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INVESTMENT AID

The Investment Aid program in Slovakia aims to encourage direct investments in less developed regions with high added value. Eligible investments include Industrial Technology Centers, SSCs, and more. The Ministry of Economy is the administrative body overseeing the program, with the Slovak government making final decisions on aid. The legal framework is governed by the Act on Investment Aid with aid granted from 2002 to 2011, supporting 118 projects and creating 42,731 new jobs.

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INVESTMENT AID

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  1. INVESTMENT AID

  2. WHAT IS INVESTMENT AID??? • OBJECTIVE: TO ENCOURAGE DIRECT INVESTMENTS -IN LESS DEVELOPED REGIONS -WITH HIGH ADDED VALUE • ELIGIBLE INVESTMENTS: INDUSTRIAL TECHNOLOGY CENTER SSC • ADMINISTRATIVE BODY: MINISTRY OF ECONOMY • FINAL DECISION ON AID: SLOVAK GOVERNMENT • LEGAL FRAMEWORK: ACT ON INVESTMENT AID

  3. INVESTMENT AID GRANTED IN 2002-2011 • 118 SUPPORTED PROJECTS • 6.37BILLION € OF INITIAL ELIGIBLE INVESTMENTS • 42.731OF DIRECT NEWJOBS • 1.26BILLION € OF AID GRANTED • 19,8% - AVERAGE AID INTENSITY • 29 ths EUR - AVERAGE AID PER JOB CREATED • 40% - SHARE OF TAX RELIEF FROM AID GRANTED

  4. INDUSTRY – MINIMAL REQUIRENTS TO APPLY FOR AID • NEW PLANTOREXPANSION • MIN. INVESTMENT TO LONG-TERMASSETS DURING 36 MONTHS • EUR 14 MIL., 7 MIL.or 3.5 MIL. • MIN. SHAREOF NEW MACHINERY - 60%, 50% or40%

  5. INDUSTRY – MIN. INVESTMENT & SHARE OF NEW MACHINERY

  6. TECHNOLOGY CENTER – CONDITIONS • - CENTER FOR INOVATIONS OF PRODUCTSAND PROCESSES • NEW CENTEROREXPANSION • MIN. INVESTMENT TO LONG-TERMASSETSEUR 0.5 MIL WITHIN MAX. 36 MONTHS(new technologyequipment, building, land, licenses ...) • AT LEAST 60%OF NEWLY CREATED JOBS FOR EMPLOYEES WITH UNIVERSITY EDUCATION

  7. SHARED SERVICE CENTER – CONDITIONS • - center whichprovides services with a high added value, employs qualified experts in SOFTWARE DEVELOPMENTCENTRE, EXPERT SOLUTIONCENTRE, HIGH-TECH REPAIR CENTRE, CUSTOMER SUPPORT CENTRE, HEADQUARTERS OF MULTINATIONAL CORPORATIONS • NEW CENTEROREXPANSION • MIN. INVESTMENT TO LONG-TERMASSETSEUR 0.4 MIL WITHIN MAX. 36 MONTHS(new technologyequipment, building, land, licenses ...) • AT LEAST 30%OF NEWLY CREATED JOBS FOR EMPLOYEES WITH UNIVERSITY EDUCATION

  8. AID IS CALCULATED FROM... • ELIGIBLE ARE COSTS OF: • LAND • BUILDINGS • NEW MACHINERY & TECHNOLOGY EQUIPMENT • LICENSES &PATENT RIGHTS • OR • WAGE COSTS OF NEW EMPLOYEES DURING 2 YEARS

  9. FORMS & INTENSITY OF THE AID • INCOME TAX RELIEFfor10taxperiods • - PREFERRED FORM OF THE AID • ------------ • CASH GRANT(paid ex post) • CONTRIBUTIONS ON NEW JOBS (paid ex post) • DEPENDS ON SITUATION IN THE STATE BUDGET, USUALLY APPLICABLE ONLY IN DISTRICTS WITH HIGHER UNEMPLOYMENT • ----------- • THE TOTAL AIDIN ALL FORMS CANNOT EXCEEDTHE MAX. INTENSITY IN THE DISTRICT

  10. MAX. AID – INDUSTRY

  11. MAX. AID - TC & SSC:

  12. MILESTONES WORKS ON PROJECT CAN START EVALUATION SARIO DRAFT OF AID OFFERMoE AID OFFERMoE APPROVAL GOVERNMENT 30 days 10 days 20 days 30 days 30 days SUBMISSION TOMoE STATEMENT MoE EVALUATION MINISTRIES ACCEPTANCE INVESTOR

  13. EXAMPLE INDUSTRIAL INVESTMENT :20 M EUR , 300 NEW JOBS REGION: DISTRICT POPRAD (ZONE C)– MAX. INTENSITY38% MAX. AID = 38% * 20 =7,6 M EUR MAX. AID IN PART. FORMS: 10 y TAX RELIEF = 3,7M EUR CASH GRANT = 12% * 20 =2,4 M EUR CONTRIBUTIONS ON NEW JOBS= 5ths EUR * 300 =1,5 M EUR

  14. EXAMPLE SSC PROJECT:1 M EURINVESTMENT, 150 NEW JOBS (WAGE COSTS= 150*24 MONTHS*1000 Eur= 3,6 M Eur) REGION: DISTRICT B.BYSTRICA (ZONE D)– MAX. INTENSITY40% MAX. AID = 40% * 3,6 =1,44 M EUR AID IN PART. FORMS: CONTRIBUTIONS ON NEW JOBS= 5ths EUR * 150 =0,75 M EUR TAX RELIEF = 0,69 M EUR(BASED ON CALCULATION)

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