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Additional state aid to mitigate the economic effects of the coronavirus

Additional state aid to mitigate the economic...

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Gergő Wieder

Senior Manager

KPMG Tanácsadó Kft.

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Last week, the government announced further measures to mitigate the economic effects of the coronavirus crisis. In addition to the HUF 80 billion job-creating wage support program, the support of competitiveness for enterprises’ budget was expanded to HUF 100 billion, and a program was launched to support the technological renewal of SMEs.

Wage subsidy program to support job creation

At an online press conference this week, Sándor Bodó, Secretary of State for Employment Policy at the Ministry of Innovation and Technology, announced the launch of a HUF 80 billion wage support program to aid job creation to help more than 70,000 people to find work.

In addition to the 6-month wage subsidy, the government expects 3 months of further employment, so the employees participating in the program are guaranteed employment for 9 months. The amount of the support is 100% of the gross wage and social security tax charged to the employer, but cannot exceed HUF 200 thousand per month. Together with the duration of the re-employment, the personal support can reach HUF 1 million net during the 9 months.

The condition of government support is that the jobseeker's employment must result in a net increase in the number of employees compared to the average statistical number of employees in the 6 months prior to the submission of the employer's application.

According to government information, there are 160,000 jobseekers who currently receive a jobseeker's allowance. The government considers employees with active knowledge, who can quickly relocate the target group. Further details of the program can be found on the website munka.hu, or you can contact us, applications submitted by the employers will be evaluated within 8 days.

Supporting technological innovation in SMEs

Also last week, the Ministry of Finance announced the launch of two programs supporting developments related to the technological innovation of micro, small and medium-sized enterprises, with a budget of more than HUF 50 billion. From 29 May 2020, companies will be able to submit applications for support under umbrella of the Economic Protection Action Plan. The purpose of the program is to implement developments that encourage the retention of the largest possible number of employees in domestic enterprises with the help of the conditionally repayable support. Businesses can submit grant applications for a budget of HUF 33.3 billion under the Economic Development and Innovation Operational Program (EIDHR) and for a budget of HUF 18.8 billion under the Competitive Central Hungary Operational Program (VEKOP).

New equipment and machines can be acquired from the grant, as well as new technological systems and capacities can be developed. Eligible are development of automated production systems, production technologies and information technologies, production licenses, acquisitions of production know-how, investment in real estate infrastructure and real estate, technical, product and service development, as well as training and consulting related to development.

An enterprise can apply for between HUF 5 million and HUF 153.5 million, and the maximum amount of support can be 70 percent of the total eligible costs. Enterprises with up to nine employees can apply for HUF 1.5 million per employee, from 10 to 49 employees for one million, and from 50 to 249 employees to half a million forints per employee. The applicant's performance is compared to the situation at the time of submission by re-measuring the performance targets set in advance during the period following the implementation of the project. At the end of the comparison, a decision is made on the reimbursement rate, i.e. the applicant may be granted a partial or even total exemption from the repayment of the pre-paid grant.

From 29 May 2020, applications will be open to micro, small and medium-sized enterprises with at least one closed full business year and a minimum of 5 employees in April 2020. The government expects up to 2,000 businesses to benefit from the programs.

Support of competitiveness

The government doubled the budget for Competitiveness grant, but on Wednesday the Minister of Foreign Affairs and Trade asked the government to further expand it, because the value of application from businesses have exceeded HUF 100 billion. Since the announcement, a total of 540 companies have applied for such support by Wednesday, and applicants would undertake a development worth a total of HUF 260 billion. The program assists applicant companies with an immediate, non-refundable contribution from a state budget source. The government would consider it justified to raise the subsidy limit of EUR 800,000, but this would only be possible after the approval of EU decision-makers under state aid rules.

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In order to mitigate the economic effects of COVID-19, several state funding programs and subsidies were announced, which we also regularly reported on. It will be worthwhile for economic actors to analyse which form of financing and support will best help to reduce the negative effects and economic redesign, based on the impact of their economic activity, COVID-19 on their business. It is worth assessing the opportunities as soon as possible and using them if needed, as the company can recover from the difficulties sooner, while also, some subsidies may be exhausted or ended.

© 2020 KPMG Hungária Kft./ KPMG Tanácsadó Kft. / KPMG Global Services Hungary Kft., a magyar jog alapján bejegyzett korlátolt felelősségű társaság, és egyben a KPMG International Limited („KPMG International”) angol „private company limited by guarantee” társasághoz kapcsolódó független tagtársaságokból álló KPMG globális szervezet tagtársasága. Minden jog fenntartva.

A KPMG globális szervezeti struktúrával kapcsolatos további részletekért kérjük látogassa meg a https://home.kpmg/governance oldalt.

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