Incentive System

The Ministry of Economy and Finance, in Royal Decree 899/2007 dated July 6, approved the Regulation of regional incentives, expanding upon Law 50/1985, of December 27. Royal Decree 162/2008, dated February 8, outlines the area of economic development in Andalusia.

Fundable products for economic development in Andalusia are in the following areas:

• Processing industries and production support services which use advanced technology, services aimed at environmental improvements and services which create significant improvement in the quality or innovation to processes and products. Services which favor the introduction of new technologies, as well as those offering service delivery in the information and communication technology subsector and those which significantly improve business structures, attract special interest.
• Tourist and other recreational facilities of an innovative nature, particularly in relation to environmental quality and optimizing a region´s natural resources.

These terms are currently valid. They expire on December 31, 2013. The application form can be downloaded from the website www.juntadeandalucia.es

Amount and type of incentives

The maximum subsidy will be 40% of the approved non-refundable investment for investment to be made (30% starting January 1, 2011). Projects to be promoted include:

• Projects creating new facilities (approved investment of at least € 600,000, provided that they can generate employment)
• Expansion projects (investment determined in relation to tangible assets, with a minimum amount of € 600,000; money is to be used for increasing production capacity and generating new employment)
• Upgrading projects (investment determined in relation to tangible assets, with an amuont of at least € 600,000. Money is to be used for the acquisition of technologically advanced machinery to significantly increase production capacity, diversifying production to meet new markets and maintaining existing jobs)

The following investment concepts could be promoted:

• Construction works including connections and supply lines, urban development and external projects, offices, laboratories, staff health and social services.
• Equipment supplies for processing machinery, electrical services, thermal generators
• Other investments in tangible fixed assets.
• Previous studies of the project (planning, project engineering, project management)
• Other costs, in exceptional cases.

Incentive system

Andalusia is considered as primary convergence region in the European Union, a distinction which allows it to have a maximum intensity of incentives. The region has an incentive system to encourage start-up projects and modernization by encouraging business cooperation and R&D&I. In addition, there are aids to encourage recruitment of stable employment and training of workers.

IDEA Agency is the coordinating centre for enterprise creation and innovation grants promoted by the Junta de Andalucía. It is the single manager to expedite the processing of applications for incentives. Grants can reach up to a maximum of 60% of amounts that can be granted.

The application for subsidies or incentives is carried out by means of telematics or data transmission (www.juntadeandalucia.es/innovacioncienciayempresa), or in person. The aim is to provide personalised service and guidance to companies regarding the most appropriate types of subsidy or incentives for their project, as well as answering technical and financial questions in this respect.

The deadline for resolving and reporting the proceedings outcome is 2 months. If approved and upon completion of the investment and / or costs, after submitting proof of payment to the Agency IDEA, payment of incentives is carried out within a maximum of 3 months.

Recipients

• Companies operating in Andalusia
• SMEs preferably
• Groups, associations and foundations related to the ambits of enterprise
• Extractive industries

Those sectors considered as strategic receive special support: Aeronautics, Agribusiness, Biotechnology, Energetic and Environmental, Information and Communication Technologies, Metalworking, and Cultural Industry sectors.

Type of incentives
Non-refundable incentives
Refundable incentives
Interest rate subsidies
Participatory Loans
Venture Capital
Loans funded by the European Investment Bank EIB
Bonds

The beneficiary´s contribution will be never less than 25% of the investment, except in the case of R & D projects.

Projects to be supported
Creation Projects
Business Upgrade Projects
Enterprise Competitive Collaboration Projects
Research, Development and Business Innovation Projects (RDI)

Note that the R & D should be conducted in collaboration with a research team involving at least 15% of activities. Maximum duration of projects is 3 years, subject to exceptional cases.

The Technology Fund is a special area of ERDF funds from the European Union created to promote business R&D&I in Spain for the 2007-2013 period. Invest in Spain takes part in this operational program by promoting the capture of investments with a high degree of R&D&I, stimulating investment in facilities, equipment, human resources and technology.

The period for submitting applications will be from the publication date of the notice to 31 July 2009.

Beneficiary companies

Foreign capital companies and/or groups of companies connected by contractual agreements which plan to set up in Spain, or if they are already established, plan to begin new R&D&I activities.

A foreign capital company is understood to mean one which has a headquarters in Spain if foreign direct investment accounts for more than 10% of its capital or which, regardless of the location of its headquarters, has set up a subsidiary in Spain.

