The Development Law is an institutional framework for investment project support schemes, which are submitted by companies or groups of enterprises for evaluation and approval. The Development Law aims mainly at defining the investment, development and industrial policy of the Greek state.
Very recently, the new Development Law 4887/2022 (replacing Law 4399/2016) entitled “Greece – Powerful Growth” was adopted by the Greek Parliament (Government Gazette Α’ 16/04-02-2022). Its purpose is to promote the economic development of Greece through the acceleration of procedures and the granting of incentives to targeted activities, in order to achieve the digital and technological transformation of enterprises, the green transition, the creation of economies of scale, the support of innovative investments and those seeking the introduction of new technologies of “Industry 4.0”, robotics and artificial intelligence, the enhancement of employment with qualified personnel and the support of new entrepreneurship. This law will constitute in the coming years the basic institutional framework for the provision of state aid to private investments in our country.
Development Law – Key innovations
With the new development law, thirteen new state aid schemes with thematic targeting are introduced, instead of a horizontal approach, which will allow the business community to design, develop and implement its initiatives with significant and modern forms of investments in all sectors of the Greek economy. These include important development sectors such as digital and technological transformation, research, innovation, “New Entrepreneurship”, business extroversion, strengthening tourism investments and the green transition.
With regard to technological modernization, the investment projects will concern the technologically upgraded existing units and will introduce new digital functions and processes, combining production methods with modern information and communication technology. With regard to the green transition scheme, the investment projects will have as object the protection of the environment, provided that expenditure is implemented for energy efficiency and environmental protection measures with the ultimate goal of environmental upgrading of businesses. The schemes regarding entrepreneurship will have as object the support of young entrepreneurs operating in specific sectors of the economy, the coverage of the costs of setting up companies and the provision of incentives to enterprises aiming at penetrating new foreign markets by exporting their products or services.
In addition, the procedures for the evaluation, inclusion and control of investment projects are expected to be faster and more efficient, since part of the procedures will be entrusted to the private sector (certified auditors) in an effort to substantially speed up procedures and deal with enhanced bureaucracy. In particular, each investment project with a budget of more than EUR 700,000,000 will be assigned for evaluation, integration and monitoring of the implementation of the physical and financial object to a private auditor. For investment projects of less than the aforementioned amount, the investor will be entitled to choose either an auditor or the competent services of his region. If the services of the region are chosen, there will be an explicit provision that the service will have to evaluate the investment proposal within 45 days and if this deadline passes, then automatically the application will be forwarded to an auditor. The Ministry of Development and Investments aims to approve the investment plans within a time period not exceeding 60 days, contrary to the 600 and more days that was the average time in previous years.
Forms of aid
Regarding the forms of aid, the new development law will maintain the same system as law 4399/2016 by providing as aid to investment projects: a) grant, b) leasing subsidy, c) subsidy of the cost for created employment and d) tax exemptions, and also introducing another offered incentive, i.e. e) business risk financing through a participation fund, which will only apply to the “New Entrepreneurship” scheme.
- The Grant refers to the provision by the State free of charge of an amount to cover part of the aided costs of the investment project. The grant for each investment will reach up to 70% of its budget – much higher than that in force in the previous development law, which amounted to up to 55%. In any case, the maximum amount of the subsidy will be €10,000,000 per investment, when the maximum under the previous law was € 5,000,000.
- The Leasing Subsidy refers to the coverage by the State of part of the leasing installments, which is granted for the acquisition of new mechanical and other equipment, is determined as a percentage of their acquisition value and is included in the paid installments. The subsidy may not exceed seven (7) years and the time limit begins from the date of completion of the investment.
- The Subsidy for the Cost for Created Employment refers to the coverage by the State of part of the wage costs of the new jobs created and linked to the investment project and for which no other state aid is received. It is calculated for two (2) years from the creation of each position.
- The Tax Exemption refers to the exemption from payment of income tax on the profits before tax, which arise under the relevant tax legislation, from the total activities of the enterprise, after deduction of the tax of the legal person or legal entity, corresponding to the profits distributed or assumed by the shareholders. The amount of the tax exemption is calculated as a percentage of the value of the aided expenses of the investment project or the value of the new mechanical and other equipment, acquired through leasing, and constitutes an equal reserve, which is kept in a separate account in the financial statements.
- Business Risk financing, for the “New Entrepreneurship” scheme, refers to subsidy for the interest of subordinated loans or subsidy for the insurance costs of high risk loans paid to the credit institutions.
The forms of aid referred to in points (a), (b), (d) are provided separately or in combination and are taken into account for the purpose of determining the total amount of aid for each investment project. On the other hand, the type of aid in case c is granted independently and only for the expenses of the wage costs of new jobs.
Beneficiaries of the above forms of aid are the investment bodies that are established or have a branch in the Greek Territory at the time of commencement of works of the investment plan and have one of the following forms: a. Commercial Company, b. Cooperative, c. Social Cooperative Enterprises, Agricultural Cooperatives, Producer Groups, Urban Cooperatives, Agricultural Partnerships, d. Companies under establishment or under merger, with the obligation to have completed the publicity procedures before the commencement of works of the investment plan, e. Joint ventures that carry out commercial activity (provided that they are registered at the General Commercial Registry), f. Public and Municipal enterprises and their subsidiaries under certain conditions.
Based on the size of the above entities, the minimum amount of the eligible cost of investment projects is defined between EUR 50,000 to 1,000,000.
It is obvious that the Development Law “Greece – Powerful Growth”, following the definition of new development goals and policies, attempts to be a particularly attractive financing tool that will facilitate the implementation of private investments in modern sectors of the economy, thus making Greece a strong and attractive pole of investment. In combination with the other forms of financing of private investments, it aims to contribute to the faster transition of the Greek economy towards a new model of development, by attracting investments that will promote, in addition to general entrepreneurship, the strengthening of salaried work and the reduction of the “informal economy”, the exploitation of modern forms of technology and digitalization, the renewable energy sources and generally the increase of the investment capital of the economy, along with the improvement of its competitiveness at an international level.
It remains to be seen in practice if with the simplification of the process and the greater involvement of the private sector (compared to the previous development law), bureaucracy will be reduced and the new time frames will be met.
Published on forin.gr
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