On 6 September 2019, an amendment to Act
No. 72/2000 Coll., on Investment Incentives, took effect; the objective of the amendment is to focus public support of investment plans of businessmen on projects with higher added value. The amendment aims to increase the flexibility of interconnecting the investment incentive system with the current economic situation. This was achieved by transferring the conditions for subsidies from the act into a separate governmental decree. The governmental decree was approved on 26 August 2019 and it defines, among other things, for example the “higher added value”.
The most significant change brought by the amendment is, however, the change in the approval process of investment incentive granting which starts by the approval by a relevant municipality, ministry and finally the government. The government has the final say in the allocation of specific incentives. When approving the application, it should primarily take into account the calculation of the amount and justification of the benefit of the investment for the region and the state, including the impact on energy consumption and the environment.
The definition of an investment with higher added value is as follows:
- no fewer than 80% of employees with the place of work at the place of the investment have an agreed gross salary of no less than the average monthly gross salary in the region in which the investment is implemented; and
- in addition to the prescribed share of employees with university education,
a cooperation contract with a research organisation or a university will be required, and the applicant will have to spend no less than 1% of the costs for this cooperation; concurrently with this condition, it has to meet the condition of no less than a 10% share of employees with university education having the place of work at the place of the investment; or - the share of research and development employees in the total recalculated number of employees is no less than
2%; or - it must purchase machinery equipment for research and development in the amount of no less than 10% of the total investment.
Another change is e.g. the removal of the requirement for creating new jobs in manufacturing companies (instead of the original 20).
It will be more difficult to obtain investment incentives due to the amendment. As compared to the previous situation, incentives will no longer be provided to investors that meet the clearly defined criteria, but the approval process will involve the subjective element of an assessment by the government.