In addition, economic interest groups (EIGs) in which a stake is held by at least one foreign capital company and groups of companies in which a stake is held by at least one foreign capital company may also be considered beneficiaries, in proportion to the percentage held by foreign capital.

As regards the actions intended to promote and stimulate R&D&I, together with SMEs, beneficiaries can also include public and private organizations and associations whose purpose is to promote and stimulate business activity.

Territorial distribution of the aid

The activities which are the object of aid may be carried out anywhere in the country, although precedence will be given to those planned for convergence zones (Galicia, Extremadura, Castile-la Mancha and Andalusia), with 70% of the budget allocation; to 'phasing-in' zones (Castile-León, Valencia and the Canary Islands), with 15% of the budget allocation; 'phasing-out' (Asturias, Murcia, Ceuta and Melilla), with 5% of the budget allocation; and competitiveness (Aragón, Balearic Islands, Cantabria, Catalonia, Madrid, Navarre, the Basque Country and La Rioja), with 10% of the budget allocation

Maximum amount of aid per beneficiary

The amount of the aid may total an overall maximum of 500,000 euros per beneficiary for any period during three consecutive fiscal years (Commission Regulation on de minimis aid, published 22 January 2009 in the OJEU).

Type of aid

1. Consulting and support services for innovation.
This section exclusively targets SMEs which seek consulting services from companies specializing in the following areas of activity:

1.1. Demand-side research activities for foreign companies planning to set up in Spain or which, if already established, want to increase their R&D&I capabilities within the country. 1.2. Preliminary studies for company implementation projects, which enable foreign companies planning to set up in Spain to adapt to local conditions and circumstances.

In particular, eligible expenditure for these sections will be:

• Market research.
• Technological support.
• Consulting on the use of regulations.

The individual cost of the work included in this section may not exceed 5,000 euros for each job carried out, excluding indirect taxes.

2. R&D technical viability studies.

This section is aimed as both SMEs and large companies commissioning technical viability studies from specialized companies:
2.1 Technology audits which enable foreign companies to verify the technology available in Spain with the aim of introducing or acquiring that which make it possible to take the greatest advantage of local resources. 2.2 Technological analysis or improvement plans for already established companies which intend to implement new R&D activities, with the aim of helping them to improve their capabilities. 2.3 Technical viability studies for collaborative product development between companies, provided that at least one of these is a foreign capital SME. Eligible expenses will be the studies.

The individual cost of the work included in this section may not exceed 5,000 euros, excluding indirect taxes, for each job carried out for SMEs and 15,000 euros, excluding indirect taxes, for large companies.

3. Promoting and stimulating R&D&I:

This section is aimed at SMEs and public or private organizations whose aim is to promote and stimulate business activity.

3.1 Holding conferences, seminars and workshops, provided that the goal of the activities is to disseminate information about actions to be undertaken and R&D&I investment conditions in Spain for foreign capital SMEs. 3.2 Participating in or organizing trade fairs and exhibitions with the same aim as point 3.1. above.

The eligible expenses will be those related to organizing the conference, seminar or workshop. In the case of trade fairs and exhibitions, those incurred by SMEs or organizations related to organizing or participating in these.

Level of aid

• For consulting and innovation support services for SMEs: 100% of the amount considered subsidizable for work carried out by companies which hold Spanish or European certification; 75% of the amount considered subsidizable for work carried out by companies which do not hold this certification.
• For technical viability studies:
  • In the case of SMEs, 75% of the amount considered subsidizable for work carried out by companies for industrial research activities, and 50% of the amount estimated to be subsidizable for work carried out by companies for experimental development activities.
  • In the case of large companies, 65% of the amount considered subsidizable for work carried out by companies for industrial research activities, and 40% of the amount considered subsidizable for work carried out by companies for experimental development activities.
• To promote and stimulate R&D&I:
  • To hold conferences, seminars and workshops, 100% of the amount considered subsidizable for work carried out by specialized companies which hold Spanish or European certification; 75% of the amount considered subsidizable for work carried out by companies which do not hold this certification.
  • To participate in or organize trade fairs and exhibitions, 100% of the associated expenses when the service provider holds Spanish or European certification and 75% when it does not

Under no circumstances shall indirect taxes or personal income taxes be considered fundable expenses when they can be recovered or compensated for.

The eligible period is the duration of the projects for which aid is requested, between January 1, 2009 and December 31, 2010.

The aid scheme for employment and training is regulated at national level