ECONOMY

Incentives for bigger firms

incentives-for-bigger-firms

Tax breaks, access to funding on favorable terms and immediate financing in the form of subsidies are the three incentives being planned by the Finance Ministry to encourage mergers, acquisitions and cooperation between enterprises.

Increasing the average size of Greek companies is among the main ingredients of the new production model the government envisages for the Greek economy. “We hope to increase the average size for purposes of productivity and export orientation,” says Alternate Finance Minister Thodoros Skylakakis.

The plan follows a similar direction to the recommendations of the Pissarides committee, which showed that 48.5% of Greek enterprises employ no more than nine people, against a European Union average rate of 29.9%, with an immediate impact on the productivity of labor.

The incentives the government is planning will start applying in 2022, according to sources, as the tax breaks cannot apply any earlier. The legal framework to that effect is expected to be voted in the coming months, with European resources contributing to the side of loans.

There will be no horizontal application to the incentives; they will vary depending on the situation and type of cooperation. They will include:

– Tax breaks: A reduced tax rate on incomes will apply for a number of years, as well as a reduced taxation on stock.

– Subsidies: They will be granted for the procurement of supplies and equipment, among others.

– Loans: Access will be granted to the 12.7 billion euros of the Next Generation EU loans, at a very low interest rate. Mergers and acquisitions are one of the five eligibility criteria for access to those loans (alongside digital and green transitions, export orientation, and research and development). Therefore, even corporations without a strong digital footprint, that do not even make exports, may get loans for investments in the context of their merger with or acquisition of others.

Sources also say that licensing will also be facilitated, so as to make the transfer of operating permits easier as they are currently supplied to people and not companies.

Clauses will also ensure the mergers benefitting are genuine and not fake.