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Government approves changes in the conditions for providing investment incentives

Incentives will be more available for manufacturers of medical devices and for small enterprises

Government approves changes in the conditions for providing investment incentives Source: Adobe Stock

The government has approved changes in the conditions for providing investment incentives. As a result, manufacturers of medical devices and protective equipment and companies operating in the pharmaceutical sector have easier access to incentives. This involves an amendment to Government Regulation No. 221/2019 Coll., which is an implementing legal regulation relating to the Act on Investment Incentives. The government thus wants to provide greater support for private, especially domestic, investments of small and medium-sized enterprises, as well as those of other entities.

The situation with the coronavirus has had an impact on business investment plans. “Even though investments are a prerequisite of long-term growth, uncertainty with respect to future development is leading to a decline in private investments. Therefore, we have proposed a reduction of the investment limits for obtaining investment incentives, as well as more targeted support for areas that have proved to be strategic in relation to the current crisis,” says Deputy Prime Minister and Ministry of Industry and Trade Karel Havlíček.

Investment incentives will thus be newly available for significantly smaller investments. Limits are being reduced for enterprises of all sizes, though mostly for small businesses, in whose case an investment in assets in the amount of CZK 10 million will suffice for obtaining aid for manufacturing projects in state-supported regions, while CZK 2.5 million will be enough for projects involving technology centres.

“The amendment takes into account not only production of medical materials with respect to the current crisis caused by the pandemic, as it also focuses on small businesses, for which state aid in the form of investment incentives will be far more accessible,” says Patrik Reichl, CEO of CzechInvest, which administrates investment incentives.

The amendment of the government regulation is also bringing forth greater support for investments involving the manufacture of strategic products for the protection of citizens’ lives and health. Such products include personal protective equipment, medical devices and medications. When introducing or expanding production of these products in the Czech Republic, investors will be able to apply for financial aid for the given investment in the amount of 10% of eligible costs and less strict conditions will apply to such investments.

The newly adopted changes will pertain only to new investment-incentive applicants and it is expected that they will come into force no later than 1 January 2021. This involves further fulfilment of the Innovation Strategy of the Czech Republic 2019-2030 in the Smart Investments section.