21.06.2023

EC APPROVES EUR 77 MILLION SCHEME TO SUPPORT INVESTMENTS IN AREAS WITH HIGH UNEMPLOYMENT IN BULGARIA

The European Commission has approved, in accordance with EU state aid rules, the re-introduction of a regional aid scheme in Bulgaria to support investments in manufacturing activities of small and medium-sized enterprises (SMEs) in areas with high unemployment. The initial scheme was approved by the Commission in March 2008 (No. 166/2007), reintroduced in September 2015 (SA.39869), extended in November 2020 (SA.59027) and expired in December 2021.

Bulgaria notified the Commission of its intention to reintroduce the scheme by the end of 2027 with an estimated total budget of EUR 77 million. The aim of the scheme is to promote regional development. Under the scheme, aid will take the form of a corporate income tax exemption to support initial investment projects of SMEs, such as setting up a new enterprise, increasing the capacity of an existing enterprise, diversifying products or fundamentally changing the production process of an existing enterprise . The scheme is aimed at Bulgarian municipalities with an unemployment rate at least 25% higher than the national average. The maximum amount of aid per beneficiary will be 50% of the eligible investment costs, with the exception of municipalities in the South-West region, where the share will be 25%.

The Commission assessed the measure according to EU state aid rules, in particular Art. 107, par. 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 regions, as well as the Regional State Aid Guidelines for the period 2022-2027. The Commission found that the scheme complies with the conditions set out in the guidelines. In particular, the aid will not exceed the maximum amount of aid in the eligible regions, as indicated in the Bulgarian regional aid map. The Commission concluded that the scheme is necessary, appropriate and proportionate and contributes to regional development. Furthermore, the Commission finds that the scheme does not adversely affect trading conditions to an extent contrary to the general interest. Based on this, the Commission approved the Bulgarian scheme under EU state aid rules.

The non-confidential version of the decision will be submitted under No. SA.104266 in the State aid register on the Commission's competition website, once any confidentiality issues have been resolved.