Significant changes to the VIP cash subsidy scheme

Tax & Legal Alert | PwC Hungary | 8 July 2021

From 3 July 2021, significant changes took effect concerning the conditions of eligibility for the VIP cash subsidy scheme granted by individual government decision, which we summarize below.

The main changes are as follows:

In case of initial investments, the minimum investment volume has decreased from EUR 10 million to EUR 5 million in Somogy and Jász-Nagykun-Szolnok counties, in addition to the current counties Nógrád, Borsod-Abaúj-Zemplén, Szabolcs-Szatmár-Bereg, Békés, and Baranya.

The minimum eligible amount of research and development (R&D) investments has been reduced from € 3 million to € 1 million. The required number of new R&D jobs related to the project has been decreased from 25 to 10, maintaining the obligation of at least 50% of new R&D employees with higher education.

The amendment also includes rules on the cumulation of subsidies. The legislation does not exclude the use of regional and R&D or training VIP subsidy for the same or similar eligible costs, if it does not lead to exceeding the highest aid intensity set out in the relevant European Union rules.

 

However, the scope of eligible costs is narrowed by the legislator in the case of cumulation. Neither the depreciation costs of assets acquired with the assistance of another type of state aid, nor the personnel costs of employees for which regional investment subsidy has been received during the same period are eligible for R&D or training VIP cash subsidy.

These changes will allow more companies to be eligible for this type of subsidy, which has quite beneficial terms and conditions. This can effectively help accelerate the planned expansion of existing R&D capabilities, or the foundation of new R&D centers. In this respect, it can be rewarding to re-examine whether a company can meet the renewed eligibility criteria.

A new element in case of training subsidy is that during the calculation of the EUR 2 million subsidy limit, other projects which have received training subsidy started by the same legal person within 2 years of the start of the training project now must be taken into account.

Another news related to the above mentioned, that the Government has approved the concept of the new regional aid map. The map is still before the Commission’s approval. The most important change is that the maximum state intensity in Pest county -except Budapest- will be 50%, instead of the current 0%/20%/35% which intensity is depending on the settlement. The maximum state intensity decreases in Komárom-Esztergom, Fejér and Veszprém counties from 35% to 30%, however the state intensity changes in Győr-Moson-Sopron, Vas, and Zala counties from 25% to 30%.

Moreover, the counties eligible for Just Transition Fund (JTF): in Borsod-Abaúj-Zemplén, Heves and Baranya counties, the maximum state intensity can be increased by 10% in any state aid support in case the EU Commission approves such status of these counties. 


For more information, please contact your regular contact person, or:

Barbara Koncz
Email: barbara.koncz@pwc.com

Detre Horváth
E-mail: detre.horvath@pwc.com

Andrea Végső
E-mail: andrea.vegso@pwc.com

Boldizsár Cseh
E-mail: boldizsar.cseh@pwc.com

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Cecília Szőke

Cecília Szőke

PR Senior Manager, PwC Hungary

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