The regional state aid is granted based on an application of an undertaking, whereas there is no enforceable legal entitlement for its obtaining. The procedure of granting the state aid comprises several stages and it requires a final approval by the Slovak government or, in certain cases, a notification to the European Commission.
This article will briefly outline the basic requirements of investment aid aimed at regional development in Slovakia.
(source: PETERKA & PARTNERS)
General Conditions
An investor’s project must meet several conditions in order to qualify for investment aid. It must fulfill the statutory definition of an investment plan and result in the creation of new jobs.
An investment plan is an initial investment project aimed at the establishment of:
- new undertakings, or the expansion or diversification of production in an existing undertaking,
- a new technological centre or the expansion of an existing one,
- a new strategic services centre or expansion of an existing one, or,
- a new complex tourism centre or an expansion of an existing one.
Furthermore, the project must result in the creation of new jobs, which means a net increase in the number of employees in comparison with the average number over the past 12 months; in any case, the increase must be at least 40 employees.
Forms of Investment Aid
Investment aid is granted in the form of:
- a cash grant on the acquired long term property,
- income tax relief,
- a contribution aimed at the creation of new jobs,
- the transfer or the exchange of immovable property at a price lower than its general value.
Eligible Projects
The projects eligible for investment aid are in the areas of industrial production or tourism, or they are technological centres or strategic services centres.
The general requirements for investment aid in industrial production are:
- the acquisition of long term property in the amount of at least 10 million EUR while at least 50% must be covered by one’s own equity;
- the acquisition of new production and technological equipment in the amount of at least 60% of the total amount of the acquired long term property;
- production, activities, or buildings must fulfil the environment protection requirements;
- implementation must result in the creation of new jobs (at least 40);
- the investment plan must be implemented in one place.
The above mentioned values decrease if the investment plan is implemented in a district with a higher employment rate than the average rate in Slovakia, or if it is implemented by a small or medium enterprise. An investment plan with eligible costs over 200 million EUR does not need to fulfil the criteria of creation of new jobs.
A technological centre is eligible under the following requirements:
- the acquisition of long term property in the amount of at least 500 000 EUR while at least 50% must be covered by own equity;
- at least 70% of employees must have a higher education degree;
- implementation will result in the creation of at least 30 new jobs.
A strategic services centre must meet the following conditions:
- the acquisition of long term property in the amount of at least 400 000 EUR while at least 50% must be covered by own equity;
- at least 60% of employees must have a higher education degree;
- implementation must result in the creation of new jobs.
Finally, the general requirements for investment aid in tourism are:
- the acquisition of new technological equipment in the amount of at least 40% of the total amount of acquired long term property;
- the acquisition of long term property in the amount of at least 10 million EUR while at least 50% must be covered by own equity;
- services, procedures, buildings or equipment must meet the environment protection requirements;
- implementation will result in the creation of new jobs (at least 40);
- the plan must be implemented in one place.
The above mentioned values are decreased if the plan is implemented in a district with a higher than the average employment rate and for an investment plan with eligible costs over 200 million EUR, there is no criteria of creation of new jobs.
Eligible Costs
For the purposes of investment aid the eligible costs are long term tangible assets such as land, buildings and technological equipment, situated in Slovakia acquired under the market conditions and used exclusively for investment plan purposes, and long term intangible assets resulting from technology transfer, or the amount of gross salaries for newly created jobs over two years. The state aid recipient is obliged to cover at least 25% of the eligible costs by its own resources or external financing.
Eligible Regions
The region of Bratislava is completely excluded from eligibility for investment aid. All other regions are eligible. The territory of Slovakia, for the purposes of the maximum amount of aid, is divided into three regions. The investment aid maximum intensity rate is 35% for the central and eastern Slovakia regions and 25% for the western Slovakia region. The maximum amount of contribution for the creation of a new job depends on the unemployment rate in the district in question.
Conclusion
Before making the decision whether and where in Slovakia to invest, it is advisable to consider availability and intensity of regional state aid. Identifying the suitable scheme of the investment aid as well as the process of its obtaining is very complex. Therefore, it is recommended to consult a local legal office experienced in providing advice in this area according to the specific needs and investment intentions of the client.
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By Jana Benčová, Associate, PETERKA & PARTNERS
This article is for information purposes only and is based on laws applicable on October 28, 2015. Under no account can it be considered as either a legal opinion or advice on how to proceed in particular cases or on how to assess them. If you need any further information on the issues covered by this article, please contact PETERKA & PARTNERS, Tel. +421 2 544 18 700; E-mail: office@peterkapartners.sk; www.peterkapartners.com
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Founded in 2000, PETERKA & PARTNERS has grown into a full-service law firm with over 150 lawyers and nine offices in Prague, Bratislava, Kyiv, Sofia, Moscow, Bucharest, Warsaw, Minsk and Budapest and has built up a highly regarded practice within the CEE region.
