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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure HU-2022-40/2961 – Updated – measures in Hungary

Energy cost and investment subsidy programme for energy intensive SMEs

Energiaintenzív KKVk energiaköltség és beruházás támogatási programja

Country Hungary , applies nationwide
Time period Temporary, 01 October 2022 – 31 December 2025
Context War in Ukraine, Green Transition, Restructuring Support Instruments
Type Legislations or other statutory regulations
Category Supporting businesses to stay afloat
– Direct subsidies (full or partial) or damage compensation
Author Nóra Krokovay (KOPINT-Tárki) and Eurofound
Measure added 26 October 2022 (updated 29 November 2023)

Background information

The war in Ukraine and the resulting economic countermeasures have led to an explosion of energy prices. This jeopardises the viability and competitiveness of energy-intensive manufacturing enterprises.

In response, the government is offering non-repayable subsidies for the affected SMEs to ensure they continue operating and can retain their existing workforce. As laid out in government resolution 1477/2022, the subsidy is primarily provided to cover part of increased energy costs. Furthermore, the enterprises can apply for an additional subsidy to support energy-efficiency enhancing investments.

Content of measure

The first part of the programme covers an expected energy cost increase for October, November and December 2022. The second part of the programme is a capital subsidy to co-finance a credit-supported energy efficiency investment. Only beneficiaries of the first part can apply for the second one.

Eligible SMEs must:

  • be primarily involved in manufacturing, tourism or catering;
  • have an annual energy cost above 3% of its annual net sales turnover in 2021;
  • implement an energy efficiency investment by the end of 2024, even if they are in the first part of the programme;
  • not reduce their current workforce by more than 10% until September 2023.

The first part of the subsidy amounts to 50% of the total increase of energy costs in the three months. The second part of the subsidy cannot exceed 15% of the total net cost of the energy-efficiency investment.

The maximum amount of the subsidy is €500,000 – or €200,000 if requested as de minimis subsidy. The total amount allocated is roughly €240 million for the first quarter of 2023.

Updates

The following updates to this measure have been made after it came into effect.

23 December 2022

The government resolution 1477/2022 has been updated to include a new target group, companies in the tourism and accommodation sector, from February 2023 and it has extended the programme until December 2025 (from 31 March 2023). Firms could apply for compensation for an energy cost increase experienced in January, February and March 2023. The firm’s annual energy cost cannot be below 2% (lowered from 3%) of its annual net sales turnover in 2021. Beneficiaries must implement an energy efficiency investment by the end of 2025 (extended from end of 2024). They also cannot reduce their current workforce by more than 10% until September 2023. The aid intensity is 50% for the first leg, that is, the subsidy amounts to 50% of the total increase of energy costs in the three months. Regarding the second leg, the subsidy cannot exceed 15% of the total net cost of the energy-efficiency investment. The maximum amount of the subsidy is €500,000 – or €200,000 if requested as de minimis subsidy. The total amount allocated is roughly €240 million for the first quarter of 2023.

21 November 2022

Under changes announced by the Ministry of Economic Development in a statement, the eligibility threshold for a firm’s annual energy cost was lowered to 2% of its annual net sales turnover in 2021. The 2022 budget of HUF 100 billion (€263 million), including HUF 75 billion for operating costs, will be raised to HUF 100-120 billion in 2023. The government expects recipients of the subsidy to keep at least 90% of their workforce, the statement said.

Use of measure

Based on a list of subsidies registered by 16 June 2023, the number of beneficiaries was 663. This number includes 611 beneficiaries from the manufacturing sector and 52 companies operating in the tourism/catering sector. By 27 October 2023 a refreshed list shows 696 beneficiaries in 1,235 applications (one company could apply several times) requesting altogether HUF 9.91 billion (€26.08 million) in subsidies in the manufacturing sector. The number of applicants in the tourism sector was 136 with a requested amount of HUF 910.95 million (€2.4 million).

