Changes in the non-refundable cash incentive system

Changes in the non-refundable cash incentive system

Changes in the non-refundable cash incentive system

Significant and favourable changes will be introduced in the non-refundable cash incentive system provided on the basis of individual government decision, as of October 1, 2019, according to Government Decree 227/2019. (IX. 26.) amending Government Decree 210/2014. (VIII. 27.) on the use of the Earmarked Scheme for Investment Promotion.

The principal of the investment promotion incentive system in Hungary was to increase the national employment. This objective has been achieved successfully: according to the recent statistical reports, the unemployment rate is below 3.5% in Hungary. These data and employment forecasts justify the need for elaborating and operating an incentive system focusing on the maintenance of existing jobs and the improvement of corporate productivity, rather than creating new jobs.

As a result of the current amendment, in the future, VIP cash incentive will be available for the implementation of asset investments, for the creation and/or expansion of regional service centres and for the realization of R&D projects.

Asset investments

VIP cash incentive for asset investments will be available for investments in a minimum value of EUR 5 or 10 million, depending on the location of the investment:

  • min. EUR 5 million: in Baranya, Békés, Borsod-Abaúj-Zemplén, Nógrád and Szabolcs-Szatmár-Bereg counties
  • min. EUR 10 million: in Bács-Kiskun, Csongrád, Fejér, Győr-Moson-Sopron, Hajdú-Bihar, Heves, Jász-Nagykun-Szolnok, Komárom-Esztergom, Pest, Somogy, Tolna, Vas, Veszprém and Zala counties.

In the future, it will not be necessary for investors to create new jobs; however, the maintenance of the number of the already existing employees and the increase of the corporate sales revenue and the wage costs will have an important role in within the eligibility criteria system:

  • In case of emerging enterprises, after the completion of investment, sales revenue of the investor shall increase by EUR 3 million and the wage costs of the company shall increase by EUR 300,000 compared to the base values in the monitoring period, annually, on average.
  • In case of mature enterprises (companies not considered as emerging enterprises), the base sales revenue and/or base wage costs of the investor shall increase by at least 30% and the growth shall be maintained in the monitoring period, annually, on average.
Creation and/or expansion of business service centres (BSCs) and R&D projects

Investors will continuously have the opportunity to apply for the VIP cash incentive based on the former criteria for the creation and/or expansion of BSCs and for R&D projects.