( ) Page: 1/82. Committee on Subsidies and Countervailing Measures SUBSIDIES

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1 23 August 2013 ( ) Page: 1/82 Committee on Subsidies and Countervailing Measures Original: English SUBSIDIES NEW AND FULL NOTIFICATION PURSUANT TO ARTICLE XVI:1 OF THE GATT 1994 AND ARTICLE 25 OF THE AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES EUROPEAN UNION Addendum The following addendum to the notification of the European Union relates to the subsidy programmes of Hungary.

2 - 2 - HUNGARY TABLE OF CONTENTS A. HUNGARY CORPORATE TAX CONCESSIONS TO ASSIST STRUCTURAL ADJUSTMENT AND ECONOMIC DEVELOPMENT Tax Concession for Investments Exceeding 3 Billion HUF Tax Concession for Investments Exceeding 10 Billion HUF Tax Relief for Projects of Small and Medium Enterprises Tax Concession for Small and Medium Sized Enterprises Tax Concession Related to Development Projects Tax Relief for Employment Tax Concession for Software Developers Preferential Tax Rate Tax Relief for Research and Development Tax Concession for Film Production Accelerated Depreciation for Small and Medium-sized Enterprises Tax Allowance on Sponsorship of Popular Team Sports Tax Concession for Performing Art RESEARCH AND TECHNOLOGICAL INNOVATION FUND BUDGETARY SCHEME EARMARKED FOR INVESTMENT PROMOTION BUDGETARY SCHEME EARMARKED FOR ECONOMIC DEVELOPMENT SUBSIDY FOR JOB-CREATION CO-FINANCED SUBSIDY PROGRAMMES Economic Development Operational Programme (EDOP) Environment and Energy Operational Programme (EEOP) Social Renewal Operational Programme (SROP) Social Infrastructure Operational Programme (SIOP) Transport Operational Programme (TOP) Electronic Public Administration Operational Programme (EPAOP) South Great Plain Operational Programme (SGPOP) South Transdanubia Operational Programme (STDOP) North Great Plain Operational Programme (NGPOP) North Hungary Operational Programme (NHOP) Central Transdanubia Operational Programme (CTDOP) Central Hungary Operational Programme (CHOP) West Pannon Operational Programme (WPOP) Central Europe Programme South East Europe Transnational Co-operation Programme Hungary-Slovakia Cross-border Co-operation Programme

3 Hungary-Romania Cross-border Co-operation Programme Austria-Hungary Cross-border Co-operation Programme Hungary-Croatia IPA Cross-border Co-operation Programme Hungary-Serbia IPA Cross-border Co-operation Programme Slovenia-Hungary Cross-border Co-operation Programme Hungary-Slovakia-Romania-Ukraine ENPI Cross-border Co-operation Programme Agriculture and Rural Development Operational Programme - NEW HUNGARY RURAL DEVELOPMENT PROGRAMME (NHRDP) B. HUNGARY CORPORATE TAX CONCESSIONS TO ASSIST STRUCTURAL ADJUSTMENT AND ECONOMIC DEVELOPMENT Tax Relief for Projects of Small and Medium Enterprises Tax Concession for Small and Medium Sized Enterprises Tax Concession Related to Development Projects Tax Relief for Employment Preferential Tax Rate Tax Relief for Research and Development Tax Concession for Film Production Accelerated Depreciation for Small and Medium-sized Enterprises Tax Allowance on Sponsorship of Popular Team Sports Tax Concession for Performing Art RESEARCH AND TECHNOLOGICAL INNOVATION FUND BUDGETARY SCHEME EARMARKED FOR ECONOMIC DEVELOPMENT BUDGETARY SCHEME EARMARKED FOR INVESTMENT PROMOTION SUBSIDY FOR JOB CREATION CO-FINANCED SUBSIDY PROGRAMMES Economic Development Operational Programme (EDOP) Environment and Energy Operational Programme (EEOP) Social Renewal Operational Programme (SROP) Social Infrastructure Operational Programme (SIOP) Transport Operational Programme (TOP) Electronic Public Administration Operational Programme (EPAOP) South Great Plain Operational Programme (SGPOP) South Transdanubia Operational Programme (STDOP) North Great Plain Operational Programme (NGPOP) North Hungary Operational Programme (NHOP) Central Transdanubia Operational Programme (CTDOP) Central Hungary Operational Programme (CHOP) West Pannon Operational Programme (WPOP) Central Europe Programme... 71

