state aid investment romania

Government Decision no 1680 from 10 December 2008 implementing a new state aid scheme for ensuring sustainable economic development

 


OBJECTIV: regional development by stimulating investments and new job creation

 

CONDITIONS REGARDING THE INVESTORS:

 

The present scheme addresses companies registered under the provisions of Law no. 31/1990 on trade companies, republished, with its subsequent modifications and additions, which meet the following conditions:

the companies do not belong to the category of firms in difficulty as provided for in COMMISSION REGULATION (EC) No 800/2008 on
declaring certain categories of aid compatible with the common market in application of Articles 87 and 88 of the Treaty (General block exemption Regulation);
there had been no state aid recouping decisions issued against them or, in case such decisions had been issued, they were executed, according to the law in force;
there have been no state/de minimis aid granting overlapping involving different state aid providers for the same eligible costs of the initial investment.


CUMULATIVE CONDITIONS REGARDING INVESTMENT:

it is an initial investment

Initial investment means an investment in material and immaterial assets relating to: the setting-up of a new establishment; the extension of an existing establishment; diversification of the output of an establishment for new product markets or a fundamental change in the overall production process of an existing establishment.

the value of the investment exceeds EUR 30 million (RON equivalent);
at least 300 new jobs are created as a result of the initial investment;
the investment may be carried out and the new jobs may be created in all fields of activity, excepting those mentioned in Annex 1 to the H.G. 1680/2008; conformity with prioritary fields having an important socio-economic impact as regulated under Emergency Ordinance 85/2008 on stimulating investment must also be ensured.


Exceptions:

agriculture, hunting and annex services; silviculture and forestry; fishery, aquaculture;
extractive industry - superior and inferior coal extraction;
processing industry
- manufacturing of beverage, tobacco products, textiles and clothing;
- leather tawing and finishing, manufacturing of travel articles and leather goods, harnesses and footwear, preparation and dyeing of fur coats;
- wood processing, manufacturing of wood and raft products (excepting furniture), straw and other vegetal weaved materials;
- paper and paper-products manufacturing;
- printing and reproduction of recorded data;
- manufacturing of chemical products and substances (including synthetic fibers);
- metallurgy,
- manufacturing of other means of transportation (including maritime ship building),
- furniture manufacturing,
- other industrial activities,
- machines and equipments repair, maintenance and installation;
production and supply of electric and thermal energy, gas, hot water and air - steam and air conditioned supply;
transport and deposit:
- terrestrial, water and air transportation, deposit and transport auxiliary activities, post and courier activities;
professional, scientific and technical activities (excepting R&D);
administrative and support services activities.


STATE AID CONDITIONS:

must not exceed the maximum admissible limit of the state aid intensity, as provided for in Annex 2 of H.G. 1680/2008;
it consists in granting non-refundable funds from the state budget, through the budget of the Ministry of Economy and Finance - General Actions;
it is not directly related to exported quantities, the setting up and managing of a distribution network or other usual export related expenses;
the aid does not favor the use of domestic over imported products;
it is not an operating aid;
the maximum aid level an economic operator can beneficiate of according to HG 1680/2008 is EUR 28.125 million (RON equivalent), for investments and new jobs created as a result of an initial investment in any of the first seven development regions of the country;
for investment and jobs created in the development region no. 8, Bucharest-Ilfov, the maximum aid level an economic operator can beneficiate of is EURO 22.5 million (RON equivalent).


STATE AID INTENSITY

state aid ceiling applies to the total aid where assistance is granted concurrently under several regional schemes or in combination with an ad-hoc aid, whether the aid comes from local, regional, national or Community sources;
where aid calculated on the basis of material or immaterial investment costs is combined with aid calculated on the basis of wage costs, the intensity ceiling laid down for the region concerned must be respected;
where costs eligible for regional aids are eligible in whole or in part for aids for other purposes, the common portion must be subject to the most favorable ceiling under the applicable rules;
regional investment aid cannot be cumulated with de minimis support in respect of the same eligible costs in order to circumvent the maximum aid intensities above mentioned.


De minimis aid = aid not exceeding Euro 200,000 (RON equivalent) for a period of 3 consecutive fiscal years.

