Development Law – Greece Strong Growth

Subsidy, tax relief or/and leasing, with a percentage reaching up to 75% of the projects budget

The 1st Call of the “Manufacturing – Supply Chain” scheme of the Development Law 4887/2022 has been announced with the commancement date of the submission of applications for inclusion of investment projects on July 27, 2022 and the end date of the submission cycle on October 31, 2022.

The purpose of this scheme is to strengthen investment projects belonging to the processing sector, except for the processing of agricultural products, as well as investment projects in the supply chain sector, with the aim of technological, production, administrative and organizational upgrading, as well as innovative and extroverted development and growth, with the aim of strengthening the competitive position of businesses in the domestic and international market.

The new Development Law 4887/2022 of the Ministry of Development and Investments entitled “Development Law – Greece Strong Development” has been voted by the Greek Parliament, which defines the conditions of eligibility and the framework for the establishment of schemes for the granting of state aid. It provides for the introduction of thirteen new aid schemes that will allow the business community to plan, develop and implement their initiatives with significant and modern forms of investment in all sectors of the Greek economy. In addition, in conjunction with the new Regional Aid Charter, an aid rate of up to 75% is foreseen.

Fixed cycles for the submission of investment proposals will be included, with a timeframe from the submission of an investment project to the assessment and inclusion in the relevant scheme not exceeding a three month period of time. In an effort to substantially speed up the procedures, additional provisions will be provided for the procedures for the assessment, integration into the aid schemes and monitoring of the implementation of private investments, in order to address bureaucratic red tape and to ensure the acceleration of implementation, by entrusting the assessment, integration and monitoring of the physical and financial aspects of implementation to a private auditor. The “supervision” of the auditor will last until the completion of the investment.

The most important points are summarized below.

Beneficiaries of the aid

Under the aid schemes of the law, subjected are the companies established or having a branch in the Greek Territory at the time of commencement of the investment project while having one of the following forms:

  • Commercial company
  • Cooperative
  • Social Cooperative Enterprises under Law 4019/2011 (A’216), Agricultural Cooperatives. Producer Groups, Rural Partnerships under Law. 4384/2016 (A ‘ 78)
  • Under establishment or merging companies, with the obligation to have completed disclosure procedures before beginning operations on the investment project
  • Sole Proprietorship Partnership
  • Enterprises operating under consortium form provided they are registered in the General Commercial Registry Books,
  • Public and municipal companies and their subsidiaries, provided that:
  • They have not been assigned to serve the public purpose
  • They have not been assigned by the state with their exclusive service supply
  • Their operations through public funds is not assisted, for the maintenance period of the long term liabilities of Article 21
Content of investment projects – Initial investment character

Investment projects under this aid scheme, should have the initial investment character (Article 2 point 49 GER), and should in particular meet one of the following conditions:

  1. Creation of a new unit
  2. Expansion of the existing plant capacity. The additional capacity of the plant due to the investment plan can be accepted only if the existing capacity of the plant can be authenticated through official documentation.
  3. Production diversification of a unit for products or services which have not been produced ever by it, provided that the eligible costs are higher than twice (200%) the book value of assets used again, as recorded in the financial year preceding the project’s inclusion application.
  4. A fundamental change in the overall production process of an existing unit, provided that the eligible expenditures exceed the depreciation during the three previous fiscal years of the assets related to the activity, which is to be modernized. If the body of the investment has not completed, during the submission of the inclusion application, at least three completed fiscal years or in case the submitted financial data do not clearly reflect the linked to the activity depreciation, non-fulfillment of the relevant criterion is presumed.
Terms and prerequisites for participation

The financial contribution of each entity to the cost of the investment plan can be covered either with own funds or with external financing, provided that twenty-five percent (25%) of this assisted cost does not contain any state aid, public support or provision.

 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).

Aid Rates

Aid rates, based on the European Commission’s regional state aid guidelines are presented in the Regional Aid Map.

