The recently published Law 4608/2019 entitled “Hellenic Development Bank and attracting Strategic Investments and other provisions” introduces notable changes with respect to strategic investments, while it establishes the Hellenic Development Bank. This legislative initiative creates a favorable environment for investors in order to revitalize the Greek economy.
On the 25th of April, 2019, Law 4608/2019 entitled “Hellenic Development Bank and attracting Strategic Investments and other provisions” was published following the submission by the Ministry of Economy and Development to Parliament of the relevant bill. The new law on strategic investments foresees a series of incentives aimed at stimulating strategic investment activity in Greece, namely tax exemptions, wage cost subsidies, fast-track licensing procedures and immediate expropriations. The relevant provisions also re-define the terms of strategic investment classification and introduce the requirement of an independent engineer responsible for monitoring the implementation of strategic investment projects.
ΙΙ. Overview of the core provisions of the new law
(i) New definition of strategic investments
The law induces radical changes for the treatment of strategic investments. The characterization of an investment as “strategic” depends on the proposed budget. Strategic investments are investments with total budget up to 100 million of Euros or those who create at least 150 new jobs. More specifically, strategic investments have been classified as follows:
- Investments creating at least 100 new jobs or the total budget up to 40 million of Euros. Especially for investments in the industrial sector, the new limits are reduced to 75 new jobs and a budget of 30 million of Euros. With respect to investments in industrial zones the new limits are reduced to the creation of 50 new jobs and 25 million of Euros as total budget.
- “Leading Investments” are those made of eminent world-renowned firms. It must be noted that leaders of international investments automatically enjoy the positive provisions i.e. the expedited licensing procedure and the tax exemption regime regardless of budget or number of employees.
- “Strategic Investments of fast track licensing” are those creating at least 20 new jobs and up to 20 million of Euros total budget.
- “Direct Strategic Investments” such as public-private partnership projects approved by the Inter-ministerial Committee and subjected to European Fund of Strategic Investments (EFSI) and the Projects of Common Interest (PCI).
(ii) Fast-track procedure
The provisions of the new law, besides setting the criteria for the characterization of strategic investments according to incentives, rationalize licensing procedures introducing new actions to expedite process and to eliminate bureaucratic procedures. Red type is thus bypassed, providing investors the guarantees of the immediate action of public services within 45 days from the submission of the business proposal. The Minister of Economy and Development has the jurisdiction to approve or reject in accordance with the law any strategic investment. In the case of a delay, the minister of Economy and Development can prolong the deadline to a period of a month in order to approve or reject the licensing. Among the decisive factors for the approval or rejection of the licensing are the portfolio and the proposal of the strategic investment.
(iii) Tax exemptions
Strategic investments enjoy a special and highly beneficiary frame of tax treatment while the investor has the guarantee of stable tax rates for 12 years at least, similarly to investments subjected to Law 4399/2016, and two tax exemption options:
- Tax of income. The tax exemption is activated with the implementation of the 25% of the investment.
- Acceleration of depreciation of the capital which they have subjected to the approved investment plan with double rates up to 40%.
(iv) Establishment of the “Hellenic Development Bank SA”
The new law establishes the “Hellenic Development Bank SA” (hereinafter “HDB”). HDB’s purpose is the promotion of fair, sustainable and holistic development of the economy at regional and national level. National development policy is an integral part of HDB’s strategy. In particular, HDB is established in order:
(a) to support entrepreneurship;
(b) to facilitate access by firms to sources of finance for the purpose of accessing and remedying market failures and deficiencies, in particular through the design, creation and implementation of financial instruments for the optimal channeling of national, European and other funds to enterprises;
(c) to promote innovation;
(d) to enhance the competitiveness of enterprises;
(e) to promote quality, strategic and innovative projects;
(f) to attract capital and promote investment in Greece with a view to economic and social development;
(g) to promote the design, development and implementation of financial instruments;
(h) to provide advisory services to companies and the public sector, as defined in Law 4270/2014,
(i) to promote social and solidary economy; and
(j) to promote employment.
Law 4608/2019 sets a detailed framework for attracting strategic investments and for stimulating the Greek economy according to a National Strategy for Growth so as to boost employment. The law, by moving along two axes, namely, the creation of a more attractive and efficient legal framework comprised of provisions granting a wide range of benefits and the simultaneous introduction of a safe, transparent and fast process, aims at enticing investors and ensuring utmost distribution to the public of the benefits from these investments.