WORLD TRADE  
ORGANIZATION  G/SCM/N/155/EEC/Add.12
23 November 2007 
 (07-5166) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
New and Full Notification Pursuant to Article XVI:1  
of the GATT 1994 and Article 25 of the Agreement  
on Subsidies and Countervailing Measures  
  
EUROPEAN COMMUNITIES 
 
Addendum
 
   The following addendum to the notification of the European Communities relates to subsidy 
programmes of Hungary .   
 
_______________ 
 G/SCM/N/155/EEC/Add.12 
Page 2  
 
  HUNGARY  
 
TABLE OF CONTENTS 
 
 
  Page  
 
1. 2005 ........................................................................................................................... .................4  
1.1 CORPORATE TAX CONCESSIONS TO ASSIST STRUCTURAL ADJUSTMENT AND 
ECONOMIC DEVELOPMENT ........................................................................................................ 4  
1.1.1 Tax Concession for Investments Exceeding 3 Billion HUF.................................................. 4  
1.1.2 Tax Concession for Investments Exceeding 10 Billion HUF................................................ 5  
1.1.3 Tax Rate Relief for Foreign Investors.................................................................................... 6  
1.1.4 Tax Concession Related to Investments................................................................................. 7  
1.1.5 Tax Relief for Projects of Small and Medium Enterprises .................................................. 8  
1.1.6 Tax Concession for Small and Me dium Sized Enterprises .................................................. 9  
1.1.7 Tax Concession Related to Development Projects ................................................................ 9  
1.1.8 Tax Relief for Intellectual Products ..................................................................................... 11  
1.1.9 Tax Relief for Employment................................................................................................... 12  
1.1.10  Tax Relief for Research  and Development .......................................................................... 13  
1.1.11  Tax Concession for Film Production.................................................................................... 14  
1.1.12  Accelerated Depreciation for Small and Medium-sized Enterprises ................................ 15  
1.2 RESEARCH AND TECHNICAL INNOVATION FUND .................................................................... 16  
1.3 BUDGETARY SCHEME EARMARKED FOR NATIONAL INVESTMENT PROMOTION ..................... 17  
1.4 BUDGETARY SCHEME EARMARKED FOR INVESTMENT PROMOTION ....................................... 18  
1.5 MINING CONVERSION PROGRAMME ........................................................................................ 19  
1.6 BUDGETARY SCHEME EARMARKED FOR THE DEVELOPMENT OF SMALL AND MEDIUM 
SIZED ENTERPRISES ................................................................................................................. 20  
1.7 SUBSIDY FOR JOB-CREATION ................................................................................................... 21  
1.8 SUBSIDY FOR EMPLOYMENT OF PEOPLE WITH DISABILITIES .................................................. 22  
2. 2006 ........................................................................................................................... ...............23  
2.1 CORPORATE TAX CONCESSIONS TO ASSIST STRUCTURAL ADJUSTMENT AND 
ECONOMIC DEVELOPMENT ...................................................................................................... 23  
2.1.1 Tax Concession for Investments Exceeding 3 Billion HUF................................................ 23  
2.1.2 Tax Concession for Investments Exceeding 10 Billion HUF.............................................. 24  
2.1.3 Tax Concession Related to Investments............................................................................... 25  
2.1.4 Tax Relief for Projects of Small and Medium Enterprises ................................................ 26  
2.1.5 Tax Concession for Small and Medium Sized Enterprises ................................................ 27  
2.1.6 Tax Concession Related to Development Projects .............................................................. 28   G/SCM/N/155/EEC/Add.12 
 Page 3 
 
 
  2.1.7 Tax Relief for Intellectual Products ..................................................................................... 29  
2.1.8 Tax Relief for Employment................................................................................................... 30  
2.1.9 Tax Concession for Software Developers............................................................................. 31  
2.1.10  Preferential Tax Rate .......................................................................................................... ..32 
2.1.11  Tax Relief for Research  and Development .......................................................................... 33  
2.1.12  Tax Concession for Film Production.................................................................................... 34  
2.1.13  Accelerated Depreciation for Small and Medium-sized Enterprises ................................ 34  
2.2 RESEARCH AND TECHNICAL INNOVATION FUND .................................................................... 35  
2.3 BUDGETARY SCHEME EARMARKED FOR NATIONAL INVESTMENT PROMOTION ..................... 36  
2.4 BUDGETARY SCHEME EARMARKED FOR INVESTMENT PROMOTION ....................................... 37  
2.5 MINING CONVERSION PROGRAMME ........................................................................................ 38  
2.6 BUDGETARY SCHEME EARMARKED FOR THE DEVELOPMENT OF SMALL AND MEDIUM 
SIZED ENTERPRISES ................................................................................................................. 39  
2.7 SUBSIDY FOR JOB-CREATION ................................................................................................... 40  
2.8 EMPLOYMENT SUBSIDY OF PEOPLE WITH DISABILITIES ......................................................... 41  
 G/SCM/N/155/EEC/Add.12 
Page 4  
 
  1. 2005 
1.1 C
ORPORATE TAX CONCESSIONS TO ASSIST STRUCTURAL ADJUSTMENT AND ECONOMIC 
DEVELOPMENT  
1.1.1 Tax Concession for Invest ments Exceeding 3 Billion HUF 
1. Title of the subsidy programme  
 
 Tax concession for investments exceeding 3 billion HUF.    2. Period covered by the notification
 
 
 2005.   
 3. Policy objective and/or purpose of the subsidy
 
  The purpose of this tax concession is to stim ulate investments in underdeveloped regions 
from a social-economic point of view and/or in c ounties having unemployment rate higher than 15 per 
cent.    4. Background and authority for the subsidy
 
  This tax benefit is provided for by Secti on 21 of the Act LXXXI of 1996 on the Corporate 
Tax and Dividend Tax.   
 5. Form of the subsidy
 
  The subsidy is in the form of deduction from the corporate tax.   
 
6. To whom and how the subsidy is provided
 
  Companies with head office or premises registered in a socially-economically 
underdeveloped region and/or in a county where the unemployment rate exceeds 15 per cent, and after 
31 December 1996 began an investment of at l east 3 billion HUF for the production of goods may 
receive a tax concession in a ten year period following the project's start up.   
  The above tax benefit can only be applied fo r from the second taxation year and thereafter if 
the annual average number of the staff employed exceeds by at least 100 persons the average number 
of the staff employed in the year preceding the start up.   
 
 The tax concession equals to the ratio of sal es revenue from manufacturing operations to the 
total sales revenue.     This tax concession can not be applied to projects commencing subsequent to 
31 December 2002.   
 
7. Subsidy per unit or the total amount
 
  The tax benefit accounted for 12,8 billion HUF in 2005.    
8. Duration of the subsidy
 
  This tax concession may not be applied after the year 2011.    G/SCM/N/155/EEC/Add.12 
 Page 5 
 
 
  9. Statistical data permitting an assessmen t of the trade effects of the subsidy  
 
N.A.   
 
1.1.2 Tax Concession for Investments Exceeding 10 Billion HUF 
1. Title of the subsidy programme  
  Tax concession for investments exceeding 10 billion HUF.    2. Period covered by the notification
 
 
2005.   
 3. Policy objective and/or purpose of the subsidy
 
 
 The purpose of this tax benefit is to promote large investments.   
 4. Background and authority for the subsidy
 
  This tax benefit is provided for by Secti on 21 of Act LXXXI of 1996 on the Corporate Tax 
and Dividend Tax.   
 
