All Things Newz
Law \ Legal

State Aid For Investments In The Manufacturing Industry – Investment Strategy

To print this article, all you need is to be registered or login on

  1. Overview

Romania has recently launched a State aid scheme for the purpose
of encouraging investments in the manufacturing industry, with
view, on the one hand, to overcome current extensive labour
shortages and the diminished trade flows to and from Ukraine caused
by the armed conflict therein, and, on the other hand, to
facilitate access to new international markets.

Specifically, Government Decision no. 959/2022 on the
establishment of a State aid scheme providing grants for
investments in the manufacturing industry (the
Scheme”) proposes measures to
stimulate the Romanian economy in terms of value chain development,
with focus on two lines of action:

  1. supporting economic operators in Romania to develop the
    production potential for materials, products, equipment and/or
    services in demand on the market, by ensuring the necessary sources
    of financing and production capacities;

  2. attracting new investments and developing production capacities
    to increase the resilience of the Romanian manufacturing industry
    and to ensure the competitiveness of Romanian industrial products
    on international markets.

The scheme is issued pursuant to Regulation (EC) no. 651/2014
declaring certain categories of aid compatible with the internal
market in application of Articles 107 and 108 of the Treaty on the
Functioning of the European Union and complies with the maximum aid
intensities laid down therein and with the regional aid map
approved by the European Commission for Romania for the period

The Scheme is therefore not subject to European
Commission’s approval, yet Romania will submit it to the
Commission for information purposes.

  1. Content

The measures consist of aid for regional development in the form
of grants for greenfield investments or for investments in favour
of a new economic activity, which may concern:

  1. establishing a new production unit;

  2. expanding the capacity of an existing production unit;

  3. diversifying the production unit towards products not
    previously manufactured therein;

  4. a fundamental change in the overall production process of an
    existing unit; or

  5. the acquisition of assets directly linked to a production unit
    which is closed or would have been closed had it not been
    purchased, under certain conditions.

The maximum Scheme budget is of EUR 300 million, with the
maximum average annual budget being of EUR 150 million.

The amounts thus granted under the Scheme may be used for the
purpose of financing the costs of investments in (i) tangible
assets (e.g., land, buildings, machinery, or equipment) and
intangible assets (e.g., patents, licences, know-how or other
intellectual property rights), as well as (ii) a two-year
estimation of wage costs (including taxes and contributions
thereof) to be incurred for the jobs generated as a result of the
investment, or (iii) a combination thereof.

The assets (i) must be new, except in case of small and
medium-sized enterprises (“SMEs”) and
in case of purchasing an existing unit, (ii) must be exclusively
exploited by the beneficiary in order to achieve the investment
objectives for which the financing was requested, (iii)  must
be kept in the patrimony of the beneficiary and remain associated
with the investment, in the same region, for a period of at least 5
years from the completion of the same (or 3 years in case of
investments carried out by SMEs) and (iv) must be purchased in
market conditions.

In addition, costs related to the leasing of tangible assets may
also be taken into account,  provided that (i) as regards land
and buildings, the lease continues for a period of at least 5 years
in case of large enterprises, and respectively 3 years in case of
SMEs, calculated from the completion of the investment project, and
respectively (ii) as regards the leasing of plant or machinery, the
contract is a financial lease and contains an obligation for the
beneficiary to purchase the asset at the expiry date.

As regards intangible assets, for large enterprises the costs
are eligible only up to a 50% threshold of the total eligible costs
of the greenfield investment.

  1. Eligible beneficiaries

Eligible beneficiaries may be SMEs and large enterprises,
existing or newly established, provided that the same, or by case
their projects, meet a set of criteria as of the application date,
of which:

  1. to be duly registered in accordance with Romanian laws;

  2. to not have outstanding debts to the state budget;

  3. not to be considered enterprises in difficulty;

  4. not to be under insolvency, bankruptcy, judicial
    reorganisation, etc.;

  5. not to owe any amounts under a State aid recovery

  6. at least 10% of the value of the project to represent green

In addition, the existing companies must:

  1. have a return on turnover greater than zero in one of the last
    3 completed financial years;

  2. have positive equity in the last completed financial year;

  3. have a minimum subscribed share capital of RON 100,000
    (approximately EUR 20,000) paid up in accordance with the law;

  4. make investments with a minimum value of EUR 3 million.

The estimated number of undertakings to benefit from regional
State aid under the Scheme is 30 beneficiaries.

  1. Regional intensity

State aid is granted for greenfield investments made by both
SMEs and large enterprises in all regions of Romania, except for
Bucharest and certain localities in the Ilfov County.

Nonetheless, for investments in favour of a new economic
activity, large enterprises may benefit from aid also with respect
to certain localities in the Ilfov County.

Regional aid intensity ranges between:

  1. 30% – 60% for large enterprises;

  2. 40% – 70% for medium-sized enterprises; and

  3. 50% – 80% for small enterprises.

Nonetheless, the maximum value of aid to be obtained is related
to large investment projects and amounts up to EUR 60 million.

Grants may be cumulated with any other State aid covering
different identifiable eligible costs, or even the same eligible
costs, in the latter case provided that the cumulated amount of aid
does not exceed the maximum regional intensities under the

On the other hand, the beneficiary must provide a financial
contribution of at least 25% of the eligible costs, either from its
own resources or from external financing, in a form which is not
the object of any other public aid.

  1. Status and implementation

Financing agreements under the Scheme may be issued by the
Ministry of Economy until December 31, 2023. State aid will be paid
during the period 2022-2027 on the basis of the financing
agreements thus issued and with the observance of the annual budget
allocated to the Scheme.

According to the provisions of the Scheme, the registration
period for applications will be communicated by the Ministry of
Economy on its website at least 30 working days before the opening
date of the sessions.

At present, a draft applicant’s guide is under public
debate and is pending adoption.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

Source link

Related posts

Former Enforcers Clash Over Cooperating With FBI – Antitrust, EU Competition

Horace Hayward

United States: Registered In-House Counsel Is Not An Option For The Government – Allen Matkins Leck Gamble Mallory & Natsis LLP

Horace Hayward

The Court Of Civil Appeal Quashes Judgement Of Commercial Division Of Supreme Court In Record Time On The Day Of The Appeal Hearing In Mauritius – Trials & Appeals & Compensation

Horace Hayward