandatory commitments

For years, professional discussions have centred on how the conditions tied to investment grants could help integrate large Hungarian companies and SMEs more closely into supply chains, thereby increasing the national economic return of foreign investments. The previous version of the EKD Decree did not require such multiplicative effects, but the new amendment finally includes them among the mandatory commitments.

In the future, companies receiving cash grants must commit to conditions among others such as:

• generating at least EUR 15 million in additional revenue and
  at least EUR 2 million in additional wage costs during the monitoring period,
• increasing per capita wages and/or revenue (replacing the former emphasis on headcount retention),
• raising the proportion of suppliers located within a 100 km radius,
• increasing the use of renewable energy sources, and
• raising expenditures on research and development.

Easing the burden for SMEs

Although the support is still primarily aimed at significant market players, stronger Hungarian medium-sized enterprises may now be able to meet the eligibility criteria. The revised EKD Decree offers a new benefit for them: up to 25% of the awarded cash grant can now be disbursed in advance to SMEs.

The amendment of the EKD Decree has solidified a new investment promotion strategy that prioritises innovation, value creation, and sustainability. By lowering the minimum eligible project cost, new opportunities have opened for SMEs – especially those focused on innovation and high value-added production – primarily in Hungary’s southern counties. The new business line of WTS Klient Hungary is ready to advise you on investment plans with expert guidance. Don’t hesitate to contact us!

This article provides general information and does not constitute advice.

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The Hungarian Ministry of Foreign Affairs and Trade has launched a public consultation on the expected amendments and invited feedback until 21 March 2025.

Investments from EUR 2 million can be supported

The amendment of the government decree will allow investments from EUR 2 million to be eligible for support in some parts of Hungary. The regions concerned are Borsod-Abaúj-Zemplén, Heves, Nógrád, Szabolcs-Szatmár-Bereg, Bács-Kiskun, Békés, Csongrád-Csanád, Baranya, Somogy, Tolna and Zala counties.

The minimum eligible cost of the investment will remain tiered depending on the location of the investment. The additional bands are as follows:

• EUR 3 million: in municipalities of the counties of Hajdú-Bihar, Jász-Nagykun-Szolnok, Pest, Fejér, Komárom-Esztergom, Veszprém, Győr-Moson-Sopron and Vas not qualifying as district seat municipalities.
• EUR 5 million: in Salgótarján, Miskolc, Nyíregyháza, Békéscsaba, Pécs, Kaposvár, Szolnok, or in municipalities of the counties of Hajdú-Bihar, Jász-Nagykun-Szolnok, Pest, Fejér, Komárom-Esztergom, Veszprém, Győr-Moson-Sopron and Vas that are considered as district seats.
• EUR 10 million: in the municipalities of Győr, Székesfehérvár, Tatabánya, Szekszárd, Kecskemét, Szombathely, Veszprém, Zalaegerszeg, Debrecen, Szeged and Eger.

Changes in terms of commitments

There are also significant changes to the commitments for subsidy for investments. The two main elements of the commitments will be wage bill (EUR 5 million increase in wage bill over the maintenance period) and turnover (EUR 25 million increase in turnover over the maintenance period) instead of staff maintenance.

However, in addition to these, the following commitments are expected to be required:

• a wage increase per capita or
• a per capita increase in turnover, or
• creation of at least 25 new jobs.

In addition to the above, at least two of the following commitments will be required:

• creation of R&D jobs,
• R&D expenditure increase,
• achieve the required proportion of suppliers within 100 km to reduce environmental impact,
• use of own renewable energy, also to reduce environmental impact,
• increase the number of employees in dual training or student employment contracts, possibly with a vocational training contract.

It is clear from the expected changes that support for investments will be more focused on innovation and environmental protection than before, and that the emphasis will be on average wage growth rather than employment growth, thus supporting higher value added production as opposed to lower value added mass production.

The experienced financial management experts of WTS Klient Hungary are happy to provide our clients with up-to-date information on investment support options, legal requirements and financial accounting for subsidies. Contact us if you need an expert!

 This article provides general information and does not constitute advice.

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