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State aid scheme for research, development, and innovation activities (1)

In the Official Gazette (Part I) no.797 of 4 September 2023 was published the M.I.P.E. Order no.3284 on the approval of the State aid scheme for research, development and innovation activities funded under priority 1. ”Support and promotion of an attractive and competitive CDI system in RO” of the Smart Growth, Digitization and Financial Instruments Programme, with applicability from 4 September 2023.

 

It is important to underline that a specific registration period needs to be announced in order to allow online registration in the MySMIS application.

 

         Please note that the authority administering the scheme is the Ministry of Research, Innovation and Digitisation, through the Intermediary Authority  for Research (OIC), and the authority providing state aid is the Ministry of European Investment and Projects, through the Managing Authority of the Smart Growth, Digitisation and Financial Instruments Programme (AM POCIDIF).

 

This scheme provides support to achieve the following objectives:

  • main objective: research and development;
  • secondary objectives: innovation; regional development and job creation.

 

This scheme includes the following categories of aid:

  • regional investment aid;
  • aid for newly established enterprises;
  • aid for research and development projects;
  • aid for projects which have been awarded a “mark of excellence” quality label;
  • aid for teaming actions;
  • aid for investment in research infrastructures;
  • innovation aid for SMEs;
  • aid for process and organisational innovation.

 

Scheme does not apply:

  • aid for activities linked to exports to third countries or to other Member States, namely aid directly linked to the quantities exported, to the establishment and operation of a distribution network or to other current expenditure linked to the export activity;
  • aid contingent upon the use of domestic over imported products;
  • aid granted in the fisheries and aquaculture sector falling within the scope of Regulation (EU) No 1379/2013 of the European Parliament and of the Council of 11 December 2013 on the common organisation of the markets in fishery and aquaculture products, amending Regulations (EC) No 1234/2007 and (EC) No 1234/2007 and amending Regulation (EC) No 1234/2007. 1.184/2006 and (EC) No 1.224/2009 and repealing Council Regulation (EC) No 104/2000, with the exception of aid for access to finance for SMEs (start-up aid), aid for research and development and aid for innovation for SMEs;
  • aid granted in the primary agricultural production sector, with the exception of aid for research and development and aid for innovation for SMEs;
  • aid granted in the sector of processing and marketing of agricultural products in the following cases:
  • (i)where the amount of aid is fixed on the basis of the price or quantity of such products purchased from primary producers or placed on the market by such undertakings; or
  • (ii)where the aid is conditional on being partly or entirely transferred to primary producers;
  • aid to facilitate the closure of uncompetitive coal mines, as regulated by Council Decision 2010/787/EU of 10 December 2010 on State aid to facilitate the closure of uncompetitive coal mines;
  • beneficiary who has not confirmed that, in the two years preceding the aid application, it has not relocated to the establishment where the initial investment for which aid is requested is to take place and who does not give an undertaking that it will not do so for a period of up to two years after completion of the initial investment for which aid is requested;
  • aid favouring activities in the steel, coal, shipbuilding or synthetic fibres sectors;
  • aid for the transport sector and related infrastructure; aid for the energy production, storage, transport and distribution sector and for energy infrastructure;
  • regional aid in the form of schemes which target a limited number of specific sectors of economic activity; aid schemes for tourism, broadband infrastructure or the processing and marketing of agricultural products are not considered to target specific sectors of economic activity.

 

The aid is given in the form of a grant (non-reimbursable financial assistance in one or more instalments).

State aid is granted through the settlement of eligible expenditure according to the financing contract, without exceeding the applicable state aid intensity. The request for reimbursement of eligible expenditure must be accompanied by clear and detailed supporting documents. The total eligible expenditure settled may not exceed the amount provided for in the financing contract.

 

According to the recently published legal act, beneficiaries can be micro, small and medium-sized enterprises, as well as large enterprises, but only in partnership with SMEs. Regardless of the sector in which they operate, companies can apply only if they have research activity mentioned in their statutes (CAEN codes 7211, 7219, 7220).

