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European Commission Approves Reintroduction of Bulgarian Aid Scheme to Support Investments by SMEs in High-Unemployment Areas — Orbitax Tax News & Alerts

The European Commission has announced its approval of the reintroduction of a Bulgarian regional aid scheme to support investments into manufacturing activities by SMEs.


State aid: Commission approves €77 million Bulgarian scheme to support investments in high unemployment areas

The European Commission has approved, under EU State aid rules, the reintroduction of a Bulgarian regional aid scheme to support investments into manufacturing activities by small and medium-sized enterprises ('SMEs') in high unemployment areas. The original scheme was approved by the Commission in March 2008 (N 166/2007), reintroduced in September 2015 (SA.39869), prolonged in November 2020 (SA.59027), and it expired in December 2021.

Bulgaria notified the Commission of its intention to reintroduce the scheme until the end of 2027, with an estimated overall budget of €77 million. The aim of the scheme is to promote regional development. Under the scheme, the aid will take the form of a corporate income tax exemption to support initial investment projects by SMEs, such as setting up a new establishment, increasing the capacity of an existing establishment, product diversification or a fundamental change in the production process of an existing establishment. The scheme targets Bulgaria's municipalities with unemployment rates that are at least 25% higher than the national average. The maximum amount of aid per beneficiary will be 50% of the eligible investment costs, except for 25% in the municipalities in Yugozapaden.

The Commission assessed the measure under EU State aid rules, in particular under Article 107(3)(a) and (c) of the Treaty on the Functioning of the European Union, which allow Member States to promote the economic development of the most disadvantaged areas, and the Regional State Aid Guidelines 2022-2027. The Commission found that the scheme is in line with the conditions set out in these Guidelines. In particular, the support will not exceed the maximum amount of aid in the eligible regions as set out in the Bulgarian regional aid map. The Commission concluded that the scheme is necessary, appropriate and proportionate and contributes to regional development. In addition, the Commission found that the scheme does not adversely affect trading conditions to an extent contrary to the common interest. On this basis, the Commission approved the Bulgarian scheme under EU State aid rules.

The non-confidential version of the decision will be made available under the case number SA.104266 in the State aid register on the Commission's competition website once any confidentiality issues have been resolved.