Development Law

Subsidy, tax relief or/and leasing, with a percentage reaching up to 55% of the projects budget

The 5th Call for Proposals for the “Entrepreneurship for Very Small and Small Enterprises” scheme of the Development Law 4399/16 has been announced, along with the 7th Call for Proposals for the “General Entrepreneurship” scheme of the Development Law 4399/2016, by the Ministry of Economy and Development, with a deadline for submission of applications of investment projects on July 30th 2021. 

The 4th Call for Proposals for the “Mechanical Equipment Aid” scheme remains active, with a deadline for submission of applications of investment projects on September 30th 2021 provided that the budget of the scheme is not exhausted earlier.

Aid rates of up to 55% are provided, based on the expected revision of the Regional Aid Map, depending on company size and installation area.

It is important to note that compared to the first submission cycle the two submission phases of the investment projects are merged In particular, the submission of the application for admission and the submission of the relevant electronic documentation will take place in one single stage.

The 4 basic schemes of the New Development Law 4399/2016 have been originally published on October 19, 2016, “General Entrepreneurship ‘,’ Mechanical Equipment Reinforcements”, “New Independent SMEs” and “Large Investments.”

Significant changes have been promoted further to the public consultation of new proclamations, with first and foremost the possibility of documentation of the financing of the project cost through a letter by the Legal Representative of the entity, concerning the intention for receiving a loan which further results to a non-obligation to prove the own contribution of the organization, nor for prior loan authorization from a bank during the application submission.

The most important points are summarized below.

General remarks
  • An explicit reference to the provisions of the General block exemption Regulation (“G.B.E.R.”) of the European Commision (651/17.07.2014, L. 187/1/26.06.2014) is being made for first time.
  • The new Law is structured into two sections: (a) the General Section, which includes the main regulations and restrictions of the G.B.E.R. and refers to all aid schemes, and (b) the Special Section, which describes the specific aid shemes, to which the provisions of the General Part and of the G.B.E.R. are applied.
  • Focus is being made on the tax incentives in comparison to the other types of aid.
  • A threshold is being provided for the types of aid available to individuals investment projects, as well as to companies and group of companies, in order to achieve dispersion of the beneficiaries of state aid.
  • Special categories of aid are being determined, either (a) on the basis of the performance of the companies (extroversion, mergers, employment increase, sectors, high added value), or (b) on territorial basis (highland, border areas and areas with increased migration burden, Industrial Areas, Innovations Zones). Companies that fall under the special categories may be reinforced through capital aids, in case the latter are not provided, or by additional capital aids, in case the latter are provided.
Beneficiaries of the aid

Individual companies, commercial companies, cooperatives, social cooperative companies of L. 4019/2011, groups of producers, agricultural partnerships of L. 4015/2011, companies under formation or under merger, on the condition that they have been incorporated or merged before the commencement of the project, joint ventures provided that they have been registered with General Commercial Registry (GEMI).

Terms and prerequisites for participation
  • The compulsory nature of own-participation is being abolished. The participation of the beneficiary in the cost of the investment project can take place either through own equity or through external financing. The main
    Beneficiaries of the aidm Terms and prerequisites for participation General remarks prerequisite is that the 25% of the total investment cost does not contain state aid, support or subsidy.
  • The minimum investment amount ranges from EUR 50,000 (for Social Cooperative Companies) to EUR 500,000.00 for large companies.
  • The investment projects that fall under the aid schemes should have the character of initial investment (buildings, machinery, intangible) and meet certain conditions (indicatively, creation of new plants, extension of existing plants’ capacity, etc.).
Covered investment projects

The investment projects that are covered by the new Law relate, in principal, to all economic sectors, subject to certain exceptions (sector of steel, coal, synthetic fibers, shipbuilding, etc.).

