Eligible Costs of the Investment

Eligible costs of the investment

The eligible costs of the investment, which are the basis for the calculation of the maximum amount of incentive that may be paid to a company in accordance with these Instructions, shall be established on the basis of the application of an applicant and the following restrictions:

1. General restrictions

- The costs of the investment (the costs of tangible and intangible investments, the costs of new jobs calculated for two years) shall be eligible only if they are directly related to the investment project, and required for the implementation of activities arising from the investment project (or activities which are the essence of the investment project). - The costs of VAT and land use change compensation, and other taxes and charges (except the public utilities charge, and contributions related to the payment of salaries) shall not be deemed eligible costs.

2. Restrictions regarding investments in tangible fixed assets (tangible investments):

- The purchase of land and buildings shall only constitute an eligible cost if activities to which other eligible costs, which are subject to co-financing, are carried out on/in them. - The purchase of lands and buildings shall not constitute an eligible cost except in cases of purchasing lands and buildings between relatives of the first, second, and third order of succession or between a natural person who is a sole trader and his/her company or between partners in a company and the company. - The share of land where the buildings are located or anticipated shall be recognised as an eligible cost for land purchases. The part of land which is a part of the eligible costs shall be determined on the basis of construction documents and/or an extract from the land register, and the actual use of land. If the value of the land directly below the building cannot be determined on the basis of a purchase contract, the project company must submit an appraisal of the land approved by a court appraiser, which shows the value of the land directly below the building. - The purchase of land may represent a maximum of 25 per cent of the declared eligible costs. - Construction works shall only be deemed eligible costs if they refer to buildings in which production or the research or service activity will be carried out. - Construction works shall not be deemed eligible costs if they are carried out by relatives one, twice or three times removed, or by a natural person who is a sole trader, or by partners in a company for that company. - Only the purchase of new fixed assets shall be deemed eligible costs. - The costs of leasing land and buildings also belong among the eligible costs of material investments but in this case the lease agreement must be concluded for at least five years after the expected date of the completion of the project for a large business and three years for small and medium-sized businesses. - The costs of a lease in the form of a financial lease with the obligation of the purchase of assets following the termination of the agreement shall be taken into account when leasing equipment. The lease must be carried out according to market conditions. Only the lease of new equipment shall be deemed an eligible cost. - The costs of the purchase of passenger, freight, and multi-purpose vehicles shall not be deemed eligible costs. 3. Restrictions regarding investments in intangible fixed assets (intangible investments):

- the costs of intangible investments (purchase of patents, licences, know-how, and non-patented technical knowledge) may amount to a maximum of 30 per cent of the eligible costs on the whole investment. - Intangible investments must be treated as depreciable assets. Furthermore, they must be purchased from the third-party according to the market conditions. They must be included among the company’s fixed assets, and must remain with the large enterprise that received the subsidy for at least five years, and at least for three years with small and medium-sized enterprises

4. Restrictions regarding costs in relation to the creation of new jobs:

- The eligible costs of new jobs, which must be created directly with the investment project, shall be taken into account for a period of up to two years, and must actually be paid by the project company regarding the related employment (i.e. the costs of gross salaries before taxes, and compulsory social security contributions).

5. Other restrictions regarding eligible costs

- In incentives granted for significant changes in the production process, eligible costs must exceed the amount of the amortisation of assets in the last three financial years related to the activity that is to be modernised. - In incentives granted for the diversification of an existing business unit, eligible costs must exceed the book value of assets to be reused, as recorded in the financial year prior to the commencement of works, by at least 200 per cent.