The investment incentive certificate: process and monitoring
An incentive certificate is not a permission but an undertaking. In return for the support it provides, the investment must be completed as set out in the certificate; monitoring therefore matters as much as the application.
The investment incentive certificate is issued by the Ministry of Industry and Technology under the decree on state aid for investments. Depending on the location, subject and size of the investment, it combines several forms of support. The application and subsequent procedures are carried out electronically through the E-TUYS system.
Forms of support
| Support | What it provides | When it applies |
|---|---|---|
| VAT exemption | No VAT on machinery and equipment within the certificate | During the investment period |
| Customs duty exemption | No customs duty on imported machinery and equipment | During the investment period |
| Tax reduction | A reduced rate applies to income earned in the operating period | During operation |
| Employer's social security share support | The employer premium is met from the budget for a set period | Once employment begins |
| Interest or profit share support | Part of the interest or profit share on investment credit is met | On drawing the credit |
| Allocation of investment land | Public property may be allocated | Before investment |
The process
- Definition and feasibility: the machinery list, amount, employment and duration are planned. What is written into the certificate becomes an undertaking.
- E-TUYS application and user authorisation: procedures run through an authorised user.
- Issue of the certificate: supports, duration and machinery list are set out in it.
- Investment period: purchases are made within the certificate; an exemption certificate is used for VAT.
- Completion visa: at the end of the period, the realised amount and elements are established.
- Operating period: the tax reduction and premium support are used at this stage.
What changes in the accounts
- Purchases within the certificate must be tracked separately. Without a clear split between in-scope and out-of-scope expenditure, problems arise at the completion visa.
- Because no VAT is incurred on exempt purchases, deduction and refund calculations are set up accordingly.
- Applying the reduced corporate tax rate requires separating the income arising from the investment, and the accounting structure must support that separation.
- Depreciation of the machinery is calculated under the general rules, independently of the support.
- Transferring a certified asset before the prescribed period expires can lead to the supports being reclaimed.
Legal basis
- Decree No. 2012/3305 on State Aid for Investments
- Corporate Tax Law No. 5520, Article 32/A (reduced corporate tax)
- VAT Law No. 3065, Article 13/d
- E-TUYS implementing rules
This article is general information and does not replace professional assessment of a specific matter. Amounts and rates relate to the stated year; please verify the current provisions before acting.
