New developments in investment incentive legislation
The senate has approved an amendment to the Investment Incentives Act that should simplify and speed up the investment incentive approval process. A related government decree that changes the permissible level of public aid in the regions of cohesion in the Czech Republic from 2024 was published in the Collection of Laws at the end of November. We provide details below.
The biggest change concerning the approval of applications for investment incentives is that after four years they will return into the competence of the Ministry of Industry and Trade (MIT). In cooperation with other ministries, the ministry will assess compliance with the conditions and obligations set out in the act and other legislation and issue decisions accordingly. At least for some instances, this should eliminate the biggest weakness of the current system of investment incentives, i.e., the need for government approval of each project, leading to delays in approval and the unpredictability of the whole process for investors.
Even after this amendment, the government will remain responsible for approving strategic investment projects for which part of the investment incentives is drawn in the form of cash grants. At the same time, the amendment will allow the approval of large projects above EUR 110 million to be subject to different EU regulations than has been the case so far. This will make it possible to use special rules, e.g., to support key investments important for the transformation of the EU economy within the framework of the Investment Incentives Act.
The amendment is now awaiting presidential approval and will take effect on the fifteenth day after its publication in the Collection of Laws.
In connection with this year's changes to the EU rules, the government decree on the permissible level of public aid in the regions of cohesion has been updated. Reacting to inflation, the threshold for notifying projects to the European Commission has been increased from the current EUR 100 million to EUR 110 million. Similarly, the threshold for large investment projects has been increased from the current EUR 50 million to EUR 55 million.
Another important change is the introduction of a maximum public aid amount linked to the cohesion region and the aid intensity applicable to that region.
Thus, projects whose investments exceed the threshold of EUR 110 million and the maximum public aid amount set by the government decree for the relevant cohesion region will be subject to individual approval by the European Commission.
The government decree will be effective from 1 January 2024.