New Hungarian aid scheme to tackle the effect of the current COVID-19 outbreak on economy

A new, temporary state aid scheme approved by the European Commission and started by the Ministry of Foreign Affairs and Trade – managed by HIPA Non-Profit Ltd. - would be available in Hungary in order to ease some economic issues caused by the current COVID-19 outbreak. The new scheme is aiming to improve competitiveness and liquidity of middle and large enterprises, and also to compensate for the losses incurred due to the current outbreak. The scheme would also promote new investment and support the maintenance of the jobs created in recent years. In case of new investment, up to 50% aid intensity and a maximum amount of 800 000 EUR would be available for enterprises as non-refundable grant in line with the specific commitments.

The budget of the scheme is 50 billion HUF. Aid under the scheme will be available until December 31, 2020, if the applicant enterprise commits to:

  • implementing an investment of a volume of at least 150 000 EUR until June 30, 2021; and
  • maintaining its base headcount (average headcount of the 12 months prior the application) until the end of the investment, but at least until December 31, 2020.

The applicant shall also verify or declare that:

  • it was not in difficulty on December 31, 2019, however, faced difficulties or entered in difficulty thereafter as a result of the COVID-19 outbreak,
  • its turnover or the volume its purchase order decreased at least by 25% as a result of the outbreak,
  • is not responsible for the economic downturn and has acted with reasonable care,
  • has no insurance covering its losses or its insurance does not enable to cover the losses in full,
  • the investment has not started prior application.

The amount of aid available are the following based on the investment volume – but shall not exceed 800 000 EUR:

  • 30% of the investment volume, if the investment volume is between 150 000 and 300 000 EUR,
  • 40% of the investment volume, if the investment volume is between 300 001 and 500 000 EUR.
  • 50% of the investment volume, if the investment volume is over 500 000 EUR.

The aid will be awarded by tender, and the call for applications will be available on the website of HIPA Ltd.

The new scheme may support enterprises still operating, but in immediate difficulty due to the current COVID-19 outbreak. If investment is considered viable to some extent, the aid obtained under the scheme may help in maintaining operations and decreasing unit costs of the enterprise. The three options available also enable enterprises to consider which obligation and subsequent aid amount are appropriate for them depending on the gravity of their situation.

Enterprises could also combine aid under the new scheme with any aid already awarded to them. The Aid under the new scheme, which is already approved by the European Commission would be available soon.

Based on the information received so far, the Hungarian Government considers the possibility of an aid scheme outside the rules of the Temporary Framework, enabling enterprises to apply for aid over 800 000 EUR. For this scheme, a new decree or the modification of an existing one would be necessary - also, the approval of the European Commission is necessary beforehand, which may take a few weeks.

For practical answers to key questions about the new scheme and other state aid questions, please contact our professional on the contact details below.

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