5. Form of the subsidy
 
  The subsidy is in the form of deduction from the corporate tax.    
6. To whom and how the subsidy is provided
 
  Companies that began after 31 December 1996 an investment of at least 10 billion HUF destined for the production of goods may receive a 100 per cent tax concession in a ten year period 
following the project's start up.    
 The above tax benefit can only be applied fo r from the second taxation year and thereafter if 
the annual average number of the staff employed exceeds by at least 500 persons the average number 
of the staff employed in the year preceding the start up.     This tax concession can not be applied to projects commencing subsequent to 
31 December 2002.   
 7. Subsidy per unit or the total amount
 
  The tax benefit accounted for 99 billion HUF in 2005.    
8. Duration of the subsidy
 
  This tax concession may not be applied after the year 2011.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.   G/SCM/N/155/EEC/Add.12 
Page 6  
 
  1.1.3 Tax Rate Relief for Foreign Investors 
1. Title of the subsidy programme
 
  Tax rate relief for foreign investors.    
2. Period covered by the notification
 
  2005.    3. Policy objective and/or purpose of the subsidy
 
 
 The programme is intended to create conditions  conducive to the establishment and operation 
of foreign investors that do not engage  in economic activities in Hungary.   
 4. Background and authority for the subsidy
 
 
 This tax benefit is provided for by Section 19, paragraph (2) of Act LXXXI of 1996 on the 
Corporate Tax and Dividend Tax.    5. Form of the subsidy
 
 
 The subsidy is in the form of reduced corporate tax rate.   
 6. To whom and how the subsidy is provided
 
  The preferential tax rate is available for a ny limited liability company or joint-stock company 
incorporated and having its head office in Hungary that is fully foreign owned without discontinuation 
and which:     a) has obtained authorisation from the Minister of Finance granting it Customs Free 
Zone benefits or, having regard to the fu lfilment of the conditions in b) through e), 
was registered by the Minister of Finance, and 
 
 b) performs trading activities exclusively between third countries, or provides services 
exclusively to other countries, and 
  c) in its domestic administrative and court proceedings employs only domestic lawyers 
and whose senior officers, supervisory board members and employees, taken 
separately, are in majority domestic natural persons and, furthermore, meets its audit obligations through an auditor registered in Hungary, and 
  d) neither itself, nor its owners have any interests in domestic companies or co-
operatives, nor do they maintain any repr esentative office in Hungary, nor there are 
domestic persons among its direct  or indirect owners.   
 7. Subsidy per unit or the total amount
 
  The foreign investor may take advantage of a preferential 4 per cent tax rate.   
 
8. Duration of the subsidy
 
  The benefits under this scheme will cease  to exist after 31 December 2005.   
  G/SCM/N/155/EEC/Add.12 
 Page 7 
 
 
  9. Statistical data permitting an assessmen t of the trade effects of the subsidy  
  N.A.    
1.1.4 Tax Concession Related to Investments 
1. Title of the subsidy programme
 
  Tax concession related to investments.    2. Period covered by the notification
 
 
 2005.    3. Policy objective and/or purpose of the subsidy
 
 
 The objective of this scheme is to promote deve lopment activities by corporations of a certain 
importance whose investment projects result in the manufacturing of up-to-date and environment 
friendly products and thereby increasing their sales and/or creating new jobs.    4. Background and authority for the subsidy
 
 
 This tax concession has been provided for by Section 14/A., paragraph (2) of Act LXXXVI 
of 1991 on the Corporate Tax, and Decree 90/1994 (V I.8.) of the Government on Certain Corporate 
Tax Benefits as modified by Decree 190/1994 (XII.31.) of the Government on Certain Corporate Tax 
benefits, and Section 29, paragra ph (5), subparagraph d) of Act LXXXI of 1996 on the Corporate Tax 
and Dividend Tax.   
 
5. Form of the subsidy  
  The subsidy is in the form of deduction from the corporate tax.    6. To whom and how the subsidy is provided
 
 
 Application for the concession could be ma de by a company (a) whose founders' equity 
exceeded 500 million HUF and (b) projected to make investment for at least 200 million HUF that (c) resulted in yearly sales revenue half of which w as realized from the manufacturing of environment 
friendly products and/or from the sales of products  that have been produced by using modern 
technologies and/or employing the results of scientific  research and (d) project ed an increase in its 
turnover or (e) the creation of new jobs.  U nder Section 14/A of the Corporate Tax Act the 
Government was granted discretionary power to gran t individual tax concessions to applicants that 
met the criteria referred to above.    7. Subsidy per unit or the total amount
 
 
 The maximum extent of the subsidy is 100 pe r cent of the corporate tax due for the first 
5 years and 60 per cent for the second period of 5 years.     The tax concession can be made use of in the form of withholding the tax out of the tax 
calculated.   
  The tax benefit accounted for 1 billion HUF in 2005.   G/SCM/N/155/EEC/Add.12 
Page 8  
 
  8. Duration of the subsidy
 
  The provisions of the Corporate Tax Act in troducing this scheme came into effect on 
1 January 1994 and lost effect on 1 January 1995.  The possibility of obta ining tax concession under 
this scheme was abolished by Section 13, paragrap h (5), subparagraph a) of Act LXXXIII of 1994 
with effect as of 1 January 1995.  However, part icular concessions grante d before that date will 
continue to be applied until their expiry date a pproved by the Government and provided that the 
criteria continue to be met.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.    
1.1.5 Tax Relief for Projects of Small and Medium Enterprises 
1. Title of the subsidy programme
 
 
 Tax relief for projects of small and medium enterprises.    2. Period covered by the notification
 
  2005.   
 
3. Policy objective and/or purpose of the subsidy
 
  The objective of this scheme is to promot e investment activities of small and medium 
enterprises.   
 
4. Background and authority for the subsidy
 
  The tax relief is provided for by Section 7, paragraph (1), subparagr aph zs) of Act LXXXI 
of 1996 on the Corporate Tax and Dividend Tax.    
5. Form of the subsidy
 
  This subsidy is in the form of de duction from the corporate tax base.   
 6. To whom and how the subsidy is provided
 
 
 Investing small and medium enterprises, provi ded all of their members were private natural 
persons in the tax year.    7. Subsidy per unit or the total amount
 
 
 The tax relief is equal to the total amount of th e project costs, but may not be higher than the 
pre-tax profit or 30 million HUF.     The tax benefit accounted for 13,2 billion HUF in  2005 (the declared tax relief multiplied by 
the 16 per cent tax rate).   
 
8. Duration of the subsidy
 
  This tax relief was introduced in 2001.  No explic it time limit is attached to this subsidy.   
  G/SCM/N/155/EEC/Add.12 
 Page 9 
 
 
  9. Statistical data permitting an assessmen t of the trade effects of the subsidy  
  N.A.    
1.1.6 Tax Concession for Small and Medium Sized Enterprises 
1. Title of the subsidy programme
 
  Tax concession for small and medium sized enterprises.    2. Period covered by the notification
 
 
 2005.    3. Policy objective and/or purpose of the subsidy
 
 
 The purpose of this tax concession is to stimulate investment activities of small and medium-
sized enterprises.    4. Background and authority for the subsidy
 
  The tax concession is provided for by Secti on 22/A of Act LXXXI of 1996 on Corporate Tax 
and Dividend Tax.   
 5. Form of the subsidy
 
  The subsidy is in the form of deduction from the corporate tax.   
 
6. To whom and how the subsidy is provided
 
  Small and medium-sized enterprises financing their investments by bank loans.    7. Subsidy per unit or the total amount
 
 
 The tax concession is equal to 40 per cent of the interest paid on bank loans during the tax year.  The concession may not be in excess of 6 million HUF per year.     The tax benefit accounted for 2,4 billion HUF in 2005.   
 
8. Duration of the subsidy
 
  This tax concession was introduced in 2001.  No expl icit time limit is attached to this subsidy.   
 9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.    
1.1.7 Tax Concession Related to Development Projects 
1. Title of the subsidy programme
 
 
 Tax concession related to development projects.   G/SCM/N/155/EEC/Add.12 
Page 10  
 
  2. Period covered by the notification
 
  2005.    3. Policy objective and/or purpose of the subsidy
 
 
 The objective of this scheme is to stimulate investment activities.    4. Background and authority for the subsidy
 
 
 This tax concession has been provided for by Section 22/B of Act LXXXI of 1996 on the 
Corporate Tax and Dividend Tax.    5. Form of the subsidy
 
 
 The subsidy is in the form of deduction from the corporate tax.   
 6. To whom and how the subsidy is provided
 
  The government grants tax concession to a ta xpayer whose development project entails an 
investment of at least 3 billion HUF or 1 billion HUF if the project is started and operated in 
preferable regions.  The tax concession can be app lied in the four years following the first year in 
which the tax concession is used if:     a) the average work force employed exceed s the average number of persons employed 
during the year prior to the commencement of  the project by at least 100 workers – or 
50 workers if the project is started a nd operated in preferable regions, or 
  b) if the taxpayer's annualized wage costs are at least 600 times greater than the amount 
of the minimum wage effective on the first day of the tax year as calculated for the tax year – or at least 300 times greater if  the project is launc hed and operated in 
preferable regions – as compared to the a nnualized wage costs of the year preceding 
the year in which the project commenced, or 
  c) from the trade debts of the taxpayer the di rect cost of the taxpayer's liabilities payable 
to small and medium sized enterprises exceeds 30 per cent.   
 
