Additional favourable changes in the non-refundable cash incentive system

Additional favourable changes in the non-refundable cash incentive system

Additional favourable changes in the non-refundable cash incentive system

Further significant and favourable changes will be introduced in the non-refundable cash incentive system provided on the basis of individual government decision, as of 6th March 2019, according to Government Decree 36/2019. (III. 5.) amending Government Decree 210/2014. (VIII. 27.) on the use of the Earmarked Scheme for Investment Promotion.

From January 1, 2017, in line with the transformation of the Hungarian economy from a „manufacturing hub" to a remarkable „advanced manufacturing & innovation centre" of Europe, new forms of cash incentive measures were introduced to enhance corporate R&D activities and the realization of technology-intensive investments.

The past two years since the introduction of the new forms of cash incentive measures provided the opportunity for the Hungarian Government to revise the system of the incentive provided on the basis of the individual decision of the government (VIP cash incentive), on the basis of the feedback of the investors and practical experiences.

R&D related modification

Costs in relation to contractual research services also become eligible within the framework of the VIP cash incentive for R&D projects, in case the research activity serves the aim of the project to be subsidized, up to 25% of the total eligible costs.

Technology-intensive investment related modifications

In the future, investors implementing technology-intensive investments must employ minimum 100 employees as an average in the period of 12 months preceding the start of the investment in Hungary, instead of 250, in order to be eligible for the VIP cash incentive.

As a result of the amendment of the decree, not only one, but even two legal entities may also fulfil the eligibility criteria of the cash incentive in relation to the same technology-intensive investment, with the condition that the legal entities are parts of the same corporate group. Being a large company will not be an eligibility criterion either, in the future, SMEs will also have the opportunity to apply for the incentive for technology-intensive investments.

Borsod-Abaúj-Zemplén County

VIP cash incentive becomes available in Borsod-Abaúj-Zemplén County in case of asset investments reaching an investment volume of EUR 5 million and creating at least 50 new jobs, similarly to Békés, Nógrád and Szabolcs-Szatmár-Bereg County.

Further modifications in the incentive system

In case the investment to be subsidized does not aim at energy generation activity, but the investor realizes certain energetic developments for the interest of its own demand of energy, the costs of these developments also become eligible with certain preconditions stipulated in the government decree, up to 25% of the total amount of eligible costs.

As a result of the modification of the government decree, the list of activities in relation to regional service centres is supplemented with NACE code 7112 (Engineering activities and related technical consultancy).

Contacts

Should you have any questions regarding the above, please contact your account manager, or any of the following persons of Incentives Directorate:

Márton Szabó / Director
/ + 36 1 872 6626 / marton.szabo@hipa.hu

Adrienn Oláh-Kántor / Head of Department
/ + 36 1 872 6563 / adrienn.kantor@hipa.hu

Viktória Szabó-Nagy / Head of Department
/ + 36 1 872 6618 / viktoria.nagy@hipa.hu