| GREEK INVESTMENT INCENTIVES LAW 3299/2004
Investments in renewable energy sources are among the most popular chosen activities of Investment Incentives Law. The power station units dealing with renewable energy sources are subsidized up to 40% of the total cost of the investment.
Selas is able to take over the process of applying for incorporation to the Investment Incentives Law. For further information, please contact us.
A summary of the Greek Investment Incentives Law 3299/2004.
During the last decade Greek economy has been under inspection by the biggest investment companies worldwide, and has usually been on the papers of foreign financial magazines. The out coming statistics confirm that Greek economy is running through a magnification way leading to the developed European economies and to a place with growing business opportunities. Individual investments in Greece are facing remarkable increment. In 1994 till 1997 the average increment was 6% per year and has been stabilised to 9% from 1998 till now. This important increment is closely related to the purification and the development of the Greek economy, the general improvement of its basic features, the investment of foreign capitals into the Greek market and finally, the prospects for further development during the next years.
Due to these advancements, there has been a necessity for a reform of the Greek Law 2601/98 to the recent economical situations. In 2005 the Investment Incentives Law 3299/2004 was put in force under the title: “Motives for the individual investments for the economical development and the regional approximation”. This Law was reformed in 2007 and has been in force since January.
According to the new Investment Incentives Law, the minimum limit of affiliation investments is reduced to 100.000 €. What is more, enterprises having business activities are affiliated in the intensives system. Additionally, investor’s own participation is reduced to 25%. An additional percentage of 15% in total is added to mass media subsidies. Finally, special exemptions are offered to investments that reach more than 100.000.000 €.
Basic targets of the new Investment Incentives Law 3299/2004:
- The encouragement and the boost of enterprise
- The improvement of the competitiveness of our products and services, emphasizing the innovator activities and the high extension value products.
- The expansion and (the) transformation of the production basis.
- The balanced regional development.
- Employment increase.
- Environmental protection, energy saving and reinforce of technological substructures.
Especially now, the new Investment Incentives Law institutes five motive categories, in order to provide subsidies and endowments. The Law preserves the philosophy of the areas, abolishes the connection between the subsidies and employment places, as well as the distinction between new and old companies referring to motives and it sets maximum reinforcement up to 55%.
Kinds of reinforcement
The following kinds of reinforcement are provided to the investment programs and plans, as before (article 1, paragr.1).
- Cash grant, which covers part of the expense for the investment project by the State.
- Leasing subsidy, which covers part of the payable instalments by the State relating to a lease, which has been entered for the use of new mechanical and other equipment; the maximum duration of the subsidy is 5 years.
- Tax exemption. This incentive involves exemption from payment of income tax on non distributed gains from all company activities that involve effectuation of an investment scheme or acquisition of mechanical equipment by leasing, for the first 10 years following completion of the investment, through the creation of a tax exempted reserve.
- Cash grant for the expenses of wages relating to the employment created by the investment and referring to the first two years from the completion of the investment.
Kinds of expenditure that are reinforced
The investment plans are reinforced for the following expenditures:
- Construction, extension, modernization of the buildings, when the ground of the installation belongs to the investor.
- Purchase of vehicles, for the transportation of products and materials, refrigerators.
- Purchase of supply, installation of equipment, quality control equipment.
- Purchase of know-how transfer.
- Purchase of computer supplies and software, which cannot overcome 60% of the entire investment plan.
- Purchase of advisers payments, which cannot overcome 8% of the entire investment plan.
Budget of investments plans and percentages of the individual participation
The minimum budget of investment plans is separated into the following company categories:
- Big scale companies: 500.000,00 € (a big scale company is the one with over 250 employees, the annual banking business is over 50.000.000,00 € and the annual balance-sheet is more than 43.000.000,00 €).
- Medial scale companies: 250.000,00€, have less than 250 employees. The annual banking business is less than 50.000.000,00 € and the annual balance sheet is less than 43.000.000,00 €.
- Small scale companies: 150.000,00€, have less than 50 employees. The annual banking business and the balance sheet is less than 10.000.000,00 €.
- Very small companies: 100.000,00€. They have 0 to 10 employees. The annual banking business and the balance sheet is less than 2.000.000,00 €. It follows the independence criteria.
- Totally, for the same productive unit 20.000.000,00€.
Investor’s own participation (capitals and banking loan) in any kind of reinforcement is analyzed below:
- For investments of subsidy / subvention of financial hire, the capitals must be at least 25%. The other amount is covered (individual participation and endowment are not included) by banking loan.
- For tax exemption investments or endowment of new employment positions, investor’s own participation must be at least 25% and it can be covered either with individual capitals or with banking loan.
The duration of the investments
It must be noted that according to the Law, the time limit for the completion of the investment can be extended up to 2 years, only in the case that the related request takes place in 6 months time, from the end of the deadline, when 50% of the investment has been completed.
Payment of subsidies
The Law provides for the conditions, terms and limitations, which relate to the possibility of using a bank loan.
1) Payment of cash grant:
The payment of the subsidized amount is made with instalments as follows:
- Payment of 50% of the cash grant amount is done after the completion of 50% of the investment and verification by the competent monitoring authority of this fact and of the compliance of the investor to the terms of the decision approving the investment.
- The competent monitoring authority of the completion and commencement of the productive operation of the investment make payment of the remaining 50% of the cash grant amount after verification. Drawing of the funds is made within 5 months.
- There is the possibility of a lump sum advance (as part of the total subsidy), which will not exceed 30% of the approved by the relevant decision cash grant, if a bank guarantee is submitted in an amount equal to the advance plus 10%, issued by a bank which is established and operates legally in Greece.
The subsidy is paid directly to the investor or directly to the financing bank, which granted a short-term loan to the company, which carries out the investment plan.
2) Payment of leasing subsidy:
Payment is effected after the mechanical equipment etc has been put in place and verified. An initial payment of 50% is made until the end of the completion period provided for in the decision approving the investment. The remaining amount is paid after the lapse of the completion period, provided that the completion of the investment and the commencement of operation are verified.
3) Payment of cash grants for wage expenses:
Payment is effected every six months, after a relevant application of the investor.
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