 The government grants tax concession for:   
  a) development projects with a value of at least 100 million HUF, if it constitutes the 
launch and operation of an independent environmental protection project or a 
wideband Internet service or a food facility project or a basic research, applied research and experimental development or  a motion picture and video production 
project; 
  b) projects serving to create new jobs.     Tax concession for projects serving to create new jobs is granted if during the four years 
subsequent to the third tax year following the fi rst year in which the tax allowance is used:   
  a) at least 20 per cent of the total work force hired for the new jobs created under the 
development programme are new entrants in the labour market, and 
  G/SCM/N/155/EEC/Add.12 
 Page 11 
 
 
  b) the average work force employed exceed s the average number of persons employed 
during the year prior to the commencement of the project by at least 300 workers (150 workers for medium-sized enterprises, 30 workers for small enterprises) – or 150 workers (75 workers for medium-siz ed enterprises, 15 workers for small 
enterprises) if the project is started and operated in preferable regions.   
 
 From the value of the project entitling tax concession:    
a) the value of previously unused ass ets must be at least 30 per cent;   
 
 b) the value of improvements by renovation, refurbishing etc. must not exceed 20 per 
cent, unless the project is launched and operated in preferable regions.   
 7. Subsidy per unit or the total amount
 
 
 The support granted to a specific developmen t project may not be higher than the amount 
computed by the ratio stipulated in the legislati on from the total cost of the project.  In the case of 
applications for tax concession submitted before  31 December 2003, the tax concession may be 
claimed up to 100 per cent of the corporate income tax otherwise payable.     In the case of applications for tax con cession submitted after 31 December 2003, the tax 
concession may be claimed up to 80 per cent of the corporate income tax otherwise payable.   
  The tax benefit accounted for 3,4 billion HUF in 2005.    8. Duration of the subsidy
 
 
 The taxpayer can take advantage of tax c oncession on a development programme begun after 
31 December 2002 and in five tax years.     In the case of applications for tax con cession submitted after 31 December 2003, the tax 
concession may be applied for ten years.   
 
9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.    1.1.8 Tax Relief for Intellectual Products 
1. Title of the subsidy programme
 
  Tax relief for intellectual products.    2. Period covered by the notification 
 
 
 2005.    3. Policy objective and/or purpose of the subsidy
 
 
 The objective of this scheme is to promote intellectual activities.   G/SCM/N/155/EEC/Add.12 
Page 12  
 
  4. Background and authority for the subsidy
 
  This tax relief has been provided for by S ection 7, paragraph (1), subparagraph sz) of 
Act LXXXI of 1996 on the Corporate Tax and Dividend Tax.    
5. Form of the subsidy
 
  This subsidy is in the form of de duction from the corporate tax base.   
 6. To whom and how the subsidy is provided
 
 
 Small and medium-sized enterprises.    7. Subsidy per unit or the total amount
 
 
 The tax relief is equal to the expenses incurre d in connection with the acquisition of rights in 
Hungary of a patent, consumer or industrial design a nd consumer or industrial design protection right.   
  The tax benefit accounted for 0,1 billion HUF in 2005 (the declared tax relief multiplied by 
the 16 per cent tax rate).    
8. Duration of the subsidy
 
  This tax relief was introduced in 2005.  No explic it time limit is attached to this subsidy.   
 9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.    
1.1.9 Tax Relief for Employment 
1. Title of the subsidy programme
 
 
 Tax relief for employment.   
 2. Period covered by the notification
 
  2005.   
 
3. Policy objective and/or purpose of the subsidy
 
  The objective of this scheme is to promote employment.    4. Background and authority for the subsidy
 
 
 This tax relief has been provided for by S ection 7, paragraph (1), subparagraph y) of 
Act LXXXI of 1996 on the Corporate Tax and Dividend Tax.    5. Form of the subsidy
 
 
 This subsidy is in the form of de duction from the corporate tax base.    G/SCM/N/155/EEC/Add.12 
 Page 13 
 
 
  6. To whom and how the subsidy is provided  
  Micro enterprises with no more than five employees.    7. Subsidy per unit or the total amount
 
 
 The tax relief is equal to the sum recei ved by multiplying the minimum wage by any 
increment in the average number of employees in comp arison to the previous tax year.  This tax relief 
can be applied if the taxpayer has no public debts of any kind.    
 The tax benefit accounted for 0,3 billion HUF in 2005 (the declared tax relief multiplied by 
the 16 per cent tax rate).    8. Duration of the subsidy
 
 
 This tax relief was introduced in 2005.  No explic it time limit is attached to this subsidy.   
 9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.    1.1.10 Tax Relief for Research and Development 
1. Title of the subsidy programme
 
  Tax relief for research and development.    
2. Period covered by the notification
 
  2005.    3. Policy objective and/or purpose of the subsidy
 
 
 The objective of this scheme is to promote the R and D activity.   
 4. Background and authority for the subsidy
 
  The tax relief is provided for by Section 7, paragraph (1), subparagraph t), and 
paragraphs (17) and (18) of Act LXXXI of 1996 on the Corporate Tax and Dividend Tax.   
 5. Form of the subsidy
 
  This subsidy is in the form of de duction from the corporate tax base.   
 
6. To whom and how the subsidy is provided
 
  Taxpayers engaged in basic research, app lied research and experimental development 
performed on premises managed by a research ins titution founded by an institution of higher 
education or the Hungarian Academy of Sciences ma y claim three times the general tax relief, or 
maximum 50 million HUF.   G/SCM/N/155/EEC/Add.12 
Page 14  
 
  7. Subsidy per unit or the total amount
 
  The tax relief is equal to the direct costs of basic research, applied research and experimental 
development incurred.  Any support or assistance received for development purposes can not be taken 
into account.   
 
 The tax benefit accounted for 19,2 billion HUF in  2005 (the declared tax relief multiplied by 
the 16 per cent tax rate).    8. Duration of the subsidy
 
 
 This tax relief was introduced in 1997.  No explic it time limit is attached to this subsidy.   
 9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.   
 
1.1.11 Tax Concession for Film Production 
1. Title of the subsidy programme  
  Tax concession for film production.   
 
2. Period covered by the notification
 
  2005.    
3. Policy objective and/or purpose of the subsidy
 
  The purpose of this tax concession is to stimulate film production.    4. Background and authority for the subsidy
 
 
 The tax concession is provided for by Secti on 22, paragraphs (1) and (3) of Act LXXXI 
of 1996 on Corporate Tax and Dividend Tax.    5. Form of the subsidy
 
 
 The subsidy is in the form of deduction from the corporate tax.   
 6. To whom and how the subsidy is provided
 
 
Taxpayers sponsoring film productions.   
 
7. Subsidy per unit or the total amount  
  The tax concession is equal to the amount dona ted for film production.  The tax concession 
can be applied during four years.    
 The tax concession may be claimed up to 70 per cent of the corporate income tax otherwise 
payable.     The tax benefit accounted for 2,1 billion HUF in 2005.   
  G/SCM/N/155/EEC/Add.12 
 Page 15 
 
 
  8. Duration of the subsidy  
  This tax concession was introduced in 1 April 2004.  No explicit time limit is attached to this 
subsidy.    
9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.    
1.1.12 Accelerated Depreciation for Small and Medium-sized Enterprises 
1. Title of the subsidy programme
 
  Accelerated depreciation for small and medium-sized enterprises.    2. Period covered by the notification
 
 
 2005.    3. Policy objective and/or purpose of the subsidy
 
  The objective of this scheme is to promote investment activities.   
 
4. Background and authority for the subsidy
 
  This tax relief has been provided for by A nnex 1, point 14 of Act LXXXI of 1996 on the 
Corporate Tax and Dividend Tax.   
 
5. Form of the subsidy
 
  This subsidy is in the form of de duction from the corporate tax base.   
 6. To whom and how the subsidy is provided
 
 
 Small and medium-sized enterprises making investments in underdeveloped regions.   
 7. Subsidy per unit or the total amount
 
 
 Small and medium-sized enterprises may clai m 100 per cent depreciation on the value of 
machinery, equipment and vehicles (except passenger cars), which have never been used previously, 
if these tangible assets are used in any one of the 48  micro-regions deemed most underprivileged.   
 8. Duration of the subsidy
 
 
 This tax relief was introduced in 10 May 2005.  No explicit time limit is attached to this 
subsidy.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.   
 G/SCM/N/155/EEC/Add.12 
Page 16  
 
  1.2 R
ESEARCH AND TECHNICAL INNOVATION FUND 
1. Title of the subsidy programme  
  Innovation Fund for Researc h and Technology.   
 
