Favourable modification of training-related state incentives: higher grants and red tape reduction

Training subsidies provided by the Hungarian government from national funds have always been considered an attractive incentive for training implemented by foreign investors, but involve a relatively complex and demanding application procedure.

The government has also recognised that new technologies promoted by other subsidies (including VIP cash grants and corporate tax allowances provided by the government for investments) often require a complex and expensive training programme. In order to further promote training, the government has introduced a series of amendments to the existing scheme in favour of beneficiaries, effective as of 23 December 2018. Below we highlight the key points of this extensive amendment package.

1. Higher incentives

According to the modified regulation (Decree No. 3/2015 of the Minister for National Economy), the maximum incentive amounts have been increased for both subsidies provided for training activities, namely the training subsidy for training projects and the grant for establishing or expanding vocational training centres.

While the amount per trainee has generally been increased to four thousand euros for training projects, the total maximum amount per beneficiary has been set at two million euros, instead of determining incentive grades, which was previously the case. The incentive remains at 50% of eligible costs (incentive intensity).

In the case of the vocational training centre subsidy, the new rules have introduced a new category of “preferred training courses” covering vocational training usually needed by industrial actors. Training centres implementing these vocational training courses may obtain ten thousand euros per trainee and even two point five million euros as a total cash grant. 73% incentive intensity remains in place, but in special cases when the beneficiary cooperates more closely with vocational schools up to 100% incentive intensity can be reached.

2. Lower criteria

In the case of both the training and the training centre subsidy, the criteria have been modified in favour of the beneficiaries. While the creation of minimum of 50 new jobs as a requirement for the training subsidy being granted remain in place, the calculation method for this number allows the involvement of a higher number of trainees in the training coursed being subsidised. The minimum additional trainee number for the training centre subsidy has been reduced to 25 from 50, and the period this number has to be maintained to three school years from the original five school years.

3. Easier application

In addition to the above beneficial modifications, the current version of the decree includes several amended provisions facilitating the process and fulfilment of commitments for the subsidy. The new rule allows the employment obligation to be met with part-time employment, instead of only accepting full-time employment, and maximum training period per trainee has been increased from 18 to 24 months.