Another wave of amendments in the field of state aid: spotlight on R&D, renewable energy and SSCs

Late in the evening of December 11, the Ministry of Foreign Affairs and Trade released the proposed amendment to Government Decree No 210/2014 (VIII. 27.) (“VIP cash subsidy decree”) for public consultation. According to the proposed amendment, further expansions are expected to the ​​available subsidies granted based on individual government decisions, with a focus on research and development, energy-related investments and SSCs.

We are summarizing below the most important points of the proposed amendment, and later we will issue a detailed newsletter regarding the amendment, which is expected to enter into force early 2024.

Research and development

According to the planned amendment, in the case of R&D projects implemented outside of Budapest, the maximum available aid intensity would increase from 25 to 40%. Depending on the ratio of applied research project parts (if any), this could even reach 50% regardless of the project location. Preliminary documentation would be necessary to define the ratio between applied research and experimental development.

R&D services ordered from universities would also appear as new eligible costs (up to 50%), and in addition, the maximum subsidy amount would increase from EUR 15 to 25 million.
 

Additional energy-related investment

The additional energy-related investment would become available in Budapest with a maximum aid intensity of 45% as well (compared to the previous 30%), and the maximum subsidy amount would increase to EUR 30 million. 

This scheme would also become available in the case of an investment aimed at the creation or expansion of SSCs where the investor chooses wages as the main eligible cost type.
 

Production and storage of renewable energy

In accordance with changes in EU regulation, investments aimed at hydrogen and biogas-based energy production and energy storage would become specifically eligible for state aid, in the latter case, if the storage units are filled at least 75% from renewable sources.
 

Other planned changes

The maximum amount of the training subsidy would increase from EUR 2 to 3 million.

In case of large investments, the EU Commission notification thresholds would increase (harmonization with the general block exemption regulation), therefore the maximum aid amount that can be granted without notification increases.

In line with the EU rules, only investments in the same or similar activity shall be considered when calculating the single investment project.

According to the proposed amendment, the minimum number of new jobs to be created in case of newly opened or expanded SSCs would be reduced from 50 to 25, and the expansion of the service portfolio of an existing SSC would also be considered a starting investment.
 

New aid categories

In connection with the termination of the USA-Hungary tax treaty and the GloBE rules, new aid categories would be added to the decree:

• Repatriation of profits: aid can be provided for an asset-based investment starting in 2024 or for the implementation of an SSC with a new headcount of at least 10. The amount of dividend received by the investor will be an important factor in the determination of the aid intensity.

• Turnover-based aid: the government would like to offset some effects of GloBE with this type of subsidy that can be claimed after finishing an investment.

The Ministry awaits comments and suggestions on the proposed amendment until December 19, 2023. If your company can be affected by the proposed amendment or you are interested in the topic for other reasons, you can turn to our advisors - let us review the proposed amendment together.