The EU is launching an investigation into the state support of the new car parts factory in northern Hungary

The European Commission stated that, based on its preliminary assessment, it has established above all that the investment project promotes economic development and employment in one of the less favorable regions of the EU.

However, the Brussels board has doubts about whether the measure is in line with EU rules on state aid, in particular the guidelines on regional state aid. The EU committee therefore decided to launch an investigation to assess whether the support is proportionate, i.e. whether it does not exceed the amount necessary to attract the investment to a disadvantaged region. He is also looking for an answer to whether the measure has a stimulating effect in the region. In this regard, the committee will examine whether the root cause of the decision to establish the new factory in Hungary was directly Hungarian state aid, or whether it would have been implemented in this region even without state aid. The Hungarian authorities claim that without the support, the investment would have been established outside the EU, in Turkey. Finally, the board is wondering whether the support does not have an unjustified negative effect on competition and trade within the EU, they wrote.

In 2021, Hungary notified the European Commission that it intends to provide state aid in the amount of EUR 43.76 million to Rubin NewCo Kft. for the construction of a new automotive parts factory planned in the northern Hungarian region.
The new factory will take over the capacity of two other European production sites belonging to the group. The plant is expected to create around 1,500 jobs in Northern Hungary, which is a disadvantaged region eligible for regional aid under EU state aid rules.

Hungary intends to support the construction of the new automobile parts factory with a direct subsidy of 43.01 million euros (about 17.8 billion forints) and a tax discount of 750 thousand euros (about 305 million forints). The total amount of support planned to be provided by the Hungarian authorities amounts to 31.76 percent of the eligible investment costs, which does not reach the maximum amount of support allowed for such projects, i.e. 31.88 percent.

(Source: autokalauz.co.hu; MTI | Image: pixabay.com)