Newsletter June 2018

  • 07/06/2018 17:41
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June 2018

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          At the beginning of May 2018, the Council of Ministers in Bulgaria changed the Rules on the implementation of the Investment Promotion Act (RIIPA). Changes come as a consequence of a change in the IPA after the entry into force of Regulation (EU) 2017/1084, amending Regulation (EU) 651/2014.  The new version of Art. 2a, para. 1 of the RIIPA clarifies that the investment promotion scheme does not apply when there is an outstanding order against the enterprise to recover the investment aid. This means that it is not possible for an undertaking to receive investment aid from the time the order is issued until it is finally executed.

         The previous version of the RIIPA was referring to the lack of monetary liabilities to the state as a whole. Following the amendments to the RIIPA, the legislator specified that the documents certifying the lack of monetary obligations may concern both the State and the municipalities.

         Aid to promote priority investment projects may represent a sale or the establishment of limited real rights on real estate - private state or municipal property or property of sole proprietor companies with state or municipal participation. In these cases, the new RIIPA introduced the presumption that when the sale or creation of limited real rights on such real estate takes place at prices lower than market prices, the aid is considered to be transparent (that is aid in respect of which is possible to calculate precisely the gross grant equivalent of the aid ex ante without any need to undertake a risk assessment).

        The RIIPA specifies the current regime for the allocation of financial assistance to employers, who create new jobs for employees. Prior to the legislative amendments, the NRA regulation only indicated that this was done once a year after 31 March. Under the new regime, funds are allocated as follows:

  1. annually during the period of creating new jobs, the date of grant being after 31 March;

  or

  1. once a year at the end of the implementation period of the measure for the creation of new jobs, the date of grant being after March 31 of the current year.

       Paragraph 1 of the Additional Provisions defines the term "relocation", namely – the transfer of the same or a similar activity or part thereof by an undertaking in one of the Contracting Parties to the EEA Agreement (original undertaking) to the undertaking in which the assisted investments are carried out in the territory of another Contracting Party to the EEA Agreement (assisted enterprise). A transfer occurs when a product or service in the original and in the assisted undertaking at least partially pursues the same objectives and responds to the demand or needs of the same customers and leads to loss of jobs in the same or similar activity in one of the beneficiaries in the EEA.

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