Review of the most important changes introduced by the new Act and the related implementing ordinance

The new Regional Investment Aid Act (hereafter the “Act”) prepared by the Slovak Ministry of Economy to modify the rules for the provision of investment incentives has been in force since 1 April 2018. By supporting new and established investors, the new Act aims at reducing regional differences and promoting higher added-value investments, and research and development to increase the competitiveness of the Slovak economy. It specifies the terms and conditions for the provision of investment aid depending on the requested form of aid and the region in which the investment project is to be implemented (in a so-called priority region, or elsewhere). Priority regions are specified in line with the Research and Innovation Strategies for Smart Specialization (RIS 3) and Industry 4.0 technological trends.

On 1 July 2018, a government directive stipulating specific conditions for the provision of investment aid and the maximum amount of aid for an investment project in individual Slovak regions came into effect. This new ordinance regulates the details of an application for investment aid, of the acceptance of offers, and of monitoring reports.

The most important changes introduced by the new Act and the related implementing ordinance include:

1. Tourism is no longer a supported area under the Act.
2. Investment aid can also be provided in the form of a transfer or lease of real estate at a price lower than the market value.
3. The condition of creating new jobs in industrial production has been omitted.
4. For technology centres and shared service centres, the condition of employing people with completed university education has been replaced by the condition of paying a higher wage than the average wage in the district in which the main place of the investment plan implementation is situated.
5. When implementing an investment plan in industrial production, a supplementary implementation place is permitted, where the investment aid recipient may place a certain proportion of new machines, instruments, and equipment acquired under the aid in the contractor’s business premises (vendor tooling).
6. Investment and wage costs may now be included in eligible costs at the same time.
7. Costs incurred for the lease of land and buildings, and the lease of machines, instruments, and equipment can also be included in eligible costs.
8. Mandatory insurance of the acquired property has been introduced.
9. Tax relief is a preferred form of investment aid. Change to the calculation of the proportional part of the tax base when claiming a tax relief – a constant coefficient of 0.5.
10. An investor wishing to receive direct aid as a subsidy for property acquisition must now invest a greatly increased amount of funds.
11. In developed regions with an unemployment rate lower than the Slovak average, investors can receive direct aid as a subsidy for property acquisition if their investments are made in a priority area.
12. Investments of small and medium-sized enterprises have been made more favourable in terms of conditions for the provision of investment aid, maintaining the investment, and retaining new jobs created (3 years).
13. A combination of investment aid for industrial production and a technology centre is permitted.
14. The new government directive introduces district zoning for granting a subsidy for new jobs created and for investment projects in industrial production, which means that districts adjacent to the district in which the main place of the investment plan implementation is situated are also taken into consideration.