 Regions

 Regional Unit  Maximum intensity of regional investment aids
Large Sized Businesses Medium Sized Businesses Small Sized Businesses
EAST MACEDONIA AND THRACE REGION RODOPI 50% 60% 70%
DRAMA 50% 60% 70%
EVROS 50% 60% 70%
THASSOS, KAVALA 50% 60% 70%
KSANTHI 50% 60% 70%
CENTRAL MACEDONIA REGION THESSALONIKI 50% 60% 70%
IMATHIA 50% 60% 70%
KILKIS 50% 60% 70%
PELLA 50% 60% 70%
PIERIA 50% 60% 70%
SERRES 50% 60% 70%
CHALCIDICE 50% 60% 70%
WESTERN MACEDONIA REGION* GREVENA, KOZANI 40% 50% 60%
KASTORIA 40% 50% 60%
FLORINA 40% 50% 60%
EPIRUS REGION GIANNENA 50% 60% 70%
ARTA, PREVEZA 50% 60% 70%
THESPROTIA 50% 60% 70%
THESSALY REGION LARISSA 50% 60% 70%
KARDITSA, TRIKALA 50% 60% 70%
MAGNESIA, SPORADES 50% 60% 70%
CENTRAL GREECE REGION FTHIOTIDA 40% 50% 60%
BOEOTIA 40% 50% 60%
EUBOEA 40% 50% 60%
EVRITANIA 40% 50% 60%
FOKIDA 40% 50% 60%
IONIAN ISLANDS REGION CORFU 40% 50% 60%
ZANTE 40% 50% 60%
ITHAKA, KEFALONIA 40% 50% 60%
LEFKADA 40% 50% 60%
WESTERN GREECE REGION ACHAIA 50% 60% 70%
ETOLOAKARNANIA 50% 60% 70%
ILIA 50% 60% 70%
PELOPONNESE REGION ARGOLIDA, ARCADIA 40% 50% 60%
CORINTHIA 40% 50% 60%
MUNICIPALITIES OF MEGALOPOLIS, TRIPOLIS, GORTINIA, OICHALIA * 40% 50% 60%
REST OR ARCADIA 40% 50% 60%
LACONIA, MESSINIA 40% 50% 60%
ATTICA REGION MAIN AREA OF ATHENS 0% 0% 0%
NORTH AREA OF ATHENS 0% 0% 0%
WEST AREA OF ATHENS 15% 25% 35%
SOUTH AREA OF ATHENS 0% 0% 0%
EAST ATTICA 25% 35% 45%
WEST ATTICA 25% 35% 45%
PIRAEUS, ISLANDS 25% 35% 45%
NORTH AEGEAN REGION* LESVOS, LIMNOS 50% 60% 70%
IKARIA, SAMOS 50% 60% 70%
CHIOS 50% 60% 70%
SOUTH AEGEAN REGION* ANDROS, THIRA, KEA, MILOS, MYKONOS, NAXOS, PAROS, SIROS, TINOS 30% 40% 50%
KALYMNOS, KARPATHOS, KOS, RHODES 30% 40% 50%
CRETE REGION* HERAKLION 40% 50% 60%
LASSITHI 40% 50% 60%
RETHIMNO 40% 50% 60%
CHANIA 40% 50%

60%

*In parts of these regions the percentages will be increased by 10% for the Fair Development Transition Plan regions. For the North Aegean region the aid percentage cannot exceed 75%

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

A project is completed with the implementation of the physical and financial object and with the beginning of functional operations of the investment, as long as it serves the primary productive operation objectives and the integrated nature of the investment, within the deadline determined in the qualification decision, which may not exceed 3 years from the date of publication of the said decision.

The completion and beginning of operations, is certified with the issue of a relevant decision by the competent Institutions as they are defined in Article 17 of the Law.

The date in the qualification decision may be extended once, up to two years maximum, provided that the following conditions are cumulatively met:

  1. Electronic submission of the relevant request should take place before the end of the integration period, as it is initially defined in the qualification decision,
  2. implementation of 50% of the physical and sixty five percent (65%) of the financial object.

For the validation of the beginning of operational function of the investment, documentation of the unit’s operations is required, especially concerning the sale of products or services and the issuance of all legalization permits, as well as with the creation of at least half of the new jobs (denominated in AWUs) defined the qualification decision. The rest of the job positions should be created by the end of the forecasted maintenance period of long-term liabilities.

Special Aid Categories

The aid rate is set at 80% of the RAΜ. In order to receive an aid rate of 100% of the rate set in the Regional Aid Map, depending on the aid scheme concerned, a company must fall into at least one of the following situations:

  • Implement an investment project eligible for submission to the New Business scheme or the Fair Development Transition scheme*.
  • Implement an investment project in its special regions as defined in a relevant annex to the law (mountainous, island, border regions, regions affected by natural disasters).
  • To implement its investment plan in Industrial and Business Areas (IBAs), Business Parks (BPs), excluding Intermediate Business Parks (IBAs), technology parks and Innovative Activity Hosts (IAHCs) and Organised Manufacturing and Business Activity Hosts (MABHs), provided that they do not concern the modernisation or extension of existing structures of the assisted firm.
  • Implement an investment project in buildings classified as listed buildings (90% of the MSE).
  • Implement an investment project involving the reopening of industrial plants that have ceased to operate. The value of the fixed equipment of the industrial unit to be reopened covers at least fifty percent (50%) of the eligible costs of the investment project.

To be eligible to apply for aid in the form of a grant, a company must be a Micro or Small Enterprise.

Note: For the ‘Fair Development Transition’ scheme, the aid rates for the eligible costs of the initial investment are granted on the basis of the maximum aid intensities of the Regional Aid Map, irrespective of the size of the investment body.

Aid schemes – Priority Sectors
  • Digital and Technological Business Transformation
  • Green Transition – Environmental Business Upgrade
  • New Business
  • Research and Applied Innovation
  • Agri-food – Primary Production and Processing of Agricultural Products – Fisheries
  • Manufacturing – Supply Chain
  • Business Extroversion
  • Support for Tourism Investments –  Alternative Forms of Tourism
  • Aid of less favored areas of the country and areas included in the Fair Development Transition Plan (FDTP)

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.