2. Period covered by the notification
 
  2005.    3. Policy objective and/or purpose of the subsidy
 
 
 The Fund is intended to improve the competitiveness and innovation performance of the Hungarian economy.  Its main objectives are:    
- to increase and concentrate the innovation activ ity of the enterprises with the emphasis on 
utilisation of innovative, marketab le and competitive products;   
- to increase the regional innovation capacity;   
- to increase the cooperation between the resear ch and industrial production sphere by 
improving the conditions of innovation environment.   
 4. Background and authority for the subsidy
 
 
 Act XC. of 2003 on the Innovation Fund for Research and Technology and Act CXXXIV 
of 2004 on Research, Development and Technological Innovation.   
 5. Form of the subsidy
 
 
 Grant.    6. To whom and how the subsidy is provided
 
  Public and private research entities, en terprises, non-profit organisations and common 
projects conducted by companies in consortia with  public/university laboratories may receive the 
support.     Support from the Fund may be received through open tender procedures for the purposes set in the Act.   
 
7. Subsidy per unit or the total amount
 
  Payments under this programme amounted to 26,5 billion HUF.    8. Duration of the subsidy
 
 
 No explicit time limit is attached to the programme.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.    G/SCM/N/155/EEC/Add.12 
 Page 17 
 
 
  1.3 B UDGETARY SCHEME EARMARKED FOR NATIONAL INVESTMENT PROMOTION  
1. Title of the subsidy programme  
  Budgetary scheme earmarked for Na tional Investment Promotion.   
 
2. Period covered by the notification
 
  2005.    3. Policy objective and/or purpose of the subsidy
 
 
 The scheme is designed to assist the realis ation of national economic and investment 
promotion policy objectives in compliance with Hunga ry's obligations under EU  law and international 
agreements by promoting i.a.    
- foreign direct investment in Hungary;   
- realisation of industrial parks and innovation centres;   
- establishment of quality assurance and certifica tion systems necessary for the introduction of 
products into foreign markets;  
- regional development;   
- participation in international aid programmes;   
- information and PR activities bringing about  investment incentives;   
- development of subcontractors' ne twork, in particular SMEs;   
- enhancement of the suppliers' competitiveness in particular SMEs;   
- financement of measures to protect consumers;   
- establishment of market monitoring systems;   
- development of human resources;   
- modernization of  technologies;   
- realisation of logistic centres and services;   
- realization of industrial clusters;   
- enhancement of innovation and R+D.   
 
4. Background and authority for the subsidy
 
  Act on state budget, Decree 1/2001 (I. 5) of  the Minister of Economic Affaires.   
 5. Form of the subsidy
 
 
 The subsidy can be provided for in the form  of grant, and interest rate support.   
 6. To whom and how the subsidy is provided
 
  Domestic legal persons, economic corpora tions without legal personality, self-employed 
persons, cooperatives, professional as sociations, Chamber of Trade a nd Industry, natural persons of 
Hungarian citizenship, public benefit companies, local governments.     All kinds of subsidy are aw arded through tender procedures.  The upper limit of support is 
specified in the call for tender.  At least 25 per cen t of the project cost should be financed from own 
source.   G/SCM/N/155/EEC/Add.12 
Page 18  
 
  7. Subsidy per unit or the total amount
 
  The total amount accounted for 4,323 billion HUF.    8. Duration of the subsidy
 
 
 No explicit time limit is attached to the programme.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.   
 1.4 B
UDGETARY SCHEME EARMARKED FOR INVESTMENT PROMOTION  
1. Title of the subsidy programme  
 
 Budgetary scheme earmarked for investment promotion.   
 2. Period covered by the notification 
 
  2005.    
3. Policy objective and/or purpose of the subsidy
 
  The scheme is designed to assist the realiza tion of strategic investment in manufacturing 
industry, creation of R+D investments, logistic centres and projects in touristic sector in compliance with Hungary's obligations under EU law and inte rnational agreements by promoting i.a.:   
 
- enhancement of the international competitiveness, 
- acceleration of industrial restructuring, 
- development of technologies, 
- foreign direct investments of strategic investors, 
- creation of regional service centres, 
- establishment of R+D investments, 
- realization of investments in tourism sector.   
 4. Background and authority for the subsidy
 
 
 Act on state budget, Decree 1/2001 (I. 5) of the Minister of Economic Affairs.   
 5. Form of the subsidy
 
  The subsidy is to be provided in the form of grant.    
6. To whom and how the subsidy is provided
 
  Domestic legal persons, economic corpora tions without legal personality, European 
companies, European cooperatives registered in Hungary.    
 Subsidy is awarded on the basis of the Government decision.  The upper limit of support is in 
accordance with the maximum aid intensity specified  in 85/2004 (IV 19) Government Decree.  At 
least 40 per cent of the project cost should be financed from own source.    G/SCM/N/155/EEC/Add.12 
 Page 19 
 
 
  7. Subsidy per unit or the total amount  
  The total amount accounted for 5,176 billion HUF.    8. Duration of the subsidy
 
 
 No explicit time limit is attached to the programme.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.   
 1.5 M
INING CONVERSION PROGRAMME  
1. Title of the subsidy programme  
 
 Mining conversion programme.   
 2. Period covered by the notification
 
  2005.    
3. Policy objective and/or purpose of the subsidy
 
  The assistance is intended to address major social problems stemming from structural adjustment in the sector and the need of ensuri ng progressive and orderly reduction of mining.   
 
4. Background and authority for the subsidy
 
  Annual state budget, Decree 7/2005 (I. 19) Korm. of the Government.    5. Form of the subsidy
 
 
 Grant.   
 6. To whom and how the subsidy is provided
 
  Aid is granted by the government to specific mining companies on the basis of either the Act 
on State Budget or within its own discretionary power.   
 7. Subsidy per unit or the total amount
 
  The support accounted for 1,4 billion HUF.    
8. Duration of the subsidy
 
  No explicit time limit is attached to this programme.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.    G/SCM/N/155/EEC/Add.12 
Page 20  
 
  1.6 B
UDGETARY SCHEME EARMARKED FOR THE DEVELOPMENT OF SMALL AND MEDIUM SIZED 
ENTERPRISES  
1. Title of the subsidy programme  
  Budgetary scheme earmarked for the developmen t of small and medium sized enterprises.   
 
2. Period covered by the notification
 
  2005.    
3. Policy objective and / or purpose of the subsidy
 
  The scheme is designed to help SMEs overco me disadvantages inherent in their size.   
 4. Background and authority for the subsidy
 
 
 The subsidy is provided for by the Act XXXI V of 2004 on the Small and Medium Sized 
Enterprises and on the Support of their Developm ent, the acts on annual state budgets and the 
Decree 1/2001 (I.5) of the Minister for Economic Affairs.    5. Form of the subsidy
 
 
 The support can be provided for in the form of  grant, interest rate support, preferential 
guarantee fee, interest free loan, loan with preferen tial interest rate, participation in venture capital 
funds.  
6. To whom and how the subsidy is provided
 
  All kinds of subsidy are awarded through te nder procedures.  Support may be granted for 
programmes whose purpose is i.a.:    
- to establish conditions for start up, 
- to attain entrepreneurial knowle dge, to get acquainted with the law of the European Union, to 
develop entrepreneurial cultu re and managerial qualities, 
- to improve competitiveness through technological development, 
- to enlarge subcontractors network, 
- to explore market possibilities, 
- to promote cooperation among SMEs in  production, selling and purchase, 
- to participate in EU programmes.   
  The subsidy may not be in excess of 50 per cent of the programme's total costs except for 
depressed counties where the ceiling is 65 per cent.    
7. Subsidy per unit or the total amount
 
 
HUF 3 567 million.   
 8. Duration of the subsidy
 
 
 No explicit time limit is attached to this programme.    G/SCM/N/155/EEC/Add.12 
 Page 21 
 
 
  9. Statistical data permitting an assessmen t of the trade effects of the subsidy  
  N.A.    1.7 S
UBSIDY FOR JOB-CREATION  
1. Title of the subsidy program  
  Labour Market Fund.    2. Period covered by the notification
 
 
 2005.    3. Policy objective and / or purpose of the subsidy
 
 
 Promoting creation of new jobs through investments.   
 4. Background and authority for the subsidy
 
  The subsidy is provided for by 18 § of the Act IV of 1991 on Job Assistance and 
Unemployment Benefits and the 18 § of the Decree 6/1996 (VII. 16) of the Minister for Employment 
on employment subsidies and subs idy for crisis management.   
 5. Form of the subsidy
 
  Non-reimbursable subsidy.   
 
