In August 2021, the Ministry of Industry and Trade (MoIT) presented a draft government decree to the Czech government, which changes government decree no. 221/2019 Coll., on performing some stipulations of the act on investment incentives, as amended by government regulation no. 514/2020 Coll.

The document has already gone through the internal comments procedure. The amended decree is planned to take effect from 1 January 2022, and for all proceedings not finally completed as of 1 January 2022, the original regulation would apply.

In the explanatory memorandum, the Ministry of Industry and Trade notes that according to a number of economic analyses, the problem of low added value persists in Czech economy and focus on innovations of lower orders compared to advanced economies, which focus on more knowledge-intensive activities. The aim of the amendment is to support projects in the processing industry with high added value.

The amendment brings the following changes in strategic investments:

• increase of limits for support to 20 % of eligible costs without explicitly stating a top limit for value (previously it has been 10 % of eligible costs but only up to CZK 1.5bn at maximum for an investment in production and CZK 0.5bn for an investment in a technological or repair centre),
• adjustment of the amount of investment to CZK 2bn and the number of new jobs for strategic investments in production to 250 (previously CZK 0.5bn and 500 new jobs),
• expansion of the range of strategic investments in manufacturing – now, regardless of the limits (CZK 2bn and 250 new jobs), the strategic investment action in manufacturing will support investments focused on selected sectors with high or medium-high technological intensity (such as advanced material technologies, nanotechnologies, advanced production technologies, biotechnologies, photonics, microelectronics, nanoelectronics, artificial intelligence technologies).

We will keep you informed about further progress of the approval process. If you are considering new projects targeting fields with medium of high technological intensity, it is worth considering the use of investment incentives under the new rules. In this way, you can obtain not only indeterminate and indirect support in the form of “tax credit” for the following 10 years (it derives from increasing the tax base compared to comparative periods), but more importantly direct support of your investments based on an agreement with the Ministry of Industry and Trade.

We will be happy to assist you in this area (from the preparation of the intention to the actual drawdown) based on our extensive experience with investment incentives.