Hungary has always been a leader in economic development policies, including generous incentives programs for companies looking to invest or expand in the country. However, as an EU member state, Hungary’s incentives must adhere to European State Aid rules which restrict the amount of incentives that may be offered in regions with high GDP per capita. This means that for years, investments in the Budapest region have garnered little to no incentives support for job creation and capital expenditures.
In response to the COVID-19 downturn, the European Commission passed legislation to temporarily expand state aid to all regions of the EU. More information on that legislation can be found here.
Every EU member state has the authority to implement incentives under this expanded framework. By the end of April, over 100 programs were approved by the EU commission, most as subsidized loans or loan guarantees. But Hungary has gone a step further, budgeting HUF 50 billion (EUR 140 million) in cash grants for medium and large companies.
Unlike most cash grant programs, these grants are paid out in advance of the project to give immediate access to cash needed for the investment.
Which companies qualify?
This grant program is for manufacturers or business service centers. Additionally, applicants must have:
- Not have been in financial difficulty prior to the COVID-19 outbreak
- Experienced a decline of at least 25% in sales or orders in connection with the pandemic
- No insurance or other form of compensation for these losses
Are there additional requirements?
Yes, to qualify for the incentive, the company must:
- Invest at least EUR 150,000 by June 30, 2021
- Submit the application before the investment begins
- Retain its headcount (no new jobs are required) through the investment period, or at least through December 31, 2020
How much is the grant?
The grants range from 30% - 50% of the investment value, per the following schedule:
|Size of Investment||% of Grant|
|EUR 150,000 – 300,000||30%|
|EUR 301,000 – 500,000||40%|
|Greater than EUR 500,000||50%|
Under this program, the grant maximum is EUR 800,000. However, Hungary continues to offer cash grants and tax incentives under the standard state aid framework that may be more relevant to specific projects and circumstances.
For questions about this or other state aid programs, please reach out to our Site Selection and Incentives Advisory practice.
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Site Selection and Incentives Advisory
Assistance for businesses to realize economic development incentives.