Target groups

Workers Businesses Citizens
Does not apply to workers Sector specific set of companies
SMEs
Does not apply to citizens

Actors and funding

Actors Funding
National government
Employers' organisations
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Informed Consulted
Form Not applicable Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

  • Only employers' organisations
  • Main level of involvement: Peak or cross-sectoral level

Involvement

The government held meetings with employer organisations when preparing changes in the subsidy programme at the end of 2022. In January 2023, it formally set up a consultation forum called Consultation Forum for Economic Chambers and employers, with VOSZ, the Confederation of Hungarian Employers and Industrialists MGYOSZ, Construction industry EO ÉVOSZ, the Hungarian Chamber of Commerce MKIK and the German and US Chambers of Commerce as members. The forum discussed the subsidy programme and proposals were heard and incorporated, portfolio.hu reported. The Business Development Council (Vállalkozásfejlesztési Tanács), of which the LIGA Trade Union is a member, addressed the programme and a draft was presented for comments.

Views and reactions

In September 2022, the Association of Entrepreneurs and Employers (VOSZ) proposed that the government should expand the programme to every sector because the energy crisis would hit the whole economy. The construction, services, tourism and catering sectors would be hit especially hard, a VOSZ proposal said, claiming that these sectors are responsible for the majority of employment.

Sectors and occupations

    • Economic area Sector (NACE level 2)
      C - Manufacturing C10 Manufacture of food products
      C11 Manufacture of beverages
      C12 Manufacture of tobacco products
      C13 Manufacture of textiles
      C14 Manufacture of wearing apparel
      C15 Manufacture of leather and related products
      C16 Manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials
      C17 Manufacture of paper and paper products
      C18 Printing and reproduction of recorded media
      C19 Manufacture of coke and refined petroleum products
      C20 Manufacture of chemicals and chemical products
      C21 Manufacture of basic pharmaceutical products and pharmaceutical preparations
      C22 Manufacture of rubber and plastic products
      C23 Manufacture of other non-metallic mineral products
      C24 Manufacture of basic metals
      C25 Manufacture of fabricated metal products, except machinery and equipment
      C26 Manufacture of computer, electronic and optical products
      C27 Manufacture of electrical equipment
      C28 Manufacture of machinery and equipment n.e.c.
      C29 Manufacture of motor vehicles, trailers and semi-trailers

This case is not occupation-specific.

Sources

  • 28 September 2022: VOSZ proposals on the energy crisis (vosz.hu)
  • 06 October 2022: government supports the manufacturing SMEs with HUF 200 billion (A kormány 200 milliárd forinttal támogatja a feldolgozóipari kkv-kat (www.vg.hu)
  • 06 October 2022: Government resolution 1477/2022 on the support to energy intensive enterprise (njt.hu)
  • 10 October 2022: Energy cost and investment subsidy programme for manufacturing SMEs: FAQ (Feldolgozóipari KKV Energiaköltség és Beruházás Támogatási Program 2022 GyIK (nffku.hu)
  • 19 October 2022: Starting date of registration revealed (Kiderült, mikor indul a regisztráció az energiatámogatási programra (www.portfolio.hu)
  • 24 October 2022: Energy cost and investment subsidy programme for manufacturing SMEs (Feldolgozóipari KKV Energiaköltség és Beruházás Támogatási Program) (nffku.hu)
  • 21 November 2022: Ministry: Energy intensive SME subsidy extended (kormany.hu)
  • 31 January 2023: New forum to consult on economic policy
  • 14 February 2023: Govt resolution 1477/2022 updated (njt.hu)
  • 02 June 2023: List of SMEs supported in energy intensive subsidy (vali.hu)
  • 27 October 2023: Energy subsidy supported SMEs Oct 2023 (vali.hu)

Citation

Eurofound (2022), Energy cost and investment subsidy programme for energy intensive SMEs, measure HU-2022-40/2961 (measures in Hungary), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/HU-2022-40_2961.html

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