6. To whom and how the subsidy is provided
 
  All kinds of subsidy are aw arded through tender procedures.  At least 25 per cent of the 
expenditure of investment must be financed from own source.    
 Support may be granted for those employers who create new jobs, connected to investment.  
Support may be granted for those employers who undertake to:    
- realize the investment in a year after its initiation, 
- sustain and operate capacities and services produced by the investment continuously at least 
for 5 years in accordance of the original purpose, and 
- maintain the employee number indicated in the application at least 3 years after hiring them.   
  The subsidy may not be in excess of 50 per cent of the programme's total costs except for 
SME's in depressed regions.    
7. Subsidy per unit or the total amount
 
  HUF 1 651 million.    8. Duration of the subsidy 
 
 
 No explicit time limit is attached to this program.   G/SCM/N/155/EEC/Add.12 
Page 22  
 
  9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.    1.8 S
UBSIDY FOR EMPLOYMENT OF PEOPLE WITH DISABILITIES  
1. Title of the subsidy program  
  Labour Market Fund.    2. Period covered by the notification
 
 
 2005.    3. Policy objective and / or purpose of the subsidy
 
 
 Increasing employment of and creating jobs for people with disabilities.   
 4. Background and authority for the subsidy
 
  The subsidy is provided for by 19 § of the Act IV of 1991 on Job Assistance and 
Unemployment Benefits and the 19 § of the Decree 6/1996 (VII. 16) of the Minister for Employment 
on employment subsidies and subs idy for crisis management.   
 5. Form of the subsidy
 
  The support can be provided in the form of re imbursable and/or non-reimbursable subsidy.   
 
6. To whom and how the subsidy is provided
 
  All kinds of subsidy are awarded through te nder procedures.  Support may be granted for 
those employers who undertake i.e.:    
- to create new jobs for people with disabilities, 
- to restructure production or service facilities in connection with employment of people with 
disabilities, 
- to procure or transform tools and equipments necessary for employment of people with 
disabilities, 
- to modernize workplaces and working tools in favour of employment of people with 
disabilities, 
- to invest in order to create, modernize or develop workplaces in favour of employment of 
people with disabilities.   
  The employment obligation of the employer is 3 years in the first and the last case, otherwise 
2 years.   
 7. Subsidy per unit or the total amount
 
 
HUF 892 million.   
 
8. Duration of the subsidy  
  No explicit time limit is attached to this program.     G/SCM/N/155/EEC/Add.12 
 Page 23 
 
 
  9. Statistical data permitting an assessmen t of the trade effects of the subsidy  
  N.A.     2. 2006 
2.1 C
ORPORATE TAX CONCESSIONS TO ASSIST STRUCTURAL ADJUSTMENT AND ECONOMIC 
DEVELOPMENT  
2.1.1 Tax Concession for Invest ments Exceeding 3 Billion HUF 
1. Title of the subsidy programme  
 
 Tax concession for investments exceeding 3 billion HUF.    2. Period covered by the notification
 
 
2006.   
 3. Policy objective and/or purpose of the subsidy
 
  The purpose of this tax concession is to stim ulate investments in underdeveloped regions 
from a social-economic point of view and/or in c ounties having unemployment rate higher than 15 per 
cent. 
 4. Background and authority for the subsidy
 
  This tax benefit is provided for by Secti on 21 of the Act LXXXI of 1996 on the Corporate 
Tax and Dividend Tax.   
 5. Form of the subsidy
 
  The subsidy is in the form of deduction from the corporate tax.    
6. To whom and how the subsidy is provided
 
  Companies with head office or premises registered in a socially-economically 
underdeveloped region and/or in a county where the unemployment rate exceeds 15 per cent, and after 
31 December 1996 began an investment of at least  3 billion HUF for the production of goods may 
receive a tax concession in a ten year period following the project's start up.   
  The above tax benefit can only be applied fo r from the second taxation year and thereafter if 
the annual average number of the staff employed exceeds by at least 100 persons the average number 
of the staff employed in the year preceding the start up.    
 The tax concession equals to the ratio of sal es revenue from manufacturing operations to the 
total sales revenue.     This tax concession can not be applied to projects commencing subsequent to 
31 December 2002.   G/SCM/N/155/EEC/Add.12 
Page 24  
 
  7. Subsidy per unit or the total amount
 
  The amount of tax benefit is not yet available.    8. Duration of the subsidy
 
 
 This tax concession may not be applied after the year 2011.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.   
 
2.1.2 Tax Concession for Investments Exceeding 10 Billion HUF 
1. Title of the subsidy programme  
 
 Tax concession for investments exceeding 10 billion HUF.   
 2. Period covered by the notification
 
  2006.    
3. Policy objective and/or purpose of the subsidy
 
  The purpose of this tax benefit is to promote large investments.   
 4. Background and authority for the subsidy
 
 
 This tax benefit is provided for by Secti on 21 of Act LXXXI of 1996 on the Corporate Tax 
and Dividend Tax.    5. Form of the subsidy
 
 
 The subsidy is in the form of deduction from the corporate tax.   
 6. To whom and how the subsidy is provided
 
  Companies that began after 31 December 1996 an investment of at least 10 billion HUF 
destined for the production of goods may receive a 100 per cent tax concession in a ten year period 
following the project's start up.     The above tax benefit can only be applied fo r from the second taxation year and thereafter if 
the annual average number of the staff employed exceeds by at least 500 persons the average number 
of the staff employed in the year preceding the start up. 
 
 This tax concession can not be applied to projects commencing subsequent to 
31 December 2002.    7. Subsidy per unit or the total amount
 
 
 The amount of tax benefit is not yet available.    G/SCM/N/155/EEC/Add.12 
 Page 25 
 
 
  8. Duration of the subsidy  
  This tax concession may not be applied after the year 2011.  9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.    
2.1.3 Tax Concession Related to Investments 
1. Title of the subsidy programme
 
 
 Tax concession related to investments.    2. Period covered by the notification
 
 
 2006.   
 3. Policy objective and/or purpose of the subsidy
 
  The objective of this scheme is to promote deve lopment activities by corporations of a certain 
importance whose investment projects result in the manufacturing of up-to-date and environment 
friendly products and thereby increasing their sales and/or creating new jobs.  
 4. Background and authority for the subsidy
 
  This tax concession has been provided for by Section 14/A., paragraph (2) of Act LXXXVI 
of 1991 on the Corporate Tax, and Decree 90/1994 (V I.8) of the Government on Certain Corporate 
Tax Benefits as modified by Decree 190/1994 (XII.31) of the Government on Certain Corporate Tax 
benefits, and Section 29, paragra ph (5), subparagraph d) of Act LXXXI of 1996 on the Corporate Tax 
and Dividend Tax.    5. Form of the subsidy
 
 
 The subsidy is in the form of deduction from the corporate tax.    6. To whom and how the subsidy is provided
 
 
 Application for the concession could be ma de by a company (a) whose founders' equity 
exceeded 500 million HUF and (b) projected to make investment for at least 200 million HUF that (c) resulted in yearly sales revenue half of which w as realized from the manufacturing of environment 
friendly products and/or from the sales of products  that have been produced by using modern 
technologies and/or employing the results of scientific  research and (d) project ed an increase in its 
turnover or (e) the creation of new jobs.  Unde r Section 14/A. of the Corporate Tax Act the 
Government was granted discretionary power to gran t individual tax concessions to applicants that 
met the criteria referred to above.    7 Subsidy per unit or the total amount
 
 
 The maximum extent of the subsidy is 100 pe r cent of the corporate tax due for the first 
5 years and 60 per cent for the second period of 5 years.   G/SCM/N/155/EEC/Add.12 
Page 26  
 
   The tax concession can be made use of in the form of withholding the tax out of the tax 
calculated.     The amount of tax benefit is not yet available.    
8. Duration of the subsidy
 
  The provisions of the Corporate Tax Act in troducing this scheme came into effect on 
1 January 1994 and lost effect on 1 January 1995.  The possibility of obta ining tax concession under 
this scheme was abolished by Section 13, paragrap h (5), subparagraph a) of Act LXXXIII of 1994 
with effect as of 1 January 1995.  However, part icular concessions grante d before that date will 
continue to be applied until their expiry date a pproved by the Government and provided that the 
criteria continue to be met.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.    
2.1.4 Tax Relief for Projects of Small and Medium Enterprises 
1. Title of the subsidy programme
 
 
 Tax relief for projects of small and medium enterprises.   
 2. Period covered by the notification
 
  2006.   
 
