crisis aid

Crisis aid to mitigate the effects of the Russian-Ukrainian war

In a Communication published in the Official Journal of the European Union C 131/I on 24 March 2022, the European Commission adopted a temporary crisis framework in view of the extremely damaging impact of the Russian-Ukrainian war on the EU economy. The adoption of the crisis framework has made it possible to support EU businesses that have been adversely affected, directly or indirectly, by the crisis caused by the war or by the sanctions imposed during the war.

The crisis framework identifies 4 forms of aid:

  • limited amounts of aid
  • liquidity support in the form of guarantees
  • liquidity support in the form of subsidised loans
  • aid for additional costs due to exceptionally severe increases in natural gas and electricity prices.

By Government Decree No 240/2022 (VI. 30) (hereinafter the Decree), published in the Hungarian Official Gazette No 106 of 30 June 2022, as of 3 July 2022 the Government introduced an aid scheme under which it grants limited amounts of aid (so-called crisis aid) to companies affected by the impacts of the war.

The crisis aid can be granted to companies concerned after the Commission decision approving the scheme has been adopted. The companies must declare its involvement before the aid is granted.

The detailed rules of the aid are also set out in the Government Decree No 255/2014 (X. 10.) on the rules on state aid allocated for the 2014-2020 programming period, and in the Government Decree No 474/2016 (XII. 27.) on the use and allocation of state aid for sport (hereinafter: the Government Decree on Sports Aid). The Decree also supplements the aid programmes regulated by the Government Decree No. 258/2021 (20 May) on the rules on state aid allocated for the programming period 2021-2027and Government Decree No. 413/2021 (13 July) on the basic rules for the implementation of the Hungary Recovery and Resilience Plan and the institutions responsible for implementation with the newly introduced crisis aid.

Crisis aid can be used for most of the purposes covered by the programmes regulated by the above mentioned government decrees.

The aid may be granted in the form of non-repayable grants, loans and capital up to a fixed amount or, in the case of those covered by the Government Decree on Sports Aid, in the form of non-repayable grants. Under the rules, aid granted in the form of a loan will have the possibility to be converted into another form of aid (e.g. a loan into a non-repayable grant). This possibility will be open to the beneficiary companies until 30 June 2023.

The amount of aid granted to businesses active in the primary production of agricultural products, fishery and aquaculture sectors, together with other aid granted within the category of limited amounts of aid, may not exceed the equivalent in HUF of EUR 35,000. When examining whether the threshold has been reached, the amounts of aid granted to related parties shall be added together.

The maximum amount of aid that may be granted to businesses in other sectors is EUR 400,000 – the related party aggregation rule also applies in this case.

Where a business is active in several sectors to which different maximum amounts apply, it must be ensured, by appropriate means, such as separation of accounts, that the relevant threshold is respected for each of those activities and that the overall maximum amount of EUR 400,000 is not exceeded per company.

As a special rule, the aid granted to businesses active in the processing and marketing of agricultural products is conditional on not being partly or entirely passed on to primary producers and is not fixed on the basis of the price or quantity of products put on the market by the businesses concerned or purchased from primary producers, unless, in the latter case, the products were either not put on the market or were used for non-food purposes such as distillation, methanization or composting by the businesses concerned.

Under certain conditions, the provision allows cumulation of aid under different schemes.

Aid shall not be granted to businesses under sanctions adopted by the EU, including but not limited to: a. persons, entities or bodies specifically named in the legal acts imposing those sanctions; b. businesses owned or controlled by persons, entities or bodies targeted by sanctions adopted by the EU; or c. businesses active in industries targeted by sanctions adopted by the EU, insofar as the aid would undermine the objectives of the relevant sanctions. 

However, aid granted under the Communication shall not be conditioned on the relocation of a production activity or of another activity of the beneficiary from another country within the EEA to the territory of the Member State granting the aid.

The aid described above can be granted until 31 December 2022.

Finally, we would like to inform our readers that in the same issue of the Official Gazette mentioned at the beginning of this article, another related decree was published. The given decree extends certain deadlines laid down in the conditions for granting aid for competitiveness, such as the deadline of the submission of the reports required by the aid instrument, the submission of declarations or the implementation of the investment.

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