 

the state aid intensity is expressed by the ratio between the aid updated gross value and the updated value of eligible costs. The eligible costs are updated to their value on the date of aid granting. Aids payable through installments are updated to the value held on the day of their granting;
for investments with eligible costs under EUR 50 million, the gross intensity of the regional aid can not exceed 50% of the initial investment due expenses or the wage costs with newly employed personnel calculated for a 2-year period;
for investments or jobs created in region no. 8, Bucharest - Ilfov, the maximum state aid intensity is 40%;
for big investment projects - eligible costs exceeding RON equivalent of EUR 50 million - the gross intensity is calculated by adjusting the regional ceiling, depending on the value of the eligible costs.


In order to avoid any artificial dividing of a big investment project into several subprojects, a big investment project is considered a single project when the initial investment is implemented by the same company or companies in a three-year period, and it represents a combination of fixed capital elements economically indivisible.

 

Gross intensity for big investment projects:

- for eligible costs not reaching the RON equivalent of EUR 50 million, the regional ceiling is applied;
- for that portion of eligible costs reaching between the RON equivalent of EUR 50 million and the RON equivalent of EUR 100 million, 50% of the regional ceiling is applied;
- for that portion of eligible costs exceeding the RON equivalent of EUR 100 million, 34% of the regional ceiling is applied;

The formula for obtaining the amount admissible for state aid for a project exceeding the RON equivalent of EUR 50 million is:

 

A=Rx(50+0,50B+0,34C)


where:

A - maximum state aid amount;
R - regional unadjusted ceiling according to the GUIDELINES ON NATIONAL REGIONAL AID FOR 2007-2013, published in the Official Journal of the European Union no. C54/2006, i.e. 50% for all development regions, excepting region number 8 (Bucharest-Ilfov) where it is 40%;
B - eligible costs reaching between the RON equivalent of EUR 50 million and the RON equivalent of EUR 100 million;
C - eligible costs exceeding RON equivalent of EUR 100 million.

 

For investments whose RON equivalent exceeds Euro 50 million, the total aid granted from all sources can not exceed 75% from the maximum aid that could be granted for an investment whose eligible costs have a RON equivalent of EUR 100 million, respectively the amount provided in art. 10 of the H.G. 1680/2008;
For companies operating in agricultural products processing and trade and having less than 750 employees and/or a turnover lower than Euro 200 million, the maximum aid intensity is 25% of the eligible costs of initial investment.


PROVIDER - The Ministry of Economy and Finance

 

DURATION OF THE STATE AID SCHEME: 5 years, respectively the period 2009-2013.

 

MAXIMUM AID SCHEME BUDGET: Euro 1 billion, with an average Euro 200 million budget, within the limit of the annual budget ceilings of the 5-year period.

 

ELIGIBLE COSTS:

 

I. for investments in material and immaterial assets

 

a. eligible costs for investments in material assets:

buildings for industrial production;
technical installations and machines;
other installations, equipment and industrial furnishing


b. eligible costs for investments in immaterial assets:

costs related to the transfer of technology, by acquiring copyright: patents, licenses, know-how or unpatented technical knowledge.

 


II. new job creation

 

a. wage costs with the newly employed personnel, calculated for a 2-year investment period:

gross wage
compulsory social insurance


METHOD OF GRANTING: allocation of non-refundable funds from the state budget through the budget of the Ministry of Economy and Finance.

 

GRANTING PROCEDURE:

 

Eligibility criteria: must be met cumulatively, when applying.

 

Eligibility criteria:

companies are registered according to Law no 31/1990 on trading companies republished, with subsequent modifications and completions; they realize investments in Romania;
companies intend to realize investments with a value higher than the RON equivalent of EUR 30 million and create at least 300 new jobs, as a result of the initial investment;
companies have no unpaid debts to the funds of the general consolidated budget;
companies are not subject to compulsory execution, bankruptcy, juridical reorganization, dissolution, operational closing, liquidation or other situations regulated by the law;
are not firms in difficulty;
there had been no state aid recouping decisions issued against them or, in case there had been, such decisions were executed according to the law in force;
when applying for state aid, the companies submit a viable investment plan and a technical-economic study made by a specialized firm, proving the economic efficiency of the investment by means of the indicators present in Annex 4 of HG 1680/2008;
investments are nor realized and new jobs are not created in the fields of activity in ANNEX 1 to HG 1680/2008, defined in accordance with the Classification of activities in the national economy;
no previous financing-agreement applications have been submitted by the same company for the same investment in order to be granted specific individual allocations under the present scheme.