4 South East Europe Transnational Co-operation Programme Hungary-Slovakia Cross-border Co-operation Programme Hungary-Romania Cross-border Co-operation Programme Austria-Hungary Cross-border Co-operation Programme Hungary-Croatia IPA Cross-border Co-operation Programme Hungary-Serbia IPA Cross-border Co-operation Programme Slovenia-Hungary Cross-border Co-operation Programme Hungary-Slovakia-Romania-Ukraine ENPI Cross-border Co-operation Programme Agriculture and Rural Development Operational Programme - NEW HUNGARY RURAL DEVELOPMENT PROGRAMME (NHRDP)

5 - 5 - A. HUNGARY CORPORATE TAX CONCESSIONS TO ASSIST STRUCTURAL ADJUSTMENT AND ECONOMIC DEVELOPMENT 1.1 Tax Concession for Investments Exceeding 3 Billion HUF Tax concession for investments exceeding 3 billion HUF The purpose of this tax concession is to stimulate investments in underdeveloped regions from a social-economic point of view and/or in counties having unemployment rate higher than 15%. This tax benefit is provided for by Section 21 of the Act LXXXI. of 1996 on the Corporate Tax and Dividend Tax. The subsidy is in the form of deduction from the corporate tax. Companies with head office or premises registered in a socially-economically underdeveloped region and/or in a county where the unemployment rate exceeds 15%, and after 31 December 1996 began an investment of at least 3 billion HUF for the production of goods may receive a tax concession in a ten year period following the project's start up. The above tax benefit can only be applied for from the second taxation year and thereafter if the annual average number of the staff employed exceeds by at least 100 persons the average number of the staff employed in the year preceding the start up. The tax concession equals to the ratio of sales revenue from manufacturing operations to the total sales revenue. This tax concession cannot be applied to projects commencing subsequent to 31 December Subsidy per unit or the total amount The tax benefit accounted for HUF 17.7 billion. This tax concession can not be applied after the year Tax Concession for Investments Exceeding 10 Billion HUF Tax concession for investments exceeding 10 billion HUF.

6 The purpose of this tax benefit is to promote large investments. This tax benefit is provided for by Section 21 of Act LXXXI. of 1996 on the Corporate Tax and Dividend Tax. The subsidy is in the form of deduction from the corporate tax. Companies that began after 31 December 1996 an investment of at least 10 billion HUF destined for the production of goods may receive a 100% tax concession in a ten year period following the project's start up. The above tax benefit can only be applied for if the annual average number of the staff employed exceeds by at least 500 persons the average number of the staff employed in the year preceding the start up. This tax concession cannot be applied to projects commencing subsequent to 31 December Subsidy per unit or the total amount The tax benefit accounted for HUF 53 billion. This tax concession is not applied after the year Tax Relief for Projects of Small and Medium Enterprises Tax relief for projects of small and medium enterprises The objective of this scheme is to promote investment activities of small and medium enterprises. The tax relief is provided for by Section 7, paragraph (1), subparagraph zs) of Act LXXXI. of 1996 on the Corporate Tax and Dividend Tax.

7 - 7 - This subsidy is in the form of deduction from the corporate tax base. Investing small and medium enterprises provided all of their members were private natural persons in the tax year. 7. Subsidy per unit or the total amount The tax relief is equal to the total amount of the project costs, but may not be higher than the pretax profit or HUF 30 million. The tax benefit accounted for HUF 8.1 billion. This tax relief was introduced in No explicit time limit is attached to this subsidy. 1.4 Tax Concession for Small and Medium Sized Enterprises Tax concession for small and medium sized enterprises The purpose of this tax concession is to stimulate investment activities of small and medium-sized enterprises. The tax concession is provided for by Section 22/A of Act LXXXI. of 1996 on Corporate Tax and Dividend Tax. The subsidy is in the form of deduction from the corporate tax. Small and medium-sized enterprises financing their investments by bank loans. 7. Subsidy per unit or the total amount The tax concession is equal to 40% of the interest paid on bank loans during the tax year. The concession may not be in excess of 6 million HUF per year. The tax benefit accounted for HUF 2.1 billion. This tax concession was introduced in No explicit time limit is attached to this subsidy.

