FASI: Funding Aid Strategies Investments

A guide to incentives for industrial crisis areas in Italy

European Union, 2022 / Photographer: Claudio CentonzeThe Italian Ministry of Economic Development completed the restyling of the subsidies for industrial crisis areas. The measure is implemented through calls for tenders issued by the Ministry and managed by Invitalia.

Rules on development contracts in force

Invitalia, the National Agency for the attraction of investments and business development, owned by the Ministry of the Economy, oversees the preliminary investigation of applications, the granting and disbursement of subsidies, monitoring, inspections, and controls on the beneficiaries of funding. Here is how the calls work.

What does Law 181-1989 finance for industrial crisis areas?

The subsidies are intended for productive investment programmes and environmental protection investment programmes relating to production units located in one of the crisis areas, of a size of no less than EUR 1 million, to be started after the application for subsidies has been submitted and completed within 36 months from the date the concession contracts are signed.

The productive investment programmes concern:

  • the creation of new production units through the adoption of technical, organisational and/or production solutions that are innovative with respect to the reference market;
  • the expansion and/or upgrading of existing production units through the diversification of production into new additional products or a fundamental change in the overall production process;
  • the construction of new production units or the expansion of existing production units;the acquisition of the assets of an establishment, within the meaning and limits of Article 2(49) of the GBER Regulation.

Large companies can only propose productive investment programmes if they are:

  • carried out in crisis areas falling within the areas of national territory eligible for the derogation under Article 107(3)(a) TFEU, i.e. Molise, Campania, Puglia, Basilicata, Calabria, Sicily and Sardinia;
  • under certain conditions, in the areas referred to in Article 107(3)(c) TFEU,

without prejudice to the possibility of applying for de minimis aid.

As regards to investment programmes for environmental protection, these must be aimed at:

  • increase the level of environmental protection resulting from the company's activities (Art. 36 of the GBER Regulation);
  •  enable early adaptation to new EU standards which increase the level of environmental protection and are not yet in force (Art. 37 of the GBER Regulation);
  • recycling and reuse of waste (Art. 47 of the GBER regulation).

In addition to these two types of investment programmes, the following are eligible if they are closely linked and functional to their implementation:

  • projects for process innovation and organisational innovation in an amount not exceeding 40 per cent of the eligible investments of the investment programmes (Art. 29 of the GBER regulation). For large enterprises, such projects are only eligible if they are carried out through effective collaboration with SMEs and if the SMEs involved bear at least 30 per cent of the total eligible project costs;
  • staff training projects amounting to no more than 20 per cent of the eligible investments of the investment programmes (Art. 31 of the GBER Regulation), which are strictly consistent with the aims of the programme;
  • industrial research and experimental development projects (Article 25 of the GBER regulation), limited to investment programmes with eligible costs exceeding EUR 5 million and aimed at the creation of new products, processes or services or the significant improvement of existing products, processes or services.

Lastly, the investment must also include an employment programme, characterised by an increase in the number of employees, to be implemented within 12 months from the date of completion of the investment (in the case of a programme agreement, it is also permissible to merely maintain the number of employees, provided that the production unit has been operational for at least two years).

In general, the beneficiaries must undertake, within their respective workforce needs and after verifying the existence of the professional requirements, to give priority to the hiring of workers residing in the crisis area who are redundancy fund recipients, registered on the mobility lists, or unemployed following collective redundancy procedures and, subsequently, of workers of the companies in the reference territory involved in the crisis tables active at the Ministry and at the regions.

Who can apply for crisis area funding?

Companies constituted as joint-stock companies, including cooperatives, consortia, and business networks composed of a minimum of three and a maximum of six companies (each company may only participate in one network contract requesting the facility) are eligible for the facilities.

Eligible economic activities are:

  • mining of minerals from quarries and mines, excluding non-competitive coal mining as defined in Council Decision 2010/787/EU;
  • manufacturing activities;
  • energy production, limited to productive investment programmes if the facilities are granted under Article 17 of the GBER Regulation, or to investment programmes for environmental protection if they relate to renewables and remediation of contaminated sites;

  • business services activities;

  • tourism activities, in particular for the development of the tourism offer through the strengthening and improvement of the quality of the accommodation offer.

Greater flexibility on sectors of economic activity is envisaged for investments governed by programme agreements, based on the development needs of the territories concerned.

What are the incentives for industrial crisis areas?

Incentives may be granted, even in combination, in the form of capital grant, a contribution to the cost and subsidised loan, under the conditions and within the limits of the maximum aid intensities provided for by the GBER regulation, as detailed in the MISE decree of 24 November 2022 and the implementing memorandum of 16 June 2022, depending on the type and location of the investment.

