Article by lawyer Chara Zerva on the Greek Law Digest Guide titled «Strategic Investments and Fast – Track Procedure The new effective Legal Framework».

            By Chara D. Zerva, DEA, Chief Legal Officer Director of Legal Department, ENTERPRISE GREECE

 

• Introduction

On the 25th of April, 2019, Law no 4608/2019 entitled “Hellenic Development Bank and attracting Strategic Investments and other provisions” was published in the Official Gazette following the submission by the Ministry of Development and Investments to Parliament of the relevant bill. The new legal framework on strategic investments, as efficiently amended by the provisions of Law 4635/2019 entitled  “Invest in Greece and other Provisions” (Official Government Gazette A’ 167/30.10.2019), foresees a series of incentives aimed at promoting strategic investment activity in Greece, namely tax exemptions, wage cost subsidies, fast-track licensing procedures. The abovementioned legislative initiative aims to create a favorable and stable environment for investors and to rationalize licensing procedures introducing new actions to expedite process and to eliminate bureaucratic procedures.

2. Key elements of the Strategic Investments’ Legal Framework

The Law no 4608/2019, as amended by Law no 4635/2019, introduces radical changes for the treatment of strategic investments aiming to attract numerous and reliable investors in significant sectors of the Greek economy. The key- elements of the new legal framework are the following;

1. What is a Strategic Investment?

As Strategic Investment is described an investment, mainly in financial sectors involving international trade of products or services, which, due to its strategic importance for the national or local economy, may generate significant quantitative or qualitative results regarding employment, production, in accordance with the natural and cultural environment, containing or generating extroversion, innovation, competitiveness, universal planning and high added value as its main characteristics.

2. Which is the classification of the Strategic Investments?

Strategic investments are categorized by reference either to the investment amount or the job generation, as well as their contribution in sustainable growth. More precisely, the legal framework provides the following classification:

• Strategic Investments Category 1, which include:

• investments whose total budget exceeds 100 million Euros,
• investments that create at least 75 new jobs and whose total budget exceeds 40 million Euros,

• Strategic Investments Category 2, which include:

• investments that create at least 50 new jobs and whose total budget exceeds 30 million euros,
• investments in specified manufacturing sectors that create at least 50 new jobs and whose total budget exceeds 25 million euros.

• Emblematic Investments, which include:

• investments carried out by distinguished internationally recognized legal entities ranked first in their global or European level, including mainly those promoting the green economy and the low-energy and environmentally friendly economy and

• investments in the manufacturing process and tourist sector that create at least 200 new jobs and whose total budget exceeds 200 million euros.

• Fast-track Strategic Investments, which are investments that create at least 30 new jobs and whose total budget exceeds 20 million euros and

• Automatically Incorporated Strategic Investments, which include Public-Private Partnerships (PPP), already approved by the Interministerial PPP Commission, and investments identified as European Energy Projects of Common Interest (PCI).

3. Which are the incentives available?

Depending on the category of strategic investment, the possible incentives may vary. The principal incentives offered are the following:

• Spatial planning in uniform areas, determined by Special Plans for the spatial development of Strategic Investments (ΕΣΧΑΣΕ under its Greek acronym). Moreover, in order to resolve difficulties in the conveyance process of the private-owned land, expropriations may be pronounced for the investment, including ancillary works, for a surface not exceeding the 3% of the total investment site, while compensation costs are exclusively borne by the investor, provided that expropriation is deemed as absolutely necessary for the materialization of the business plan.
• Income tax rate stabilization, income tax exemption and acceleration of tax depreciation for assets that form part of the approved investment plan. More precisely, the new legal framework provides tax exemptions incentives, as an individual type of legal state aid, tax rate stabilization for twelve (12) consecutive years from the implementation of the investment plan and accelerated depreciations of fixed assets. It is noted that these incentives are to be implemented within the framework of EU 651/2014 Commission Regulation of 17 June 2014 on “categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty”.
• Fast track licensing, which will be completed within forty-five (45) calendar days from the approval of the fully detailed investment proposal. Ιn case this deadline lapses without the necessary permit or license being issued, the investment is automatically referred to the Minister of Development and Investments, who may proceed to its issuance or reject the investment proposal within thirty (30) days from receiving the relevant file, after having received the opinion of the General Secretariat for Strategic and Private Investments (hereinafter GSSPI).