3. Policy objective and/or purpose of the subsidy
 
  The objective of this scheme is to promot e investment activities of small and medium 
enterprises.    
4. Background and authority for the subsidy
 
  The tax relief is provided for by Section 7, paragraph (1), subparagr aph zs) of Act LXXXI 
of 1996 on the Corporate Tax and Dividend Tax.    
5. Form of the subsidy
 
  This subsidy is in the form of de duction from the corporate tax base.   
 6. To whom and how the subsidy is provided
 
 
 Investing small and medium enterprises, provi ded all of their members were private natural 
persons in the tax year.    7. Subsidy per unit or the total amount
 
 
 The tax relief is equal to the total amount of th e project costs, but may not be higher than the 
pre-tax profit or 30 million HUF.     The amount of tax benefit is not yet available.     G/SCM/N/155/EEC/Add.12 
 Page 27 
 
 
  8. Duration of the subsidy  
  This tax relief was introduced in 2001.  No explic it time limit is attached to this subsidy.   
9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.   
 
2.1.5 Tax Concession for Small and Medium Sized Enterprises 
1. Title of the subsidy programme  
 
 Tax concession for small and medium sized enterprises.   
 2. Period covered by the notification
 
  2006.   
 
3. Policy objective and/or purpose of the subsidy
 
  The purpose of this tax concession is to stimulate investment activities of small and medium-sized enterprises.    
4. Background and authority for the subsidy
 
  The tax concession is provided for by Secti on 22/A of Act LXXXI of 1996 on Corporate Tax 
and Dividend Tax.    
5. Form of the subsidy
 
  The subsidy is in the form of deduction from the corporate tax.    6. To whom and how the subsidy is provided
 
 
 Small and medium-sized enterprises financing their investments by bank loans.   
 7. Subsidy per unit or the total amount
 
  The tax concession is equal to 40 per cent of the interest paid on bank loans during the tax 
year.  The concession may not be in excess of 6 million HUF per year.   
  The amount of tax benefit is not yet available.    8. Duration of the subsidy
 
 
 This tax concession was introduced in 2001. No explic it time limit is attached to this subsidy.   
 9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.   G/SCM/N/155/EEC/Add.12 
Page 28  
 
  2.1.6 Tax Concession Related to Development Projects 
1. Title of the subsidy programme
 
  Tax concession related to development projects.    
2. Period covered by the notification
 
  2006.    3. Policy objective and/or purpose of the subsidy
 
 
 The objective of this scheme is to stimulate investment activities.    4. Background and authority for the subsidy
 
 
 This tax concession has been provided for by Section 22/B of Act LXXXI of 1996 on the 
Corporate Tax and Dividend Tax.    5. Form of the subsidy
 
  The subsidy is in the form of deduction from the corporate tax.   
 
6. To whom and how the subsidy is provided
 
  Tax concession is granted to a taxpayer whose development project enta ils an investment of 
at least 3 billion HUF or 1 billion HUF if the project is started and operated in preferable regions.  The 
tax concession can be applied in the four years fo llowing the first year in which the tax concession is 
used if:     a) the average work force employed exceed s the average number of persons employed 
during the year prior to the commencement of  the project by at least 100 workers – or 
50 workers if the project is started a nd operated in preferable regions, or 
 
 b) if the taxpayer's annualized wage costs are at least 600 times greater than the amount 
of the minimum wage effective on the first day of the tax year as calculated for the tax year – or at least 300 times greater if  the project is launc hed and operated in 
preferable regions – as compared to the a nnualized wage costs of the year preceding 
the year in which the project commenced, or 
  c) from the trade debts of the taxpayer the di rect cost of the taxpayer's liabilities payable 
to small and medium sized enterprises exceeds 30 per cent.   
  Tax concession is granted for:   
 
 a) development projects with a value of at least 100 million HUF, if it constitutes the 
launch and operation of an independent environmental protection project or a 
wideband Internet service or a food facility project or a basic research, applied research and experimental development or  a motion picture and video production 
project,  
  b) projects serving to create new jobs.     G/SCM/N/155/EEC/Add.12 
 Page 29 
 
 
   Tax concession for projects serving to create new jobs is granted if during the four years 
subsequent to the third tax year following the fi rst year in which the tax allowance is used:   
  a) at least 20 per cent of the total work force hired for the new jobs created under the 
development programme are new entrants in the labour market, and 
 
 b) the average work force employed exceed s the average number of persons employed 
during the year prior to the commencement of the project by at least 300 workers (150 workers for medium-sized enterprises,  30 workers for small enterprises) – or 
150 workers (75 workers for medium-siz ed enterprises, 15 workers for small 
enterprises) if the project is started and operated in preferable regions.   
  From the value of the project entitling tax concession,  
a) the value of previously unused ass ets must be at least 30 per cent,  
 
 b) the value of improvements by renovation, refurbishing etc. must not exceed 20 per 
cent, unless the project is launched and operated in preferable regions.   
 7. Subsidy per unit or the total amount
 
 
 The support granted to a specific developmen t project may not be higher than the amount 
computed by the ratio stipulated in the legislati on from the total cost of the project.  In the case of 
applications for tax concession submitted before  31 December 2003, the tax concession may be 
claimed up to 100 per cent of the corporate income tax otherwise payable.    
 In the case of applications for tax con cession submitted after 31 December 2003, the tax 
concession may be claimed up to 80 per cent of the corporate income tax otherwise payable.   
  The amount of tax benefit is not yet available.    8. Duration of the subsidy
 
 
 The taxpayer can take advantage of tax c oncession on a development programme begun after 
31 December 2002 and in five tax years.     In the case of applications for tax con cession submitted after 31 December 2003, the tax 
concession may be applied for ten years.   
 9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.    2.1.7 Tax Relief for Intellectual Products 
1. Title of the subsidy programme
 
  Tax relief for intellectual products.    
2. Period covered by the notification 
 
  2006.   G/SCM/N/155/EEC/Add.12 
Page 30  
 
  3. Policy objective and/or purpose of the subsidy
 
  The objective of this scheme is to promote intellectual activities.    4. Background and authority for the subsidy
 
 
 This tax relief has been provided for by S ection 7, paragraph (1), subparagraph sz) of 
Act LXXXI of 1996 on the Corporate Tax and Dividend Tax.    5. Form of the subsidy
 
 
 This subsidy is in the form of de duction from the corporate tax base.   
 6. To whom and how the subsidy is provided
 
 
 Small and medium-sized enterprises.   
 7. Subsidy per unit or the total amount
 
  The tax relief is equal to the expenses incurre d in connection with the acquisition of rights in 
Hungary of a patent, consumer or industrial design a nd consumer or industrial design protection right.   
 
 The amount of tax benefit is not yet available.    8. Duration of the subsidy
 
 
 This tax relief was introduced in 2005.  No explic it time limit is attached to this subsidy.   
 
9. Statistical data permitting an assessmen t of the trade effects of the subsidy  
  N.A.    2.1.8 Tax Relief for Employment 
1. Title of the subsidy programme
 
  Tax relief for employment.    
2. Period covered by the notification
 
  2006.    3. Policy objective and/or purpose of the subsidy
 
 
 The objective of this scheme is to promote employment.   
 4. Background and authority for the subsidy
 
  This tax relief has been provided for by S ection 7, paragraph (1), subparagraph y) of 
Act LXXXI of 1996 on the Corporate Tax and Dividend Tax.    
 5. Form of the subsidy
 
  This subsidy is in the form of de duction from the corporate tax base.    G/SCM/N/155/EEC/Add.12 
 Page 31 
 
 
  6. To whom and how the subsidy is provided  
  Micro enterprises with no more than five employees.    7. Subsidy per unit or the total amount
 
 
The tax relief is equal to the sum receive d by multiplying the minimum wage by any 
increment in the average number of employees in comp arison to the previous tax year.  This tax relief 
can be applied if the taxpayer has no tax debts.    
 The amount of tax benefit is not yet available.   
 8. Duration of the subsidy
 
  This tax relief was introduced in 2005.  No explic it time limit is attached to this subsidy.   
 
9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.    
2.1.9 Tax Concession for Software Developers 
1. Title of the subsidy programme
 
  Tax concession for software developers.    2. Period covered by the notification
 
 
 2006.    3. Policy objective and/or purpose of the subsidy
 
  The objective of this scheme is to stimulate the employment of software developers in small 
and medium-sized enterprises.   
 4. Background and authority for the subsidy
 
  This tax concession has been provided for by Section 22, paragraph (10) of Act LXXXI 
of 1996 on the Corporate Tax and Dividend Tax.   
 5. Form of the subsidy
 
 
The subsidy is in the form of deduction from the corporate tax.   
 
