The Hungarian government plans to introduce a new incentive program for domestic manufacturing large companies that produce at least partially for the U.S. market. This state funding will be available under the VIP Hungarian Funding Program. The non-refundable VIP cash incentive aims to strengthen the international competitiveness of Hungarian industry and facilitate the implementation of strategically significant investments—specifically for companies whose exports to the United States account for at least 10% of total exports.
The program may be particularly attractive for companies planning to establish new production capacities, expand existing plants, or implement new technologies in the coming years while also targeting overseas markets.
Types of Investments Eligible for Funding
VIP cash incentive grants investments that contribute to Hungary’s long-term economic growth. Eligible activities include:
- Construction of new manufacturing or service facilities
- Establishment of new service centers
- Establishment of new R&D centers
- Expansion of capacities of existing plants and production lines
- Diversification of production profiles or introduction of new technologies
- Acquisition and reactivation of previously closed facilities
Special Advantages for Companies Exporting to the U.S.
For companies targeting the U.S. market, the VIP cash incentive will provide two significant benefits:
- Up to 25% of the approved funding may be requested as an advance
- Required financial guarantees need only be provided after the completion of the investment
Typically, VIP cash incentive is disbursed on a reimbursement basis, requiring financial guarantees covering at least 100% of the approved amount. This measure is intended to temporarily improve the liquidity of Hungarian companies exporting to the U.S. during the investment period.
Funding Levels by Region
VIP cash incentive is always determined on a case-by-case basis but is significantly influenced by the investment location and the size of the company. Maximum state aid intensity for large companies in less-developed regions can reach up to 60%.
Maximum State Aid Intensity by Region:
- Heves, Baranya, Borsod-Abaúj-Zemplén counties: up to 60% for large companies
- Western and Central Transdanubia: up to around 30% for large companies
- Projects in Budapest are not eligible
Investments and service centers located in southern Hungarian counties may receive preferential consideration.
Eligibility Criteria
The VIP cash incentive primarily applies to investments outside Budapest that meet minimum eligible cost thresholds. Project size is determined by regional categories:
- €10 million: e.g., Debrecen, Szeged, Győr, Kecskemét
- €5 million: district centers and certain regional hubs
- €2–3 million: smaller municipalities, primarily in eastern and southern counties
Investment periods can extend up to 5 years.
Commitments and Obligations
Companies applying for VIP cash incentive must make economic and social impact commitments:
Mandatory minimum commitments:
- At least €15 million in additional revenue during the monitoring period
- At least €2 million in additional wages during the monitoring period
One of the following is required:
- At least 30% increase in per-employee wages
- At least 30% increase in per-employee revenue
- Creation of at least 25 new jobs (mandatory for companies with fewer than 50 employees)
At least two of the following additional commitments must be met:
- Creation of 10 new R&D positions
- Increasing the share of renewable energy to 30%
- Expansion of student jobs or dual training by at least 10 positions
- Increasing R&D expenditures by 30%
- Localization of the supply chain (30% of partners within 100 km)
- Cooperation with HIPA’s supplier development program
Eligible Costs
VIP cash incentive may be used for the following investment costs:
- Land, machinery, technological equipment, and tangible assets
- Intangible assets, e.g., software, licenses (up to 50% of total cost)
- Closed-end financial leasing (machines, vehicles, etc.)
- Equipment for renewable energy production and storage (also up to 50%)
For service or R&D centers, personnel costs for new employees over 24 months may also count as eligible expenses, forming the basis for EKD funding.
Act Quickly
It is important to note that although these modifications have been prepared by the government, legal changes are not yet in force, and it is currently unknown whether they will apply retroactively to ongoing cases.
It is therefore recommended to obtain information on the relevant EKD application requirements as soon as possible and prepare to take advantage of state funding opportunities opening in 2025–2026—whether for investments, service centers, or R&D activities.
Contact our team for detailed guidance.
