Investment incentives

Investment incentives

Dated: 18.01.2021

Amendment to Act no. 57/2018 Coll. on Regional Investment Aid and on Amendments to Certain Acts (hereinafter referred to as “Act No. 57/2018”), which coming into effect from 01.01.2021 responds to the current situation caused by the COVID-19 pandemic. Investment aid is regional support aimed at encouraging investments in disadvantaged regions and in creating new jobs in Slovakia. The pandemic has fundamentally and unpredictably affected the beneficiaries of investment aid and their ability to fulfill the obligations and conditions for the provision of investment aid arising from decisions granting investment aid. Amendment to Act no. 57/2018 focuses exclusively on mitigation of certain conditions from a material and temporal point of view.

Proceedings / Decisions

Conditions and obligations that the beneficiary was not obliged to meet by 12 March 2020

  • Proceedings of investment aid approval commenced but not completed before 31 December 2020 and
  • Decisions granting investment aid issued till 31. December 2020according to the Act No. 561/2007 Coll. on Investment Aid and on Amendments to Certain Acts (hereinafter referred to as “Act No. 561/2007”)
  • The condition of covering the eligible costs by the equity shall be considered to be fulfilled; the condition shall apply to beneficiaries of investment aid to whom investment aid has been approved on the basis of Act No. 561/2007 as amended at the relevant time. In the new legislation adopted in 2018, this condition no longer exists.
  • The condition of achieving the minimum percentage of new machinery, production and technology equipment shall be reduced by 10%
  • The conditions of the minimum proportion of university-educated employees shall be considered to be fulfilled; the condition shall apply only to beneficiaries of investment aid to whom investment aid has been approved pursuant to Act no. 561/2007 as amended at the relevant time. 
  • Proceedings of investment aid granting commenced but not completed before 31 December 2020 
  • Proceedings of investment aid granting commenced from 31 December 2020 to 31 December 2021 
  • Decisions granting investment aid issued till 31. December 2021 
  • The obligation to start acquiring tangible fixed assets and intangible tangible fixed assets shall be extended from the existing 12 to 24 months.
  • The obligation to complete the works on the investment project no later than the maximum period set pursuant to Section 22 (13) of Act No. 57/2018 shall be extended from the existing 3 to 5 years, for large investment projects from the existing 5 to 7 years
  • The obligation to commence the business activity specified in the investment project from the delivery of the decision granting investment aid shall be extended from the existing 3 to 5 years, for large investment projects from the existing 5 to 7 years
  • The obligation to achieve a percentage increase in output or services in the case of investment aid granted to extend the capacity of an existing establishment shall be reduced from the existing 15% to 5%
  • The condition to spend eligible costs of the investment project of at least 85% shall be reduced to 70%. Any reduction in eligible costs shall be reflected in the amount of investment aid, by reducing it through a decision amending the decision granting investment aid. 
  • The condition of achieving a net increase in jobs of at least 90% of the net increase specified in a decision granting investment aid shall be reduced to 80%
  • The condition of paying the minimum multiple of the average monthly wage to employees in the establishment in the case of Technology Centers and Centers of Strategic Services shall be considered to be fulfilled in the calendar years 2020 to 2022. 
  • The condition of paying the employees a wage specified in the investment project shall be considered to be fulfilled in the accounting periods in 2020 to 2022; this is without prejudice to the beneficiary´s obligation to acquire eligible wage costs at least in the nominal amount specified in the decision granting investment aid. 

During the calendar years 2021 and 2022, the limit on the number of changes made to the specific conditions of decision granting investment aid shall not apply. Beneficiaries of investment aid can thus make changes in investment projects, even in those conditions, which have already been changed in the past. 

Decisions granting investment aid or decisions approving investment aid issued pursuant to Act No. 561/2007, which were supported by an income tax relief that the beneficiary could start to claim after 31 December 2019, the period from 2020 to 2022 is not included in the deadline for starting the claim of the income tax relief. 

Decisions granting investment aid or decisions approving investment aid issued pursuant to Act No. 561/2007, which were supported by an income tax relief that the beneficiary could start to claim after 31 December 2019, the three immediately following tax periods are not included in the deadline during which he is entitled to the income tax relief, the first of these periods began in 2020. 


Reflecting the urgent need to support economic development in connection with the recovery of the economy as a result of Corona crisis, Regulation of the Government of the Slovak Republic No. 195/2018 Coll. laying down the conditions for granting investment aid, the maximum intensity of investment aid and the maximum amount of investment aid in the regions of the Slovak Republic temporarily relaxes some selected conditions for granting investment aid in favor of new investments.

Decisions granting investment aid issued till 31st December 2020 and their conditions that the beneficiary was not obliged to meet by 12th March 2020:

  • The condition of achieving the minimum percentage of new machinery, production and technology equipment shall be reduced by 10%
  • The conditions of the maximum proportion of acquired machines, devices and equipment in industrial production, which can be located in additional places of realization of the investment project shall be increased to 40% of the purchase price of all acquired machines, devices and equipment, which are included in eligible costs of the investment project.

Proceedings of investment aid granting commenced from 31st December 2020 to 31st December 2021 and their conditions:

  • The classification of districts into zones A to C will be evaluated based on the unemployment rate as before, but on a semi-annual basis
  • The minimum value of the acquired tangible fixed assets and intangible fixed assets shall be halved
  • The minimum number of created new jobs shall be halved
  • The conditions of the maximum proportion of acquired machines, devices and equipment in industrial production, which can be located in additional places of realization of the investment project shall be increased to 40% of the purchase price of all acquired machines, devices and equipment, which are included in eligible costs of the investment project.

In connection with the transformation of Horná Nitra region, Prievidza district will be temporarily assessed in terms of the conditions for granting investment aid as districts belonging to the group of least developed districts.

Author:

JUDr. Mária Porubská Tökölyová, advokát