• Subsidization of labor costs for disadvantaged employees or employees with disabilities in accordance with Articles 32 and 33 of EU 651/2014 Commission Regulation.

• Grants for research and development projects in accordance with Article 25 of EU 651/2014 Commission Regulation.

• Possibility of alternative ways of dispute resolution through arbitration between the Greek State and the strategic investment entity.

incentives such as tax depreciations, employment costs subsidies and tax rate stabilization may be combined along with the acceleration of the licensing process option, introduced by Law 4608/2019 as well as, with site specific and spatial development incentives and expropriation’s instruments.

4. What is the minimum documentation for the investment file?

 Investment file should include at least the following:

• Business Plan, with a detailed investment implementation timeline,
•  Securing land rights’ documentation, such as purchase or preliminary purchase deeds or lease agreements,
• Financial plan, including loan schemes, comfort letters, proof of funds,
• Environmental and zoning features of the projected site, including investment impact assessment,
•  Power of Attorney towards Enterprise Greece to take further action on behalf of the investor and to post all key elements of the investment,
•  Proof of payment of the first installment (25%) of the administration fee, and
• Solemn declaration of the investor that all information submitted is true and accurate.

5. What is the role of Enterprise Greece?

Enterprise Greece S.A. is the official agency of the Greek State, under the supervision of the Greek Ministry of Foreign Affairs, mandated to promote investments in Greece, exports from Greece, and make Greece attractive as an international business partner. For the consideration of a project as a Strategic Investment, each interested investor submits an application to Enterprise Greece, which is accompanied by a complete file including all the required elements, as prescribed in Article 16 of Law 4608/2019, as in force. Within forty-five (45) calendar days of the filing of a complete investment proposal before Enterprise Greece, the above mentioned agency evaluates and provides an opinion to the GSSPI on the satisfaction of the criteria of the law, the feasibility of the investment and the completeness of the file.

6. Which is the procedure for the classification of an investment as strategic?

• The aforesaid opinion of Enterprise Greece along with the investment file are consecutively deferred to GSSPI which shall escalate the investment file to the Interministerial Committee (Strategic Investment Coordination Committee – hereinafter SICC) for the final classification. To be precise, within thirty (30) days from the transfer of the investment file from GSSPI to SICC, SICC classifies the investment as strategic or rejects strategic investment classification request. The SICC’S decision is published in the Governmental Gazette.  The investment proposal is considered binding for the investor.

• Decision of the Minister of Development and Investments shall be issued, specifying the exact aid that each investment proposal, having already been granted as strategic, may receive, as well as all the specific conditions, terms and procedures that the strategic investment entity shall follow in order to receive the approved incentives.

• The strategic investment entity shall file an investment and licensing file within forty-five (45) calendar days from the publication of the approval decision in the Government Gazette and also sign, within sixty (60) calendar days from this filing, a Cooperation Memorandum (hereinafter MoU) with the Greek State, which will include legal commitments for both parties.

• The GSSPI supervises the implementation of any investment proposal, already approved by SICC and an independent engineer is required to be responsible for monitoring the implementation of strategic investment projects.

• The total time for issuing all necessary permits for the implementation of a strategic investment cannot exceed three (3) years from the date of conclusion of the MOU between the investor and the GSSPI.

7. Which are the penalties for breaching the investment terms?

In case the terms included in the Ministerial Decision and the MoU are breached due to reasons attributable to the strategic investment entity, various penalties may be imposed, depending on the nature of infringement. SICC promptly declassifies the investment from “strategic” and revokes all approved incentives and any decision issued relating to the granting of state subsidies and/or imposes against the investor a fine equal from 0,05% up to the 5% of the total cost of the investment. In addition, in case of tax incentives, tax rate stabilization and accelerated depreciations of fixed assets regimes are reversed.

3. Conclusion

The new regulatory framework of Law 4608/2019, as amended by Law 4635/2019, for strategic investments provides all the necessary tools to create a stable and appealing environment for investments. Enterprise Greece is bound that the investors will show trust in Greece and make the best of the numerous incentives available.