Comprehensive Changes in the non-refundable Cash Incentive System

Comprehensive Changes in the non-refundable Cash Incentive System

2023. 02. 23.

Pursuant to Government Decree 50/2023 (II.22.) on the Amendment of Government Decree 210/2014. (VIII. 27.) on the use of the Earmarked Scheme for Investment Promotion from 23 February 2023 significant changes will be introduced to the non-refundable cash incentive system provided on the basis of individual government decision, affecting several incentive schemes.

Considering the extraordinary interest in the Factory Rescue Programme launched on 2 November 2022 as well as the volatile economic environment and global economic circumstances, the Government decided to make changes in the conditions of the non-refundable cash incentive system provided on the basis of individual government decision.

Applications to the Factory Rescue Programme

Companies registered in the Factory Rescue Programme have eight months from the date of registration – instead of the previously prescribed four months – to submit their final application to HIPA Non-Profit Ltd, as the Managing Body in case they request a deadline prolongation at least 5 days before the expiry of the deadline and the Donor (Ministry of Foreign Affairs and Trade) approves the request.

Changes affecting asset-based investments

  • Pursuant to the newly introduced rules, costs related to the production of renewable energy will be eligible up to 50 percent of the investment volume, which is a significant increase compared to the previously available 25 percent.
  • In regard to the headcount maintenance commitment (valid for both base and additional headcount commitments) included in the incentive agreements, the employees participating in dual education may be also taken into consideration as long as the duration of employment is at least 60 hours per month on average. It should be emphasised that it is not obligatory to include these employees in the initial base headcount, and thus the base headcount will not change in these cases.
  • Some easing has also been introduced to the sanction system imposed for partial fulfilment of commitments related to revenue increase and wages. The Ministry of Foreign Affairs and Trade, as the Donor, may take into consideration payments during the monitoring period made in the spirit of social responsibility within the framework of cooperation with educational institutions in Hungary, such as financing of R&D projects, financing of dual education as well as co-financing of technical faculties of universities and, if these payments are fulfilled, the Donor may exempt the beneficiaries from the repayment obligation.

Changes to the R&D subsidy scheme

  • The range of enterprises eligible for the subsidy under the title of research and development has been extended. From now on, this form of aid is available not only for large enterprises, but also for medium-sized enterprises employing at least 100 employees, jointly with their direct owner company. Furthermore, aid may be also granted for R&D projects related to primary agricultural activity.

Additional changes to the cash incentive system

  • For new VIP cash incentive procedures after having the incentive agreements signed, beneficiaries are required to provide collateral for the amount of the aid as until now. On the other hand, the amount of this obligation is reduced from the previously prescribed 120 percent to 100 percent of the subsidy, thereby easing the burden on companies related to the provision of collateral.