Conditions for applying R&D VIP cash subsidy under individual government decision

1. Eligibility criteria

Eligibility criterion define the range of persons (entities) and projects entitled to receive this form of subsidy.

Conditions for the applicants

• This form of support is available for companies employing at least 250 employees (large corporations). The condition relating to staff level may be met on group level (for example, by inclusion of parent company staff).
• The bidding business must have a residence or branch in Hungary, and the supported research-development project must be implemented at this site. It may take place anywhere in Hungary. Budapest is not excluded either.

Conditions applicable to R&D projects eligible for support

• Support may be granted to corporate projects covering applied research and experimental development.
• The project must have a research-development attestation.
• The planned cost of the project must equal or exceed EUR 1 million by the end of implementation.
• The period of implementation is 1-3 years.
• The project results must be maintained by the end of the 2 year monitoring period.

2. Composition of projects eligible for support

Regulations relating the composition of projects eligible for support lay down the range of objectives this kind of subsidy may be used for. This requirement is often referred to as the rule on eligible costs.

Main rule

Only research-development projects may be subsidized (excluding construction projects).

The following items are accepted as project composition (eligible) costs

1. Pro-rata wage and public charges of wages
2. Costs of materials used in experimenting in the project (up to 25%)
3. Costs of external service providers involved in the project (up to 25%)
4. Rent costs of buildings used for the purposes of the project
5. Pro-rata depreciation of proprietary buildings used for the purposes of the project
6. Pro-rata depreciation of intangible and fixed assets used for the purposes of the project

Please note

Eligible costs of the project must equal or exceed – by the completion of the project (1-3 year) – the sum of EUR 1 million.

Calculation

∑(1+2+3+4+5+6)> EUR 1 million.

3. Sum and form of subsidy

The sum and form of the subsidy shows the sum of the subsidy available for the project and the form it is provided to the business.

Sum of subsidy: 25% of eligible costs (with no upper limit)
Form of subsidy: cash provided for expenses of the research-development project.
Rendering accounts in relation to the project: subsequent financing based on eligible costs
Drawing the subsidy: an advance of up to 50%, interim settlements in project implementation, and at the end of the project, there may also take place a single sum settlement.

4. Covenants

1. Implementation of a research-development project in the total sum of at least EUR 1 million (see eligible costs).

Conditions

1. In cases where the total project value does not equal or exceed EUR 1 million and 75% of the sum undertaken to be spent in the subsidy contract, the full amount of the subsidy must be repaid.
2. If the total project value is less then the sum in the subsidy contract, and is over 75% thereof, the subsidy must be repaid in part.

2. At least 10 new jobs must be created. The rate of employees thus employed must have university or college degree at least 50%, and during the implementation period, must be engaged in research-development activities at least 50% of their work time.

Conditions

1. The new jobs must be in place over and above the current statistical staff level.
2. The subsidy must be repaid in full where the number of new jobs does not equal or exceed 10, or the number undertaken in the subsidy contract, or where the current staff level declines in the maintenance period.
3. The subsidy must be repaid proportionally, if the number of new jobs does not equal or exceed the number undertaken in the subsidy contract.

3. The project must be completed within 3 years at the most (see also implementation period).
4 The end-results must be retained for a period of at least 2 years after completion.
5 A research-development attestation must be obtained by the end of project implementation period at the latest.

5. Obligation to provide security

The bidding business must provide a security for the supporting entity for the case when the business is to repay the subsidy in part or in full, due to nonfulfilment of its obligations under the subsidy contract.

The security may take the form of a bank guarantee, a mortgage, a first call surety. As part of the security scheme, the bank accounts of the bidder must be subject to collection orders.

6. Subsidy contract

The conditions relating to subsidies are laid down in a subsidy contract. The subsidy contract is governed by Hungarian law.

The contract may be amended by any of the parties, at the request of any of the parties, as allowed under Hungarian laws. The official language of the subsidy contract is Hungarian, and an official translation into English may also be requested. Any legal dispute falls within the jurisdiction of Hungarian courts.

7. Life cycle of subsidized projects

Phase 1

Implementation period: Duration: 1-3 years.

Tasks

• Implementatin of research-development project, creation of end-product
• Creation of new jobs
• Obtaining a positive research-development attestation
• Provision of a security

Drawdown of subsidy in part or in full

Phase 2

Maintenance period: Duration: 2 years.

Tasks

• Retaining the jobs created
• Provision of monitoring data and reports