 

In order to be eligible for funding under this scheme, applicants must cumulatively fulfil the following conditions:

  1. the beneficiaries are not in a state of bankruptcy or liquidation, do not have their affairs administered by a syndic judge or their commercial activities suspended, are not subject to an arrangement with creditors or are not in a situation similar to the above, regulated by law;
  2. the beneficiaries have fulfilled their obligations to pay taxes, duties and social security contributions to the component budgets of the general consolidated budget (state budget, special budgets, local budgets), in accordance with the legal provisions in force;
  3. the legal representative of the beneficiary has not been convicted in the last 3 years, by a final decision of a court, for an act that has harmed professional ethics or for committing a professional mistake;
  4. the beneficiaries are not subject to a recovery decision issued by the European Commission, an aid provider or the Competition Council, by which a State aid/de minimis aid has been declared illegal and/or incompatible with the internal market or, if the applicant has been subject to such a decision, it must have already been enforced and the aid fully recovered, including the related recovery interest;
  5. the beneficiaries are established or have a branch in Romania at the time of payment of the aid;
  6. f) each applicant submitting a project under the calls to which this scheme applies must provide identification data and updated economic and financial statements:

(i) general information; data on the applicant’s creditworthiness, including the human resources available for the implementation of the project;

(ii) original scanned documents: single registration certificate, tax certificate, memorandum and articles of association, articles of association, last balance sheet, profit and loss account;

(iii) shareholder structure (natural and legal persons);

(iv) composition of the management Authority /board of directors;

(v)declaration on own responsibility concerning compliance with the conditions of eligibility.

 

The participation of beneficiaries in projects is done individually or in partnership, and if projects are submitted and implemented in partnership, the funding contract will be concluded with the partnership leader, based on a partnership agreement assumed by all project partners, an integral part of the funding contract.

 

Beneficiaries are only those who will not be considered “enterprises in difficulty”.

 

              According to the normative act, a company in difficulty is a company that is in at least one of the following situations:

  • in the case of a limited liability company (other than an SME that has been in existence for less than three years), when more than half of its subscribed share capital has disappeared due to accumulated losses. This situation arises when the deduction of accumulated losses from reserves (and from all other items generally considered to form part of the company’s own funds) leads to a negative result exceeding half of the subscribed share capital. For the purposes of this provision, “limited liability company” refers in particular to the types of companies mentioned in Annex I to Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC, and “share capital” includes, where applicable, any share premium;
  • in the case of a company where at least some of the partners have unlimited liability for the company’s debts (other than an SME that has been in existence for less than three years) when more than half of the equity capital, as shown in the company’s accounts, has disappeared due to accumulated losses. For the purposes of this provision, “a commercial company in which at least some of the shareholders have unlimited liability for the debts of the company” refers in particular to those types of companies mentioned in Annex II to Directive 2013/34/EU;
  • where the company is subject to collective insolvency proceedings or meets the criteria laid down in national law for collective insolvency proceedings to be opened at the request of its creditors;
  • where the enterprise has received rescue aid and has not yet repaid the loan or terminated the guarantee or has received restructuring aid and is still subject to a restructuring plan;
  • in the case of an enterprise that is not an SME, when, within the last two years:

 

– the debt/equity ratio of the enterprise is more than 7.5; and

– the interest coverage calculated on the basis of EBITDA is below 1.0;

 

All aid can only be considered compatible with the internal market if it has an incentive effect. An incentive effect arises if the aid changes the behaviour of an undertaking, causing it to engage in additional activities which, in the absence of aid, it would not carry out or would carry out to a limited or different extent. However, the aid must not subsidise the costs of an activity which an undertaking would have incurred anyway and must not compensate for the normal commercial risk of an economic activity.

The aid is not considered to provide an incentive to the beneficiary if the activity for which the aid is granted has already started before the application for aid financing is submitted by the beneficiary to the national authorities. If the start of the work takes place before the aid application has been submitted by the beneficiary to the national authorities, the project will not be eligible for aid.

 

Only projects for which the beneficiary has submitted an application for aid/financing for a project to the national authority administering the scheme before the start of work (as defined in Article 7(vv)) on the project or activity are eligible for State aid under the scheme.

 

The aid/financing application shall contain at least the following information:

  • name of the enterprise and its size;
  • description of the project, including its start and end date;
  • location of the project;
  • list of eligible project costs;
  • type of aid (grant) and amount of public funding required for the project

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This scheme enters into force on the date of its publication in the Official Gazette (4 September 2023) and applies until 31 December 2028.

 

Payment of aid to beneficiaries of the scheme can be made until 31 December 2029.

 

As the provisions of Regulation (EU) No 651/2014 apply until 31 December 2026, the Ministry of European Investment and Projects will update this scheme according to the rules applicable after 31 December 2026.

All State aid granted from 1 January 2027 inclusive under this scheme must comply with the conditions laid down in the specific (EU) Regulation applicable at that time.

 

The InforEuro exchange rate valid on the date the aid is granted/payments are made etc. will be used for conversion into RON under this State aid scheme.