6. To whom and how the subsidy is provided  
  Small and medium-sized enterprises employing software developers.    7. Subsidy per unit or the total amount
 
 
 Small and medium-sized enterprises are entitle d to a tax concession of  15 per cent of the 
wages and salaries paid to a software developer during the tax year.  The tax concession can be 
claimed during the tax year and the following three tax years in equal instalments.    G/SCM/N/155/EEC/Add.12 
Page 32  
 
   The amount of tax benefit is not yet available.   
 8. Duration of the subsidy
 
  This tax concession was introduced in 2006.  No expl icit time limit is attached to this subsidy.   
 
9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.    2.1.10 Preferential Tax Rate 
1. Title of the subsidy programme
 
  Preferential tax rate.    
2. Period covered by the notification
 
  2006.    3. Policy objective and/or purpose of the subsidy
 
 
 The programme is intended to reduce tax burden for smaller companies.   
 4. Background and authority for the subsidy
 
  This tax benefit is provided for by Section 19, paragraphs (2)-(6) of Act LXXXI of 1996 on 
the Corporate Tax and Dividend Tax.   
 5. Form of the subsidy
 
  The subsidy is in the form of reduced corporate tax rate.    
6. To whom and how the subsidy is provided
 
  For the preferential tax rate, the taxpayer can not make use of any tax incentives, it must 
employ at least one employee in the tax year and it has to pay social security contributions with 
respect to each of its employees in an amount whic h equals at least 1.5 times the contributions 
payable on the minimum wage (in disadvantaged  regions only up to the amount payable on the 
minimum wage).    7. Subsidy per unit or the total amount
 
  A preferential tax rate of 10 per cent is appli cable to the part of the tax base which does not 
exceed 5 million HUF, while any excess profits are taxable at the general 16 per cent rate.   
  The amount of tax benefit is not yet available.    8. Duration of the subsidy
 
 
 This regime was introduced in 2006.  No explic it time limit is attached to this subsidy.    G/SCM/N/155/EEC/Add.12 
 Page 33 
 
 
  9. Statistical data permitting an assessmen t of the trade effects of the subsidy  
  N.A.    
2.1.11 Tax Relief for Research and Development 
1. Title of the subsidy programme
 
  Tax relief for research and development.    2. Period covered by the notification
 
 
 2006.    3. Policy objective and/or purpose of the subsidy
 
 
 The objective of this scheme is to promote the R and D activity.   
 4. Background and authority for the subsidy
 
  The tax relief is provided for by Section 7, paragraph (1), subparagraph t), and 
paragraphs (17) and (18) of Act LXXXI of 1996 on the Corporate Tax and Dividend Tax.   
 
5. Form of the subsidy
 
  This subsidy is in the form of de duction from the corporate tax base.   
 
6. To whom and how the subsidy is provided
 
  Taxpayers engaged in basic research, app lied research and experimental development 
performed on premises managed by a research ins titution founded by an institution of higher 
education or the Hungarian Academy of Sciences ma y claim three times the general tax relief, or 
maximum 50 million HUF.   
 
7. Subsidy per unit or the total amount
 
  The tax relief is equal to the direct costs of basic research, applied research and experimental 
development incurred. Any support or assistance rece ived for development purposes can not be taken 
into account.   
  The amount of tax benefit is not yet available.    8. Duration of the subsidy
 
 
 This tax relief was introduced in 1997.  No explic it time limit is attached to this subsidy.   
 9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.   G/SCM/N/155/EEC/Add.12 
Page 34  
 
  2.1.12 Tax Concession for Film Production 
1. Title of the subsidy programme
 
  Tax concession for film production.    
2. Period covered by the notification
 
  2006.    3. Policy objective and/or purpose of the subsidy
 
 
 The purpose of this tax concession is to stimulate film production.    4. Background and authority for the subsidy
 
 
 The tax concession is provided for by Secti on 22, paragraphs (1) and (3) of Act LXXXI 
of 1996 on Corporate Tax and Dividend Tax.    5. Form of the subsidy
 
  The subsidy is in the form of deduction from the corporate tax.   
 
6. To whom and how the subsidy is provided
 
  Taxpayers sponsoring film productions.    
7. Subsidy per unit or the total amount
 
  The tax concession is equal to the amount dona ted for film production.  The tax concession 
can be applied during four years.     The tax concession may be claimed up to 70 per cent of the corporate income tax otherwise 
payable.   
  The amount of tax benefit is not yet available.    8. Duration of the subsidy
 
 
 This tax concession was introduced in 1 April 2004.  No explicit time limit is attached to this 
subsidy.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.   
 
2.1.13 Accelerated Depreciation for Small and Medium-sized Enterprises 
1. Title of the subsidy programme  
 
 Accelerated depreciation for small and medium-sized enterprises.    G/SCM/N/155/EEC/Add.12 
 Page 35 
 
 
  2. Period covered by the notification  
  2006.    3. Policy objective and/or purpose of the subsidy
 
 
 The objective of this scheme is to promote investment activities.    4. Background and authority for the subsidy
 
 
 This tax relief has been provided for by A nnex 1, point 14 of Act LXXXI of 1996 on the 
Corporate Tax and Dividend Tax.    5. Form of the subsidy
 
 
 This subsidy is in the form of de duction from the corporate tax base.   
 6. To whom and how the subsidy is provided
 
  Small and medium-sized enterprises making investments in underdeveloped regions.   
 
7. Subsidy per unit or the total amount
 
  Small and medium-sized enterprises may clai m 100 per cent depreciation on the value of 
machinery, equipment and vehicles (except passenger cars), which have never been used previously, 
if these tangible assets are used in any one of the 48  micro-regions deemed most underprivileged.   
 
8. Duration of the subsidy
 
  This tax relief was introduced in 10 May 2005.  No explicit time limit is attached to this 
subsidy.    
9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.    2.2 R
ESEARCH AND TECHNICAL INNOVATION FUND 
1. Title of the subsidy programme  
  Innovation Fund for Researc h and Technology.   
 2. Period covered by the notification
 
 
 2006.   
 3. Policy objective and/or purpose of the subsidy
 
  The Fund is intended to improve the competitiveness and innovation performance of the 
Hungarian economy.  Its main objectives are:   
 
- to increase and concentrate the innovation activ ity of the enterprises with the emphasis on 
utilisation of innovative, marketab le and competitive products;   
- to increase the regional innovation capacity;   G/SCM/N/155/EEC/Add.12 
Page 36  
 
  - to increase the cooperation between the resear ch and industrial production sphere by 
improving the conditions of innovation environment.   
 4. Background and authority for the subsidy
 
 
 Act XC of 2003 on Innovation Fund for Res earch and Technology and Act CXXXIV of 2004 
on Research, Development and Technological Innovation.    5. Form of the subsidy
 
 
 Grant.   
 6. To whom and how the subsidy is provided
 
  Public and private research entities, en terprises, non-profit organisations and common 
projects conducted by companies in consortia with  public/university laboratories may receive the 
support.     Support from the Fund may be received through open tender procedures for the purposes set in the Act.    
7. Subsidy per unit or the total amount
 
  Payments under this programme amounted to 25,2 billion HUF.    8. Duration of the subsidy
 
 
 No explicit time limit is attached to the programme.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.   
 
2.3 B
UDGETARY SCHEME EARMARKED FOR NATIONAL INVESTMENT PROMOTION  
1. Title of the subsidy programme  
  Budgetary scheme earmarked for Na tional Investment Promotion.   
 
2. Period covered by the notification
 
  2006.    3. Policy objective and/or purpose of the subsidy
 
 
 The scheme is designed to assist the realis ation of national economic and investment 
promotion policy objectives in compliance with Hunga ry's obligations under EU  law and international 
agreements by promoting i.a.:    
- foreign direct investment in Hungary;   
- realisation of industrial parks and innovation centres;   
- establishment of quality assurance and certifica tion systems necessary for the introduction of 
products into foreign markets;   
- regional development;    G/SCM/N/155/EEC/Add.12 
 Page 37 
 
 
  - participation in international aid programmes;   
- information and PR activities bringing about investment incentives;   
- development of subcontractors' ne twork, in particular SMEs;   
- enhancement of the suppliers' competitivness in particular SMEs;   
- financement of measures to protect consumers;   
- establishment of market monitoring systems;   
- development of human resources;   
- modernization of technologies;   
- realisation of logistic centres and services;   
- realization of industrial clusters;   
- enhancement of innovation and R+D.   
 4. Background and authority for the subsidy
 
  Act on state budget, Decree 1/2001 (I. 5) of the Minister of Economic Affairs.   
 
