Regional investment aid is a tool for supporting new and established investors who invest in industrial production, technology centres, or shared service centres. Under the new Regional Investment Aid Act, aid is provided as a tax allowance (tax holiday), a subsidy for new jobs created, a subsidy for acquired non-current tangible and intangible assets, or a transfer or lease of real estate at a price lower than the market value. Investment aid is granted up to 25%, or 35% of the total amount of eligible project costs, depending on the main location of the investment.
The new Regional Investment Aid Act responds to changes to the business environment in Slovakia. Its goal is to promote the inflow of investments into less developed Slovak regions, and support higher added-value investments by innovations and automation in line with the Industry 4.0 strategy.
The new legislation has introduced several changes related to employment requirements. For industrial production, the condition of creating new jobs has been omitted. For technology centres and shared service centres, the condition of employing people with completed university education has been replaced by the condition of paying a higher wage than the average wage in the district of the main location of the investment plan implementation. The new government directive introduces district zoning, i.e. the classification of districts into four zones, which takes into account the unemployment rate also in districts adjacent to the district in which the main location of the investment plan implementation is situated when granting a subsidy for new jobs created and for investment projects in industrial production.
Supported areas continue to include industrial production, technological centres, and shared service centres. The new legislation permits a combination of investment aid for industrial production and a technology centre. Tax allowance is a preferred form of investment aid. Tourism is no longer a supported area under the new Regional Investment Aid Act.
Several changes related to eligible costs have been made. For example, a combination of investment and wage costs in eligible costs is now permitted. Costs incurred for the lease of land and buildings may also be considered as eligible costs. The mandatory insurance of property acquired using investment aid was introduced.
Terms and conditions for the provision of investment aid are specified depending on the requested form of aid and the region in which the investment project is to be implemented (i.e. priority region or elsewhere). Priority regions are specified in line with the Research and Innovation Strategies for Smart Specialization (RIS 3) and the relevant economic activities (SK NACE).
Compared to large enterprises, the new Regional Investment Aid Act makes investments of SMEs more favourable in terms of conditions for the provision of investment aid, maintaining the investment, and retaining new jobs created. For example, the period for maintaining new jobs created is three years for SMEs, and five years for large enterprises.
The maximum intensity of investment aid in Slovak regions remains 25%, or 35% of the total amount of the project’s eligible costs depending on the main location of the investment plan implementation. A supplementary implementation location has also been introduced, which means that an investment aid beneficiary active in industrial production may place a certain proportion of new machines, instruments, and equipment acquired under the aid in the contractor’s business premises.
“The new legislation’s goal is, inter alia, to increase the competitiveness of the Slovak economy and promote higher added-value investments with a focus on innovations in line with the Research and Innovation Strategies for Smart Specialization (RIS 3) and Industry 4.0 technological trends.“
Partner, Tax & Legal Leader, PwC Slovakia
CEE TLS Lead Relationship Partner, PwC Slovakia
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Manager, PwC Slovakia
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