The new Development Law (Law 4887/2022 published in the Government Gazette (A’ 16, 4.2.2022) aims to promote economic development by granting incentives to specific activities and sectors. It places particular emphasis on promoting the digital and technological transformation of businesses, green transition, creating economies of scale, supporting innovative investments and improving competitiveness in vital sectors of the Greek economy.
The key differentiation of the new development law is in its structure. Through the thirteen schemes it provides for, it traditionally supports investment projects in the categories of agri-food, manufacturing, supply chain, tourism, new entrepreneurship and large investments. For the first time, schemes are introduced to support targeted investment projects for digital transformation, green transition, entrepreneurial outward-looking and participation in European value chains. In addition, special attention has been given to investment projects implemented in regions with specific characteristics, such as those in the areas of the Fair Transition Territorial Plans and the regional units of Evros, Rodopi and Xanthi.
More specifically, the innovations of the above law can be summarized as follows:
The State aid concerns investment projects in one of the following 13 categories: 1) Digital and technological transformation of enterprises; 2) Green transition, environmental upgrading of enterprises; 3) New business; 4) Fair development transition regime; 5) Research and applied innovation; 6) Agri-food, primary production and processing of agricultural products, 7) Manufacturing, supply chain, 8) Entrepreneurial extroversion, 9) Tourism investment promotion, 10) Alternative forms of tourism, 11) Large investments, 12) European value chains, 13) Entrepreneurship 360o.
Eligible for assistance under the schemes of the Law are enterprises established or having a branch in Greece, irrespective of their size. Specifically, for the scheme under the category “New business“, beneficiaries are very small and small enterprises in the process of being set up. Investment projects may receive either regional aid (alone or in combination with non-regional aid) or exclusively non-regional aid (in accordance with the General Exemption Regulation No 651/2014 and other EU regulations).
Regional aid concerns:
α) Investment expenditure on tangible fixed assets (e.g. construction, extension and modernization of buildings, purchase of fixed assets, etc.).
(b) capital expenditure on intangible assets (transfer of technology, expenditure on quality assurance and quality control systems, etc.).
(c) the wage costs of the new jobs (calculated over two years from the creation of each job and constituting eligible expenditure only on their own and not in combination with points (a) or (b)).
The eligible costs of investment projects for which non-regional aid is granted are defined in detail in Annex B of the new Development Law. The minimum amount of eligible investment project costs is set according to the size of the enterprise from €50.000 (for rural and urban cooperatives, etc.) to €1.000,000 (for large enterprises). The State aid covers a percentage of the eligible costs of the investment project which is determined on the basis of the size of the entity and the region in which the investment project takes place and which in any case may not exceed 75% of the eligible costs of the investment project.
The aid provided may take the following forms, either individually or in combination:
a. Tax exemption, which consists of exemption from the payment of income tax on the pre-tax profits realized on all the company’s activities.
b. a grant, which consists of the free provision by the State of a sum of money to cover part of the eligible costs of the investment project, expressed as a percentage of the costs.
c. A leasing subsidy, which consists of the State covering part of the leasing instalments paid for the acquisition of new machinery and equipment.
d. Subsidy for the cost of employment created, which consists in the State covering part of the wage costs of the new jobs created and linked to the investment project.
e. risk financing, which consists in subsidizing the interest rate on subordinated loans or the cost of insuring subprime loans.
It is worth mentioning that for investment projects of small and micro enterprises, a choice is provided between a grant, a tax exemption, a leasing subsidy and a subsidy for the cost of employment created. The use of the grant incentive is effectively abolished for investments by medium and large enterprises, pushing them towards more rewarding investments in order to take advantage of the tax exemption incentive.
Aiming to speed up the integration and start-up of investment projects, the application of direct assessment is extended to more schemes, thus avoiding the delays resulting from comparative assessment. Specific timeframes are established for the assessment and certification of the completion of investment projects, aiming at regaining the confidence of enterprises. From now on, the assessment of investment projects will be carried out by the General Directorate for Private Investment for projects over €1 million, and will be completed either within 30 days in cases where direct assessment is applied, or within 45 days of the scheme’s closing date in cases where comparative assessment is applied. In order to address the phenomenon of stagnant investments awaiting completion audit, the audit will be entrusted, at the choice of the company, to a chartered accountant or audit firm, and the decision to complete and put the investment into production will be issued within 40 days of the submission of the final audit report. The service will carry out sample checks to verify the accuracy of the completion audit reports.
Additionally, in order to help enterprises to plan their investments more efficiently, the notices of the schemes will be issued at regular intervals throughout the year, with each notice valid for three (3) months, with no possibility of extension for benchmarking schemes. Similarly, for direct assessment schemes, the notices of schemes will be on an annual basis. At the same time, more interim controls are introduced, with corresponding payments at 25% – 50% – 65% – 100% of the investment implementation, improving the financial flows of enterprises in financing their investment projects.
The adoption of the new development law was complemented by the approval by the European Commission of the new regional aid map for the period 2022-2027. The new map provides for increased aid rates for almost the entire territory, with aid reaching 70% for investment projects of small enterprises. The only exceptions to the increased aid rates are the regions belonging to the North, South and East sectors of Athens, which, because they are part of the most developed regions of the EU, are not eligible for aid.
Our office has been successfully representing high net worth individuals and companies initiating such investment projects in Greece. The development law has been the Greece’s main development tool over time. Now, more than ever, Greece has a new, modern development instrument that brings significant improvements, meeting the long-standing demands of businesses in a very satisfactory way. We are therefore confident that now is the time for us to undertake the whole procedure of your investment in Greece, step by step.
At Amoiridis Law Services® we are dedicated at assisting our well-respected clients successfully complete any of their investment projects and real-estate purchases in Greece. Thanks to our longstanding experience, we are able to provide a full package of consultancy services to our almost exclusively international clientele, customised to their specific needs.
As a result, we have represented clients from all around the globe regarding their projects in Greece. Our network of associate experts, composed by both in-house and external solicitors, notaries, accountants, tax experts, currency exchange experts, realtors etc., enables us to provide an all-in-one package of consultancy services, guiding you through the ways to properly protect your investments.
For any further information and clarifications please do not hesitate to contact our qualified legal team, ready to provide you with further personalized information tailored to your needs and your profile.
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Athens, March 2022