COVID-19 – Extraordinary State Aid for New Investments – HUNGARY

To offset the negative economic effects of the coronavirus epidemic – with more favorable and simpler regulations than ever before -, the government has announced a competitiveness-enhancing support program to help medium-sized and large businesses overcome their revenue shortfalls. The government provides HUF 50 billion in budgetary resources for the program, and the available support can reach the 50% of the investment, up to a maximum of EUR 800,000 (approximately HUF 280 million) per eligible project.

It is worth mentioning that the support can be obtained 100% in advance (i.e. in pre-financing). Furthermore it can be received by companies and regions that would otherwise be excluded according to the normal rules (e.g. investments of large companies in Budapest). In terms, the support is non-refundable cash support, which can be granted until 31 December 2020 and will be available as an advance payment to medium and large companies operating in the sector of manufacturing and business services.

Supported companies

The competitiveness-enhancing support may be granted to a medium-sized or large enterprise having its registered office, site or branch in Hungary, though no support may be granted for the following activities:

  • steel industry,
  • ship-building activities,
  • activities in the carbon industry,
  • synthetic fibers industry,
  • the carriage of passengers by air, sea, road, rail or inland waterway for remuneration, the provision of freight services,
  • primary agricultural production,
  • projects in the fishing and aquaculture sector
  • projects for energy production, energy supply
  • commercial activity,
  • projects carrying out activities covered by concession,
  • tourism projects,
  • export-related activities (related to the establishment and operation of the sales network or other current expenses related to the export activity).

Conditions for granting the support

For qualifying the subsidy, companies have to meet the following conditions:

  • the enterprise must confirm that it did not qualify as a firm in difficulty on 31 December 2019, but became so as a result of the coronavirus epidemic or experienced other financial or economic difficulties;
  • the enterprise must confirm that its turnover has fallen by at least 25% as a result of the coronavirus crisis;
  • the enterprise must declare that it is not responsible for the economic downturn, and according to its insurance the company is not entitled to compensation for the damage suffered;
  • the enterprise must undertake to maintain its headcount until the completion of the investment, but at least until 31 December 2020;
  • the enterprise must undertake to make a new investment (not yet started) of at least EUR 150 000, in Hungary by 30 June 2021;
  • the enterprise does not have any public debt;
  • the enterprise must meet the requirements of orderly labour relations when submitting the application;
  • the enterprise (or its related party) must not have received any unlawful and incompatible support pursuant to a previous decision of the European Commission addressed to Hungary.

Extent of support

The extent of support depends on the value of the investment:

  • 30% of the value of investment for investments between EUR 150.000 and EUR 300.000
  • 40% of the value of investment for investments between EUR 300.001 and EUR 500.000
  • for investments above EUR 500 000, 50% of the value of the investment, up to a maximum of EUR 800.000.

Procedure

The subsidy may be claimed through tender procedure, the implementing organization is the HIPA National Investment Agency Nonprofit Zrt. 100% of the competitiveness-enhancing support will be paid in advance, in a single amount, and in HUF. The supported company must submit a report on the use of subsidy after the end of commitment period.