FINANCIAL AIDS FOR MAJOR INVESTMENTS

FINANCIAL AIDS FOR MAJOR INVESTMENTS

After having implemented, this summer, a State aid for companies which create new jobs in order to encourage the development of certain regions, the Romanian Government has recently passed Decision no. 807/2014; this Decision grants financial aids to companies making an initial investment in certain sectors of the economy. Such investment must have a stimulating character.

CONDITIONS

In order to receive a State aid, a company must make an initial investment in Romania. The “initial investment” is defined as an investment in tangible or intangible assets in order to create a new place for the development of the financed activity or in the fundamental change of the production process of an existing production unit or in the creation of a new unit. The tangible or intangible assets must be exploited exclusively by the company receiving the aid and the investment, including tangible and intangible assets, must be functional for at least 5 years from the date it was made. Companies investing in agriculture, mining, the production of electric and thermal energy, transports, communications, real estate transactions, gambling etc. are not eligible for such state aid. The abovementioned Government Decision only applies to aids stimulating companies, namely in the absence of such an aid the company would not have made the investment. A final condition is that the investment should not start before the issuance of the funding agreement. If the company starts the investment before receiving the funding agreement, the investment shall be considered non-eligible for the State aid.

As regards beneficiary companies, they must meet the following conditions:

• They must be registered in accordance with Law no. 31/1990


• They must make an initial investment in Romania


• The must not have any debts towards the State consolidated budget


• They must not fall under the category of companies in difficulty


• They must not be subject to an insolvency procedure, bankruptcy, judicial reorganization, winding up, operational closing, liquidation or temporary suspension


• They must not benefit from an other State aid for the same eligible costs


• The profitability of their turnover must be superior to 0, whereas new companies must have a share capital superior to 100.000 Lei.

AMOUNT OF THE AID

The total State aid plan is of 600 million Euros and the maximum annual budget is 100 million Euros. The maximum amount of the aid is 11.25 million Euros/company for companies investing in the Bucharest region between 2014 and 2017, and subsequently 7.5 million Euros for the period 2018-2020. Companies investing in the Western Region and Ilfov can obtain up to 26.25 million Euros, whereas investments in the other regions of the country can receive up to 37.5 million Euros. Funding agreements can be issued until December 31, 2020 and the payment of the State aid shall be done, based on these agreements, between 2015 and 2023. After the funding agreement is issued, companies are obliged to start the investment within 4 months. Thus, the aid shall be granted to companies after having made the eligible expenses (investments in tangible and intangible assets), in accordance with the funding agreement. Please note that the beneficiary shall have to provide itself 25% of the eligible expenses, either from its own funds or from an external funding, but never by another State aid.