 

Specific eligibility conditions by type of aid

 

Regional investment aid is eligible under the following conditions:

  1. aid may be granted to SMEs for any form of initial investment;
  2. eligible costs fall into one or more of the following categories:

(i) the costs of investment in tangible and intangible assets; or

(ii)the estimated wage costs for jobs created as a result of an initial investment, calculated over a two-year period; or

(iii)a combination of any part of the above costs, but not exceeding the amount of one of them, whichever is greater.

  1. the investment must be maintained in the region concerned for a period of at least 5 years after its completion in the case of projects implemented in partnership or, in the case of SMEs not applying in partnership, at least 3 years after its completion. This condition does not prevent the replacement of plant or equipment which has become obsolete or has been destroyed during this period, provided that economic activity is maintained in the region concerned for the minimum period;
  2. Costs related to the rental of tangible assets can be taken into account in the following situations:

(i)in the case of land and buildings, the lease must continue for a minimum period of 5 years after the completion of the projects in the case of projects implemented in partnership (3 years in the case of SMEs not submitting projects in partnership);

(ii)in the case of the rental of plant or machinery, the contract must be a financial leasing contract and must contain an obligation for the aid beneficiary to purchase the asset at the date on which the contract expires;

  1. in the case of tangible assets, only the costs of purchasing the assets from third parties not connected with the purchaser shall be taken into account. If a member of the family of the original owner or one or more employees takes over a small enterprise, the condition that the assets be purchased from third parties not related to the buyer does not apply. The transaction takes place on an arm’s length basis. If the acquisition of the assets of a unit is accompanied by an additional investment eligible for regional aid, the eligible costs of this additional investment should be added to the costs of acquiring the assets of the unit. If aid has already been granted for the acquisition of assets prior to their purchase, the costs of these assets are deducted from the eligible costs of acquiring a unit;
  2. intangible assets are eligible for the calculation of investment costs if they meet the following conditions:

(i)they must be used exclusively within the establishment receiving the aid;

(ii)they must be depreciable;

(iii) they must be purchased under market conditions from third parties not connected with the purchaser;

(iv) they must be included in the assets of the enterprise receiving the aid and must remain associated with the project for which the aid is granted for a minimum period of 5 years in the case of projects implemented in partnership (3 years in the case of SMEs not submitting projects in partnershipwhere eligible costs are calculated on the basis of estimated wage costs, the following conditions must be met:

g) the investment project results in a net increase in the number of employees in the establishment concerned, compared to the average over the previous 12 months, after deducting from the number of jobs created any jobs lost during the period, expressed in annual work units;

(ii)each post is filled within three years of the completion of the investment;

(iii)each job created by the investment is maintained in the area concerned for a period of at least 3 years from the date on which the job was first filled;

h) the aid intensity does not exceed the maximum intensity established by Government Decision No 311/2022 on the maximum intensity of regional state aid in the period 2022-2027 for initial investments, as subsequently amended. If the aid intensity is calculated in accordance with b) point. (iii), the maximum aid intensity shall not exceed the most favourable amount resulting from the application of that intensity on the basis of investment costs or wage costs

i) the aid beneficiary provides a financial contribution of at least 25% of the eligible costs, either from its own resources or from external financing, in a form which is not subject to any other public aid;

j) the beneficiary confirms that, in the 2 years preceding the aid application, it has not relocated to the establishment where the initial investment for which aid is requested is to take place and gives an undertaking that it will not do so for a period of up to 2 years after completion of the initial investment for which aid is requested;

k) any initial investment concerning an identical or similar activity undertaken by the same beneficiary (at group level) within 3 years of the date of commencement of work on another aided investment in the same level 3 region of the Nomenclature of Territorial Statistical Units is considered to be part of a single investment project. Where such a single investment project is a large investment project, the total amount of aid for the single investment project does not exceed the adjusted aid amount for large investment projects;

l) the maximum amounts of regional investment aid will be calculated by applying the maximum permissible intensities laid down in the Annex which forms an integral part of this scheme, without exceeding the maximum thresholds laid down in Table 1;

m) if the verification establishes that the project is a large investment project, the calculation formula for the adjusted aid amount in accordance with Article 7(jj) shall be applied.

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Legal basis:

MIPE Order no.3284/2023 on the approval of the State aid scheme for R&D and innovation activities financed under priority 1. ”Support and promotion of an attractive and competitive CDI system in RO” of the Smart Growth and Digitisation Programme and financial instruments;