Af for the loans, these cannot cover less than 20% of the cost, have a maximum duration of ten years, plus a pre-amortisation period of a maximum of three years, and are granted at a subsidised rate equal to 20% of the reference rate in force on the date the subsidies are granted, set on the basis of those established by the European Commission.

For programme agreements that provide for the co-financing of the interventions by the regions concerned, it is possible to determine, in compliance with the limits, a different measure of the subsidised loan and of the capital grant or contribution to  the cost  that may be granted.

The proposing party may also request a transitional minority participation of the managing entity in the company's capital, not exceeding 30% of the company's capital. Invitalia's participation is granted to SMEs within the limits indicated in Article 21 of the GBER regulation, while for large enterprises or SMEs that do not have the characteristics indicated by the EU regulation, it can be obtained subject to individual notification of the operation to the European Commission.

The sum of the incentives - subsidised loan, equipment grant, capital grant and capital participation - may not exceed 75% of the total eligible investments.

The granting of the incentives must be authorised by the European Commission if the aid amount exceeds:

  • the adjusted aid amount for an investment with eligible costs of EUR 100 million, for productive investment programmes to be carried out in crisis areas falling within the areas of the national territory eligible for the derogation under Article 107(3)(a) and (c) of the TFEU and facilitated under Article 14 of the GBER Regulation;
  • EUR 7.5 million for productive investment programmes to be carried out in crisis areas located in areas of the national territory other than those eligible for the derogation under Article 107(3)(a) and (c) of the TFEU;

  • EUR 2 million for cost on consultancy services;

  • EUR 15 million for investment programmes for environmental protection, with the exception of investments for energy efficiency for which the limit is EUR 10 million and for investments for the remediation of contaminated sites for which the limit is EUR 20 million;

  • EUR 7.5 million for projects for process innovation and organisational innovation;

  • EUR 2 million for staff training projects;

  • EUR 20 million for industrial research and experimental development projects, where the industrial research component is prevalent;

  • EUR 15 million for industrial research and experimental development projects, where the experimental development component is prevalent.

This is without prejudice to the possibility for the proposing enterprise to apply for aid for the productive investment programme under the de minimis rule or in compliance with the provisions of section 3.13 of the Temporary Framework for State Aid. In the latter case, however, the duration of the subsidised loan may not exceed eight years.

How to apply to Invitalia?

Access to the subsidies is based on an assessment procedure with a counter procedure. Facility applications must each relate to a single productive investment and/or environmental protection programme, possibly supplemented by projects for process and organisational innovation and/or personnel training projects and industrial research and experimental development projects.

Joint submission is allowed only in three cases:

  • programmes submitted by enterprise networks;
  • programmes in which a project for process and/or organisational innovation is envisaged involving up to two companies in addition to the one carrying out the productive investment and/or environmental protection programme (the latter must bear no less than 50% of the cost relating to the project for process and/or organisational innovation);

  • programmes in which there is a project for industrial research and/or experimental development involving up to two capital companies in addition to the one carrying out the programme of productive investment and/or environmental protection (the latter must bear no less than 50% of the cost relating to the project for industrial research and/or experimental development).

Invitalia proceeds in respect of the chronological order in which the applications are submitted, on the basis of five evaluation criteria that relate to the characteristics and credibility of the proposing party, the technical feasibility of the investment programme, the content of the employment programme, the reliability of the competitive analysis and the strategies for penetrating the reference market, and the economic and financial sustainability of the business project.

A memorandum of the 16 June 2022 provides a fast track for investment programmes with a total amount of EUR 10 million or more and a significant employment impact. In these cases, it is possible to apply for the procedure envisaged for Development Agreements, programmes of strategic importance with reference to the ability to attract foreign investment, the consistency of investments with the National Strategy for Smart Specialisation, or the pursuit of particular environmental objectives.

If these requirements are met, within 15 days of receiving the application, Invitalia transmits its assessment to the Ministry, the Regions and other interested administrations, which have 30 days to express their willingness to co-finance the intervention. At that point, the Development Agreement is signed, which defines the planned interventions, the timing of implementation and the financial framework. Entitlement to subsidies, however, remains subject to the positive outcome of the preliminary investigation.

As for the disbursement of the capital grant, of the direct contribution to cost (if any) and the subsidised loan, the beneficiary enterprise may submit a maximum of five requests for disbursement, containing progress reports, each of which, with the exception of the last, is not less than 15% of the eligible cost. The last progress report must be submitted within 3 months of the completion of the investment programme.

Documents:

Find out more about Law 181-89 concessions for crisis areas.

See the ministerial decree of 24 March 2022 reforming incentives for industrial crisis areas.

See memorandum no. 237343 of 16 June 2022.