According to plans, the Hungarian government will offer a new incentive system to large domestic manufacturing companies that produce at least part of their output for the US market. This state aid will be available under the EKD support system. The non-repayable subsidy based on an Individual Government Decision (IGD) is to strengthen the international competitiveness of Hungarian industry and promote the implementation of strategically important investments – in this case, those of companies that export at least 10 percent of their products to the United States.
The program may be particularly attractive to those who are planning to develop new production capacities, expand existing plants, or introduce new technologies in the coming years, and who are also targeting overseas markets.
What types of investments are eligible for support?
EKD support promotes investments that contribute to the long-term growth of the Hungarian economy. Eligible activities include the following:
- Construction of new manufacturing or service facilities;
- Establishment of a new service center;
- Establishment of a new R&D center;
- Expansion of the capacity of existing plants and production lines;
- Diversification of production profile, introduction of new technologies;
- Acquisition and reactivation of previously closed facilities.
A unique opportunity for companies exporting to the US
The EKD support system is expected to offer two important advantages for companies exporting to the US market:
- Up to 25% of the awarded grant amount may be requested as an advance payment.
- The necessary financial security shall only be provided after completion of the investment.
Under the EKD support scheme, it is typically possible to apply for post-financing support, provided that financial collateral covering at least 100% of the support amount is submitted as a condition for disbursement. With this measure, the Hungarian government would temporarily help the liquidity situation of companies exporting to the US during the investment period.
Support rates by region
The amount of EKD support is based on individual decisions in each case, but is significantly influenced by the location of the investment and the size of the investing company. The maximum state aid intensity that can be granted can reach 60% for large companies in less developed regions.
Maximum available state aid intensity:
- Heves, Baranya, Borsod-Abaúj-Zemplén counties: up to 60% for large companies,
- Western Transdanubia and Central Transdanubia: subsidies of up to 30% for large companies,
- Projects implemented in Budapest are not eligible for funding.
Among investments and service centers, those located in southern Hungary may be given preference.
ELIGIBILITY CRITERIA
The EKD support program primarily applies to investments outside Budapest that reach the minimum eligible cost level. The size of eligible projects is determined by territorial categories:
- 10 million euros: e.g. in the cities of Debrecen, Szeged, Győr, Kecskemét,
- 5 million euros: in district courts and certain regional centers,
- €2–3 million: in smaller towns, mainly in the eastern and southern counties.
The investment period can be up to 5 years.
Commitments and obligations
In order to receive EKD support, the company must make a number of commitments aimed at economic and social benefits:
Mandatory minimum commitments:
- At least €15 million in additional revenue during the monitoring period in total,
- At least €2 million in additional wage costs during the monitoring period in total.
One of these commitments is also necessary:
- An increase of at least 30% in wages per capita,
- An increase of at least 30% in revenue per capita,
- Or the creation of at least 25 new jobs (mandatory for companies with fewer than 50 employees).
At least two of the following commitments must be fulfilled:
- Creation of 10 new R&D (research and development) positions,
- Increasing the share of renewable energy to 30%,
- Expansion of student jobs or dual training by at least 10 people,
- 30% increase in R&D expenditure,
- Localization of the supply chain (increasing the proportion of partners within 100 km to 30%),
- Cooperation in the HIPA supplier development program.
What can the subsidy be used for?
The following investment costs are eligible for EKD support:
- Purchase of land, machinery, technological equipment, tangible assets,
- Intangible assets, e.g., software, licenses (up to 50% of total costs),
- Closed-end financial leasing (machinery, vehicles, etc.),
- Equipment necessary for the production and storage of renewable energy (also up to 50%).
In the case of the establishment or expansion of service providers or R&D centers, the personnel costs of new employees for 24 months may also constitute eligible costs, i.e., the basis for EKD support.
It's worth acting in time
It is important to note that although the above amendments have been prepared by the government, the legislative changes are not yet in force, and it is not yet known whether they will be applied retroactively to cases already in progress.
Therefore, it is recommended to find out about the relevant EKD application conditions as soon as possible and prepare to take advantage of the state support opportunities opening up in 2025–2026, whether it be investments, the creation or expansion of a service center or R&D activities.
