Investment Incentives for Foreign Direct Investments

The Ministry of Economy may grant investment incentives to either the applicant or another entity, the foundation of which must be safeguarded by the applicant. If the business activities are to be performed in a region with an unemployment rate of at least 10%, the expenditure threshold (as set out above) will be halved. Once the application has been submitted, the ministry will prepare an assessment and projection for provision of the investment incentives. After communication between the ministry and the applicant, and subject to the latter's consent, the ministry will submit the projection to a committee. If the committee approves the projection it goes to the government for approval. If the projection is not approved by the committee, the ministry will reject the application. When looking at the projection, the government will consider the overall economic importance of the investment and how the investment incentives will affect competition on the relevant market. Once the investment incentives are approved by the government, the ministry renders its decision.

Using Investment Incentives

The recipient of the investment incentives must start utilizing its funds for the acquisition of assets or performing its business activities as set out in its application within three years of the ministry's decision; otherwise the funds must be returned. In general, the investment incentives may be subject to inspections performed by the Ministry of Finance, the respective tax authority or an employment centre. However, the most recent amendment to the act (in 2004) refers, in respect of new jobs and training of employees financed by investment incentives, to the Employment Act, which has now been repealed. As the inspection must now be carried out under a regulation that no longer exists, it raises the question of whether such inspection is enforceable at all.