Under conditions, the investment projects that are covered relate also to:

  • Production or co-production and distribution of heat from Renewable Energy Sources and production of electricity by small hydroelectric projects;
  • Tourism;
  • Processing and marketing of agricultural products, fisheries and aquaculture products;
  • Logistics services.
Eligible expenses

The eligible expenses are divided into: (a) eligible expenses of regional state aid nature based on the Regional State Aid Map (capital expenditure in tangible and intangible assets, employment cost of new employees) and (b) eligible expenses of non regional state aid, which aim to broaden and enrich the investment options towards new qualitative directions.

The maximum amounts and percentages of regional state aids and non regional state aids are being determined. Based on the general framework, the maximum amounts and percentages of each individual aid sheme are being specified, in accordance with the provisions of the Special Section of the new Law.

Type of aids

The following types of aid are being provided:

  • Tax relief (exemption from the payment of corporate income tax on profits, before taxes, generated from the total business activity of the company, following the deduction of the corporate income tax which corresponds to the profits distributed to the company’s shareholders);
  • Subsidy of funds in order to cover part of the eligilble expenses of the investment project;
  • Subsidy of leasing for the acquisition of new machinery and other equipment (which cannot exceed the period of 7 years);
  • Subsidy of employment cost;
  • Fixed corporate income tax rate for a period of 12 years from the completion of the investment project, exclusively for investment projects of major size;
  • Funding of corporate risk through Funds of Funds

All types of aids can be provided either separately or in combination thereof and are all taken into account for the determination of the total aid amount of each investment project.

The subsidy of funds and the leasing subsidy are not granted to companies that did not generate any profits in any of the seven (7) tax years prior to the year in which the relevant application was filed.

The types of aid are granted (and, respectively, the benefit starts to apply), following a relevant certification, either in lump sum (following the issuance of the decision certifying the completion and the commencement of the productive operation of the project) or gradually (according to the specific requirements per each type of aid granted).

Reinforcement Percentages

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The reinforcement rates, which are presented in Table  are determined according to the size of the investment entity, the location of the project installation and the aid scheme under which the investment entity is requesting reinforcement.

Procedure regarding the filing of applications and evaluation of investments projects
  • All procedural issues as regards the support and implementation of the new Law (fling of applications, documentation file, evaluation, etc.) will be carried out through the State Aid Information System of the Ministry of Finance, Development and Tourism.
  • The evaluation process includes the stage of completion and legality control and the evaluation stage and is carried out either through the method of comparative evaluation or through the method of direct evaluation.
Implementation and completion of investment projects
  • Investment projects which fall under the aid schemes are audited at any time and at any stage of implementation of the investment project or at any stage of fulfilling their long term liabilities.
  • The investment project is completed following the commencement of the productive operation of the investment and in any case within the period prescribed in the relevant ministerial decision, which may not exceed three (3) years from the date of issuance of that decision. An extension for two (2) years ia also provided, under certain conditions.
Aid scheme

Types of aid granted

1. Machinery Equipment –  Tax relief

2. General Entrepreneurship –  Tax relief, subsidy of leasing and subsidy of employment cost

3. New Independent Small and Medium Enterpirses (SMEs) Tax relief, subsidy of funds, subsidy of leasing and subsidy of employment cost

4. Innovative Character Aid for Small and Medium Enterpirses (SMEs)

5. Clusters

6. Integrated Regional and Sector Projects

7. Intermediary funding organisations – Funds of Funds Public funding to private investors through: (a) equity or “virtual” equity investment or sponsorship, or (b) loans for funding of corporate risk directly or indirectly to eligible companies.

8. Major Investments – Fixed corporate income tax rate for 12 years from the completion of the investment project, until the exhaustion of the aid and up to the amount of EUR 10,000,000.00. Alternatively, tax reliefat a percentage of 10% of the eligible investment cost and up to the amount of EUR 5,000,000.00. Possibility to make use of the “Fast Track” procedure.

The beneficiaries, the eligible expenses, the type of aids, the percentage of aids, the implementation procedure, as well as the evaluation and audit process are being specifically prescribed per each separate scheme of aid.