 

Granting procedure for specific individual allocation:

 

I. Financing agreement:

in order for state aid to be granted, an agreement-in-principle application form and the justificatory documents stipulated in the H.G. 1680/2008, must be submitted to the Ministry of Economy and Finance; the application form is drew up in Romanian and bares the original stamp and signature of the company's legal representative;


Justificatory documents

- certificate issued by the Trade Register Office affiliated to the Court under the jurisdiction of which the applicant company has its registered office - in original; the following information is mentioned in the certificate: identification data, unique registration code, associates and legal representatives of the company, main field of activity and all secondary activity fields, company's lucrative facilities and the date of the last mention in the register, together with its object;
- approved annual financial situations according to the last accounting period - submitted in copy;
- the investment plan financing is applied for;
- technical - economic study elaborated by a specialized company, certifying the viability of the project applying for financing;
- tax registration certificate statuting that financial obligations towards the general consolidated budget had been paid, issued according to the law (for lucrative facilities inclusively) and submitted in original or legal copy;
- tax registration certificate regarding the fulfillment of payment obligations towards the local budget, issued according to the law for lucrative facilities inclusively and submitted in original or legal copy;
- affidavit on behalf of the company's legal representative that the company is not subject to compulsory execution, juridical reorganization, bankruptcy, operational closing, dissolution, liquidation or special administration; that the company does not have suspended activities or other similar situations regulated by law;
- affidavit on behalf of the company's legal representative that there had been no state aid recouping decisions issued against the company or, in case there had been, these decisions were executed according to the law in force;
- affidavit on behalf of the company's legal representative that the company has neither been, nor is being granted state aid on the basis of other regional schemes from other state aid providers for the same eligible costs of the initial investment for which it applied for state aid on the basis of the present scheme; an affidavit regarding the de minimis aid applied for/granted for the same eligible costs is also required;
- proxy signed and stamped by the legal representative of the applicant company, in case other person than the legal representative signs the application for the financing agreement-in-principle;
- copy of the identity card of the person empowered to sign the application for the financing agreement-in-principle;
- list of the documents submitted for obtaining the financing agreement-in-principle.

 

the applications will be analyzed and selected, in the limit of the scheme annual budget, considering the date and registration number of the documents;
the legal term provided for evaluating the application is of maximum 30 working days from the registration day;
following the evaluation of the agreement-in-principle application, the Ministry of Economy and Finance sends the solution to the applicant company.

 


The solution may be:

the financing agreement applicant enterprises selected for financing if eligibility criteria in the scheme are met, provided a more detailed checking;
a notice to the applicant specifying that the application for receiving the financing agreement-in-principle is incomplete, does not contain correct information, the accompanying documentation is incomplete or the provided information is not accurate. The applicant company has to complete the required documentation in maximum 10 working days from the day of receiving the notice after receiving the notice;
a rejection letter in case:
- criteria specified in HG 1680/2008 are not met;
- applications were submitted after the date the annual budget granted for the scheme had been consumed at;
- the term for completing the documentation was not respected.


III. Granting specific individual allocations

specific individual allocations are granted to selected applicants, after carrying out the partial or total eligible expenses of the investment project for which the financing agreement-in-principle was issued;
specific individual allocations are granted following the submission of a grant awarding application; the application must be accompanied by the document justifying the expenses and the list of the documents submitted;
the non-refundable installment is awarded by the Ministry of Economy and Finance after the procedure of examining on the spot the reality, legality and conformity of the financial-economic operations financing is applied for was completed;
applicant companies must begin the investment project the financing was applied for in maximum 4 months from the date when the financing agreement-in-principle was issued;
in case the applicant companies did not begin the investment project within this period, the agreement-in-principle is repealed;
the application for being awarded the first installment will be submitted after minimum 3 month period from the beginning of the investment project;
the actual installments transfer is made by the Ministry of Economy and Finance within maximum 45 working days from the registration of the application for non-refundable funds;
payment for project eligible costs cannot be covered by compensatory payments.