Regional incentives take the form of financial aid (e.g., non-refundable subsidies, subsidies for the repayment of loans, reductions in the employer’s social security contribution for common contingencies) granted to regions by the State, in accordance with EU limits and requirements, for productive investment in the pursuit of business activities in certain areas of Spain, with a view to aiding in the alleviation of territorial imbalances and the reinforcement of the native potential of the most underprivileged regions.
The geographical definition of eligible areas and the specific definition of maximum financing limits, and of the specific industry requirements, eligible investments and conditions, are regulated in the respective Royal Decrees demarcating Economic Development Areas (RDZPE).
However, in general, RDZPE consider projects that are eligible for investment, to be those aimed at: (i) creating new establishments that lead to the start-up of a business activity and which also create new jobs; (ii) extending existing activities with a significant increase in production capacity or initiating new activities in the same establishment; and (iii) modernizing the business. These projects should refer to an industry and activity that is eligible and must be located in one of the areas designated in the respective RDZPE.
Said Royal Decrees were prepared on the basis of the contents of the “Guidelines on National Regional Aid for 2007-2013” approved at the tme by the European Commission. However, said Guidelines were repealed and replaced by the Guidelines on Regional State Aid for 2014-2020, published on July 23, 2013 in the Official Journal of the European Union (OJ), so the Decrees will have to be brought into line with the new legal framework.
In this regard, according to the information provided by the Subdirectorate-General of EU Funds, the new Royal Decrees are currently being prepared and are expected to be approved and published in the first half of 2015.
The above notwithstanding, the new Royal Decrees must necessarily bear in mind the new regional aid map approved for Spain by the European Commission for this new period 2014-2020.
According to said Map, the Spanish regions which may benefit from the grant of greater incentives, are the Autonomous Communities of Extremadura and the Canary Islands, reaching up to 25% and 35% respectively of the eligible net investment. The maximum aid intensity in former «a» areas during the previous period 2011-2013 (Andalucía, Castilla-La Mancha and Galicia) has been reduced 15% of the eligible investment during the sub-period 2014-2017 and to 10% during the sub-period 2018-2020. The provinces of Soria and Teruel and the autonomous cities of Ceuta and Melilla, which admit aid granted for regional projects reach a maximum aid intensity of 15% of the eligible investment through December 31, 2020.
In addition, also during this period the Madrid Autonomous Community, the Basque Country, Navarra, La Rioja, Cataluña and the Balearic Islands continue to be considered non-eligible regions under the national legislation on regional incentives.
Finally, it should be pointed out that a large number of Spanish Autonomous Communities also provide, on a smaller scale, incentives similar to those described above for investments made in their respective region, which are subject to the same framework established by the regional aid Guidelines for said period 2014-2020.
Last updated: 22|06|2015