Article 4 Aid for initial investment
United Kingdom
Aid for initial investment shall be compatible with the common market within the meaning of Article 87(3) of the Treaty and shall be exempt from the notification requirement of Article 88(3) of the Treaty provided that:
the aid is granted in regions eligible for regional aid, as determined in the approved regional aid map for the Member State concerned for the period 2007 to 2013; and
the aid intensity in present gross grant equivalent does not exceed the regional aid ceiling which is in force at the time the aid is granted for the region in which the investment takes place, as determined in the approved regional aid map for the Member State concerned for the period 2007 to 2013.
With the exception of aid granted in favour of large investment projects and aid for the transport sector, the ceilings in point (b) may be increased by 20 percentage points for aid for initial investment awarded to small enterprises and by 10 percentage points for aid awarded to medium-sized enterprises.
In addition to the general conditions for exemption laid down in this Regulation, aid for initial investment shall satisfy the following specific conditions:
the investment must be maintained in the recipient region for at least five years, or three years in the case of SMEs, after the whole investment has been completed;
to be eligible, immaterial assets must:
- (i)
be used exclusively in the establishment receiving the regional aid;
- (ii)
be regarded as amortizable assets;
- (iii)
be purchased from third parties under market conditions;
- (iv)
be included in the assets of the firm and remain in the establishment receiving the regional aid for at least five years or three years in the case of SMEs;
where the aid is calculated on the basis of material or immaterial investment costs, or of acquisition costs in case of takeovers, the beneficiary must provide a financial contribution of at least 25 % of the eligible costs, either through its own resources or by external financing, in a form which is free of any public support. However, where the maximum aid intensity approved under the national regional aid map for the Member State concerned, increased in accordance with the second subparagraph of paragraph 1, if appropriate, exceeds 75 %, the financial contribution of the beneficiary is reduced accordingly.
The condition in point (a) of the first subparagraph shall not prevent the replacement of plant or equipment which has become out-dated within the period referred to in that point due to rapid technological change, provided the economic activity is retained in the region concerned for the minimum period.
The ceilings fixed in paragraph 1 shall apply to the intensity of the aid calculated either as a percentage of the investment's eligible material and immaterial costs or as a percentage of the estimated wage costs of the person hired, calculated over a period of two years, for jobs directly created by the investment project, or a combination thereof, provided the aid does not exceed the most favourable amount resulting from the application of either calculation.
The eligible investment costs shall be discounted to their value at the moment of granting of the aid. Aid payable in several instalments shall be discounted to its value at the moment of granting of the aid. The interest rate to be used for discounting purposes shall be the reference rate applicable at the time of grant. In cases where aid is awarded by means of tax exemptions or reductions on future taxes due, subject to the respect of a certain aid intensity defined in GGE, discounting of aid tranches takes place on the basis of the reference rates applicable at the various times the tax advantages become effective.
In case of acquisition of an establishment, only the costs of buying assets from third parties shall be taken into consideration, provided the transaction has taken place under market conditions. Where the acquisition is accompanied by other initial investment, the expenditure relating to the latter shall be added to the cost of the purchase.
Costs related to the acquisition of assets under lease, other than land and buildings, shall only be taken into consideration if the lease takes the form of financial leasing and contains an obligation to purchase the asset at the expiry of the term of the lease. For the lease of land and buildings, the lease must continue for at least five years after the anticipated date of the completion of the investment project or three years in the case of SMEs.
In the transport sector, expenditure on the purchase of transport equipment (movable assets) shall not be eligible for aid for initial investment.
Except in the case of SMEs and takeovers, the assets acquired shall be new. In the case of takeovers, assets for the acquisition of which aid has already been granted prior to the purchase shall be deducted. For SMEs, the full costs of investments in immaterial assets may also be taken into consideration. For large undertakings, such costs are eligible only up to a limit of 50 % of the total eligible investment expenditure for the project.
Where the aid is calculated on the basis of wage costs, the following conditions shall be satisfied:
jobs must be directly created by an investment project;
the job creation must occur within three years of the completion of the investment and each job shall be maintained for a minimum period of five years, or three years in the case of SMEs.
By way of derogation from paragraph 1, the maximum aid intensities for investments in the processing and marketing of agricultural products may be increased to:
50 % of eligible investments in regions eligible under 87(3)(a) of the Treaty and 40 % of eligible investments in other regions eligible for regional aid, as determined in the regional aid map approved for the Member States concerned for the period 2007 to 2013, if the beneficiary is a small or medium-sized enterprise;
25 % of eligible investments in regions eligible under 87(3)(a) of the Treaty and 20 % of eligible investments in other regions eligible for regional aid, as determined in the regional aid map approved for the Member States concerned for the period 2007 to 2013, if the beneficiary has less than 750 employees and/or less than EUR 200 million turnover, calculated in line with Commission Recommendation 2003/361/ECf1, and if such beneficiary fulfils all other conditions of that Recommendation.