November 2021 - In April 2021, the European Commission approved the revised Regional Aid Guidelines ("RAG"). The purpose of the new rules is to enable EU Member States to support the least favoured regions and to address disparities in economic wellbeing, income and unemployment.
In July 2021, the European Commission approved a Czech regional aid map for 2022-2027, which specifically names the regions eligible for regional investment aid and establishes the maximum permitted aid intensity (expressed as a percentage of eligible investment costs).
The rules were further implemented at a national level via Czech government decree No. 428/2021 Coll., and will be in force between 1 January 2022 and 31 December 2027. Below we provide an overview of the new regulatory framework.
The following Czech regions will be eligible for regional investment aid:
- The Severozápad, Severovýchod, Strední Morava and Moravskoslezsko regions, with a maximum intensity of between 30 and 40 percent of eligible investment costs. These are among a category of most disadvantaged regions with a GDP per capita remaining below 75 percent of the EU average and are eligible for aid under Article 107(3)(a) TFEU (the regions are formally referred to as "a" areas). In comparison with existing government policy, the maximum aid intensity in these regions is set to increase by 5 to 15 percent from a former 25 percent of eligible investment costs.
- The Strední Cechy, Jihozápad and Jihovýchod regions, with a maximum intensity of between 15 percent and 25 percent of eligible investment costs. These regions are no longer considered as most disadvantaged regions (as above), but still qualify for significant aid intensity as so-called "c" areas (under Article 107(3)(c) TFEU). Higher aid intensities will be on offer during the first half of the period and in the areas bordering "a" areas. In these regions, the maximum aid intensity remains unchanged or decreases in comparison with existing government policy.
In both above-listed regional categories, the maximum aid intensity may be increased for the purposes of initial investments made by medium-sized or small enterprises with eligible costs up to EUR 50 million. In such an event, the maximum aid intensity may be increased by:
- 10 percentage points for investments made by medium-sized enterprises; and
- 20 percentage points for investments made by small enterprises.
For larger investments between EUR 50 million and EUR 100 million, the maximum aid intensity for eligible costs exceeding EUR 50 million (but below EUR 100 million) is 50 percent of the value of the maximum aid intensity for eligible investment costs in the relevant region.
State aid for large investment projects with eligible costs exceeding EUR 100 million may be granted only as individual investment aid on the basis of an approval by the European Commission. The maximum aid intensity for eligible costs exceeding EUR 100 million is 34 percent of the value of the maximum aid intensity for eligible investment costs in the relevant region.
The new rules will apply to requests for regional aid submitted after 1 January 2022, as well as to those requests submitted earlier where a decision on granting regional aid was not issued by 31 December 2021.
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.