On 20 June 2018 the Slovak government approved a new government regulation, which specifies the conditions for granting investment aid (the “Regulation”). The Regulation will enter into force on 1 July 2018 and will enable the Slovak government to respond more flexibly to the current needs of investors. The Regulation completes the new Act on Regional Investment Aid that came into force as of 1 April 2018, and introduces several major changes to the process of granting investment aid in the Slovak Republic. We have outlined the most important changes below:
Classification of regions into Zones A-D
For the purposes of differentiation between the conditions for granting aid, the Regulation introduces a classification of regions into Zones A-D. For inclusion within the relevant zone, it will be necessary to assess the unemployment rate within the district in which the investment is primarily realised. The weighted unemployment rate average must also be considered and analysed in the context of the respective figures in the neighbouring districts, thereby preventing neighbouring districts having diametrically different conditions for the provision of the investment aid.
Removal of number of jobs requirement
The granting of investment aid will no longer require the investor to formally guarantee the creation of a minimum number of jobs in the case of industrial production investment. This is with the exception of requests for “contribution for newly created jobs” type of aid.
Simplification for obtaining aid in priority areas
The Regulation determines the priority areas of the investment with a focus on supporting the more sophisticated technologies (e.g. 3D printers, autonomously cooperating robots etc.). The conditions for obtaining aid will be simplified in case of the priority areas (e.g. half of the minimum eligible costs compared to other areas). The direct grant will no longer be provided as a form of aid in the case of the industrial production investments in the Zone A (mainly western Slovakia), with the exception of priority area investments.
New conditions for investments in technological and shared service centres.
The Regulation introduces a new condition for investments in the technological and shared service centres. Employees must be paid with a higher wage compared to the average wage in the district in which the investment is primarily realised.
The Regulation is intended to help ameliorate the current issues confronting the less developed regions of Slovakia and advance sophisticated technology investments within the country.