5. Form of the subsidy
 
  The subsidy can be provided for in the form  of grant, and interest rate support.   
 6. To whom and how the subsidy is provided
 
 
 Domestic legal persons, economic corpora tions without legal personality, self-employed 
persons, cooperatives, professional as sociations, Chamber of Trade a nd Industry, natural persons of 
Hungarian citizenship, public benefit companies, local governments.    
 All kinds of subsidy are aw arded through tender procedures.  The upper limit of support is 
specified in the call for tender. At least 25 per cen t of the project cost should be financed from own 
source.    7. Subsidy per unit or the total amount
 
 
 The total amount accounted for 3,13 billion HUF.   
 8. Duration of the subsidy
 
  No explicit time limit is attached to the programme.   
 
9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.    2.4 B
UDGETARY SCHEME EARMARKED FOR INVESTMENT PROMOTION  
1. Title of the subsidy programme  
  Budgetary scheme earmarked for investment promotion.    2. Period covered by the notification 
 
 
 2006.   G/SCM/N/155/EEC/Add.12 
Page 38  
 
  3. Policy objective and/or purpose of the subsidy
 
  The scheme is designed to assist the realiza tion of strategic investment in manufacturing 
industry, creation of R+D investments, logistic centres and projects in touristic sector in compliance with Hungary's obligations under EU law and inte rnational agreements by promoting i.a.:   
 
- enhancement of the international competitiveness, 
- acceleration of industrial restructuring, 
- development of technologies,  
- foreign direct investments of strategic investors,  
- creation of regional service centres, 
- establishment of R+D investments, 
- realization of investments in tourism sector.   
 4. Background and authority for the subsidy
 
 
 Act on state budget, Decree 1/2001 (I. 5) of the Minister of Economic Affairs.    5. Form of the subsidy
 
  The subsidy is be provided in the form of grant.   
 
6. To whom and how the subsidy is provided
 
  Domestic legal persons, economic corpora tions without legal personality, European 
Companies, European Cooperatives registered in Hungary.   
 
 Subsidy is awarded on the basis of the Government decision.  The upper limit of support is in accordance with the maximum aid intensity specified  in 85/2004 (IV 19) Government Decree.  At 
least, 40 per cent of the project cost should be financed from own source.    7. Subsidy per unit or the total amount
 
 
 The total amount accounted for 4,658 billion HUF.    8. Duration of the subsidy
 
 
 No explicit time limit is attached to the programme.   
 9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.    
2.5 M
INING CONVERSION PROGRAMME  
1. Title of the subsidy programme  
  Mining conversion programme.    
2. Period covered by the notification
 
  2006.    G/SCM/N/155/EEC/Add.12 
 Page 39 
 
 
  3. Policy objective and/or purpose of the subsidy  
  The assistance is intended to address major social problems stemming from structural adjustment in the sector and the need of ensuri ng progressive and orderly reduction of mining.   
 
4. Background and authority for the subsidy
 
  Annual state budget, Decree 26/2006 (II. 7) Korm. of the Government.   5. Form of the subsidy
 
 
 Grant.    6. To whom and how the subsidy is provided
 
 
 Aid is granted by the government to specific mining companies on the basis of either the Act 
on State Budget or within its own discretionary power.    7. Subsidy per unit or the total amount
 
  The support accounted for 1 billion HUF.   
 
8. Duration of the subsidy
 
  No explicit time limit is attached to this programme.    
9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.    2.6 B
UDGETARY SCHEME EARMARKED FOR THE DEVELOPMENT OF SMALL AND MEDIUM SIZED 
ENTERPRISES  
1. Title of the subsidy programme  
  Budgetary scheme earmarked for the developmen t of small and medium sized enterprises.   
 2. Period covered by the notification
 
 
 2006.    3. Policy objective and / or purpose of the subsidy
 
  The scheme is designed to help SMEs overco me disadvantages inherent in their size.   
 
4. Background and authority for the subsidy
 
  The subsidy is provided for by the Act XXXI V of 2004 on the Small and Medium Sized 
Enterprises and on the Support of their Developm ent, the acts on annual state budgets and the 
Decree 1/2001 (I.5) of the Minister of Economic Affairs.   G/SCM/N/155/EEC/Add.12 
Page 40  
 
  5. Form of the subsidy
 
  The support can be provided for in the form of  grant, interest rate support, preferential 
guarantee fee, interest free loan, loan with preferen tial interest rate, participation in venture capital 
funds.   
 
6. To whom and how the subsidy is provided
 
  All kinds of subsidy are awarded through te nder procedures.  Support may be granted for 
programmes whose purpose is i.a.:   
 
- to establish conditions for start up, 
- to attain entrepreneurial knowle dge, to get acquainted with the law of the European Union, to 
develop entrepreneurial cultu re and managerial qualities, 
- to improve competitiveness through technological development,  
- to enlarge subcontractors network,  
- to explore market possibilities,  
- to promote cooperation among SMEs in  production, selling and purchase,  
- to participate in EU programmes.   
  The subsidy may not be in excess of 50 per cent of the programme's total costs except for 
depressed counties where the ceiling is 65 per cent.   
 7. Subsidy per unit or the total amount
 
  HUF 3 731 million.   
 
8. Duration of the subsidy
 
  No explicit time limit is attached to this programme.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.    2.7 S
UBSIDY FOR JOB-CREATION  
1. Title of the subsidy program  
 
 Labour Market Fund.    2. Period covered by the notification
 
  2006.   
 
3. Policy objective and / or purpose of the subsidy
 
  Promoting creation of new jobs through investments.    
4. Background and authority for the subsidy
 
  The subsidy is provided for by 18 § of the Act IV of 1991 on Job Assistance and 
Unemployment Benefits and the 18 § of the Decree 6/1996 (VII. 16) of the Minister for Employment 
on employment subsidies and subs idy for crisis management.    G/SCM/N/155/EEC/Add.12 
 Page 41 
 
 
  5. Form of the subsidy  
  Non-reimbursable subsidy.    6. To whom and how the subsidy is provided
 
 
 All kinds of subsidy are aw arded through tender procedures.  At least 25 per cent of the 
expenditure of investment must be financed from own source.     Support may be granted for those employers who create new jobs, connected to investment.  
Support may be granted for those employers who undertake to:   
 
- realize the investment in a year after its initiation, 
- sustain and operate capacities and services produced by the investment continuously at least 
for 5 years in accordance of the original purpose, and 
- maintain the employee number indicated in the application at least 3 years after hiring them.   
  The subsidy may not be in excess of 50 per cent of the programme's total costs except for 
SME's in depressed regions.    7. Subsidy per unit or the total amount
 
 
 HUF 2 960 million.    8. Duration of the subsidy 
 
 
 No explicit time limit is attached to this program.   
 9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  N.A.    
2.8 E
MPLOYMENT SUBSIDY OF PEOPLE WITH DISABILITIES  
1. Title of the subsidy program  
  Labour Market Fund.    
2. Period covered by the notification
 
  2006.    3. Policy objective and / or purpose of the subsidy
 
 
 Increasing of employment and jobs of people with disabilities.   
 4. Background and authority for the subsidy
 
  The subsidy is provided for by 19 § of the Act IV of 1991 on Job Assistance and 
Unemployment Benefits and the 19 § of the Decree 6/1996 (VII. 16) of the Minister for Employment 
on employment subsidies and subs idy for crisis management.   G/SCM/N/155/EEC/Add.12 
Page 42  
 
  5. Form of the subsidy
 
  The support can be provided in the form of re imbursable and/or non-reimbursable subsidy.   
 6. To whom and how the subsidy is provided
 
 
 All kinds of subsidy are awarded through te nder procedures.  Support may be granted for 
those employers who undertake i.a.:    
- to create new jobs, 
- to restructure production or service facilities in connection with employment of people with 
disabilities, 
- to procure or transform tools and equipments necessary for employment of people with 
disabilities, 
- to modernize workplaces and working tools in favour of employment of people with 
disabilities, 
- to invest in order to create, modernize or develop workplaces in favour of employment of 
people with disabilities.   
  The employment obligation of the employer is  3 years in the first and the last case, 
otherwise 2 years.   
 
7. Subsidy per unit or the total amount
 
  HUF 1 564 million.    
8. Duration of the subsidy
 
  No explicit time limit is attached to this program.    9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 N.A.   
 
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