8 Tax Concession Related to Development Projects Tax concession related to development projects The objective of this scheme is to stimulate investment activities. This tax concession has been provided for by Section 22/B of Act LXXXI. of 1996 on the Corporate Tax and Dividend Tax. The subsidy is in the form of deduction from the corporate tax. Tax concession is granted to a taxpayer whose development project entails an investment of at least 3 billion HUF or 1 billion HUF if the project is started and operated in preferable regions. The tax concession can be applied in the four years following the first year in which the tax concession is used if: a) the average number of workers employed exceeds the average number of persons employed during the tax year prior to the commencement of the project, or - at the taxpayer s discretion - the mathematical average calculated based on the three tax years before the commencement of the project by at least 150 workers - or 75 workers if the project is started and operated within the administrative jurisdiction of a favored municipal government specified in the relevant government decree -, or b) the taxpayer s annualized wage costs are at least six hundred times greater than the amount of the prevailing minimum wage effective on the first day of the tax year as calculated for the tax year - or at least three hundred times greater if the project is launched and operated within the administrative jurisdiction of a favored municipal government specified in the relevant government decree - as compared to the annualized wage costs of the year preceding the year in which the project was launched, or - at the taxpayer s discretion - the mathematical average of wage costs calculated from the annualized data based on the period of three tax years before the commencement of the project. Tax concession is granted for: a) development projects with a value of at least 100 million HUF, if it constitutes the launch and operation of an independent environmental protection project or a wideband Internet service or a food facility project or a basic research, applied research and experimental development or a motion picture and video production project, b) development projects with a value of at least 100 million HUF, if these projects have been financed by newly issued shares and the relevant joint-stock company is registered at the stock exchange, c) projects serving to create new jobs.

9 Subsidy per unit or the total amount The support granted to a specific development project may not be higher than the amount computed by the ratio stipulated in the legislation from the total cost of the project. The tax concession may be claimed up to 80 per cent of the corporate income tax otherwise payable. The tax benefit accounted for HUF 25,7 billion. The tax concession may be applied in the tax year following the year when the project was launched - or in the same tax year at the taxpayer s discretion - and in the following nine tax years, at the latest during the fourteenth tax year following the tax year in which the notification or the application was submitted. 1.6 Tax Relief for Employment Tax relief for employment The objective of this scheme is to promote employment. This tax relief has been provided for by Section 7, paragraph (1), subparagraph y) of Act LXXXI. of 1996 on the Corporate Tax and Dividend Tax. This subsidy is in the form of deduction from the corporate tax base. Micro enterprises with no more than five employees. 7. Subsidy per unit or the total amount The tax relief is equal to the sum received by multiplying the minimum wage by any increment in the average number of employees in comparison to the previous tax year. This tax relief can be applied if the taxpayer has no tax debts. The tax benefit accounted for HUF 0.11 billion. This tax relief was introduced in No explicit time limit is attached to this subsidy.

10 Tax Concession for Software Developers Tax concession for software developers The objective of this scheme is to stimulate the employment of software developers in small and medium-sized enterprises. This tax concession has been provided for by Section 22 paragraph (10) of Act LXXXI of 1996 on the Corporate Tax and Dividend Tax. The subsidy is in the form of deduction from the corporate tax. Small and medium-sized enterprises employing software developers. 7. Subsidy per unit or the total amount Small and medium-sized enterprises are entitled to a tax concession of 15% of the wages and salaries paid to a software developer during the tax year. The tax concession can be claimed during the tax year and the following three tax years in equal instalments. The tax benefit accounted for HUF 1,1 billion. This tax concession was introduced in No explicit time limit is attached to this subsidy. 1.8 Preferential Tax Rate Preferential tax rate The programme is intended to reduce tax burden for smaller companies.

