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New law on investment promises tax relief

14 December 2010 / 09:12:15  GRReporter
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The Ministry of Economy and Regional Development has introduced a new law on investment in Greece in the most difficult moment of the economic life of the country. This time, besides the known funds in support of small and medium enterprises the Ministry came up with a common program in which tax benefits are the main incentives to develop new business or expand an established one. The exact budget of the investment law is not yet clear but the rule will be three euros tax relief for every euro of state grant.

The companies with approved projects will have the opportunity to choose between direct grant for funding (the amount of which is defined in the law on geographical base) or tax relief for the next six to eight years of operation. A financial advisor from the Ministry of Economy and Development clarified for GRReporter that the so-called "smart subsidies" could apply depending on the sector in which a company operates. In this way the company is able to use the maximum amount approved for the project by combining direct funding with tax relief within the total approved amount of state aid. The tax relief for the approved projects of new enterprises starting business in 2011 is for eight years. For companies that already have an operating business the program provides tax relief for the next six years after the grant approval. The tax relief is in the amount of the state grant and if the company exceeds its value it pays only the difference of the tax due.

Preference will be given to companies that are engaged in the development of high technologies, innovation, green economy and exports. The more remote the area of company’s operation, the greater share of state grant. The amount of the grant varies from 15% to 50% depending on the area and the amount of the investment. The grant for large enterprises in Attica - Viotia region, which is considered one of the most central and developed regions of Greece, is 15% and 20% - 25% for small and very small companies. The grant for Zone B as Thessaly and other areas in central and northern Greece increases to 30%, 35% and 40% respectively, while the grant for the islands could reach 40% -50% under the new investment law.

Projects will be reviewed and approved twice a year in April and October and the Minister of Economy and Development Michalis Chrysohoidis stressed that the ministry will consider first projects that choose tax relief rather than direct funding. He explained that the country is ready to give up three billion euros of tax revenue in the next few years in order to support entrepreneurship through the one-to-three system. Projects administration and allocation of funds will take six months after the approval, which Minister Chrysohoidis noted was a great progress. He stressed that this is an extremely short time for processing the data and compared it with the previous rules under which authorized entities could wait for a government grant to three years. Economic activities that can not participate in the programs included in the new investment law are hotel services, shipyards, construction companies, wholesale and retail and companies that offer financial services.

 

Tags: EconomyMarketsGrantsDevelopmentVictoria Mindova
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