TAX NEWS - DECEMber 2009

Hungary Tax: Government announces environmental grants measures

The Hungarian National Development Agency recently announced new calls for grant applications to support waste recovery and environmental technology development projects and has indicated that the year-end deadline for grant applications for certain high employment projects may be extended and funds significantly increased.


Grants for waste recovery/environmental technology

The "Grant for Waste Recovery Technology Development" aims to support existing and new waste recovery activities carried out by companies to facilitate the recovery of certain substances in selectively collected waste and to aid developments aimed at exploiting the energy content of waste. The "Environmental Technology Development Grant" aims to help companies increase their competitiveness and efficiency by improving their operations and technology with the best exploitation of environmentally friendly technology and procedures. The objective is to reduce the burden on the environment through technological developments implemented by these companies.

The grant amount is calculated based on eligible costs (i.e. project expenditure). For both the waste recovery and environmental technology development grants, eligible costs include those related to: the purchase of new tools; infrastructure and real estate construction projects; production licensing and know-how; information technology development; marketing; courses on sustainability; and implementation of quality, environmental and other management systems.

Both grants are available throughout Hungary. The waste recovery grant is capped at HUF 200 million for projects in Budapest or Pest County (Central Hungary) and is maximized at HUF 1 billion for all other areas in country. The environmental technology grant is capped at HUF 125 million irrespective of where in Hungary the project is located.

The grant application period is scheduled to run from 1 March 2022 to 30 April 2022 for the waste recovery grant and between 1 March 2022 and 30 August 2010, but several months are required to prepare an application file.


High employment impact projects

The "Complex Funding of High Employment Impact Projects" funds projects where the total eligible expenditure reaches HUF 1.5 billion and at least 25 new jobs are created. The National Development Agency has communicated its intent (not yet final) to extend the submission deadline of 31 December 2021 and increase available funds for future applicants. Grants thus far include projects in the pharmaceutical, automotive and electronic industries, with applicants receiving between HUF 250 million and HUF 1.4 billion. Applicants from other industries are welcome under the flexible and investor-friendly grant application rules.

The grant amount is calculated based on eligible costs (i.e. project expenditure), with eligible costs comprised of: the 24-month total of the wages and contributions of new hires; purchase of new tools; infrastructure and real estate construction projects; real estate rent for a maximum of 12 months; licensing and know-how; information technology development; marketing; HR development; consultancy services; and implementation of quality, environmental and other management systems.

The grant is available throughout the country, except in Budapest and Pest county. Representing one of the highest grant amounts available for development investment projects in Hungary, the grant amount is capped at HUF 1.5 billion (not to exceed 35% of the project's eligible expenditure).

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