11 This tax benefit is provided for by Section 19 paragraphs (2) of Act LXXXI. of 1996 on the Corporate Tax and Dividend Tax. The subsidy is in the form of reduced corporate tax rate. The corporate tax shall be 10% of the positive tax base up to five hundred million forints. 7. Subsidy per unit or the total amount A preferential tax rate of 10% is applicable to the part of the tax base which does not exceed 500 million HUF, while any excess profits are taxable at the general 19% rate. The tax benefit accounted for HUF 151,5 billion. This regime was introduced in No explicit time limit is attached to this subsidy. 1.9 Tax Relief for Research and Development Tax relief for research and development The objective of this scheme is to promote the R&D activity. The tax relief is provided for by Section 7 paragraph (1) subparagraph t) and paragraphs (17) and (18) of Act LXXXI. of 1996 on the Corporate Tax and Dividend Tax. This subsidy is in the form of deduction from the corporate tax base. Taking into consideration of what is contained in Subsections (17)-(18) of Act LXXXI, the direct costs of basic research, applied research and experimental development carried out within the taxpayer s own scope of activities (not including the value of research and experimental development services provided by a resident taxpayer, by the domestic branch of a nonresident entrepreneur or - pursuant to the Personal Income Tax Act - by a private entrepreneur directly or indirectly) claimed in the tax year in which it is incurred or, at the taxpayer s discretion, if these costs are shown under the capitalized value of experimental development (intellectual property) in the tax year in which depreciation is claimed, up to the amount claimed as depreciation; these costs (charges) may not be deducted from pre-tax profit and shown under the costs of

12 development or operating costs (charges) in the amount of any support or assistance requested from the tax authority before the balance sheet date or received during the tax year for development purposes without any obligation of repayment, or - if applicable - in the amount of income included in the pre-tax profit for the tax year under the title of grant or support. 7. Subsidy per unit or the total amount The tax relief is equal to the direct costs of basic research, applied research and experimental development incurred. Any support or assistance received for development purposes cannot be taken into account. The tax benefit accounted for HUF 20,8 billion. This tax relief was introduced in No explicit time limit is attached to this subsidy Tax Concession for Film Production Tax concession for film production The purpose of this tax concession is to stimulate film production. The tax concession is provided for by Section 4 point 36 and Section 22 paragraphs (1) and (3) of Act LXXXI. of 1996 on Corporate Tax and Dividend Tax. The subsidy is in the form of deduction from the corporate tax. Taxpayers sponsoring film productions. 7. Subsidy per unit or the total amount The tax concession is equal to the amount donated for film production. The tax concession can be applied during for the current tax year and the following three tax years. The tax concession may be claimed up to 70% of the corporate income tax otherwise payable. The tax benefit accounted for HUF 7,3 billion. This tax concession was introduced in 1 April No explicit time limit is attached to this subsidy.

13 Accelerated Depreciation for Small and Medium-sized Enterprises Accelerated depreciation for small and medium-sized enterprises The objective of this scheme is to promote investment activities in underdeveloped regions. This tax relief has been provided for by Annex 1, point 14 of Act LXXXI. of 1996 on the Corporate Tax and Dividend Tax. This subsidy is in the form of deduction from the corporate tax base. Small and medium-sized enterprises making investments in underdeveloped regions. 7. Subsidy per unit or the total amount Small and medium-sized enterprises may claim 100% depreciation on the value of machinery, equipment and vehicles (except passenger cars), which have never been used previously, if these tangible assets are used in most underprivileged regions. The amount of tax benefit is not available. This tax relief was introduced in 10 May No explicit time limit is attached to this subsidy Tax Allowance on Sponsorship of Popular Team Sports Tax Allowance on Sponsorship of Popular Team Sports The objective of this scheme is to sponsor of Popular Team Sports.

14 The tax concession is provided for by Section 22/C paragraphs (1) of Act LXXXI of 1996 on Corporate Tax and Dividend Tax. This subsidy is in the form of deduction from the corporate tax. Within the framework of sponsorship of popular team sports, taxpayers may provide support (funding) under the following titles: a) to national associations of popular team sports, b) to amateur sports organizations holding membership in a national association of a popular team sport, including sports academies set up under the national association according to the Sports Act, c) to professional sports organizations holding membership in a national association of a popular team sport: d) to public foundations created for the promotion of a popular team sport, e) to sports bodies governed by public law, created for the strategic development of sports, vested with decision-making powers having regard to the allocation of State aid for sports as specified in the annual budget act, through which the aid is made available. 7. Subsidy per unit or the total amount Additional tax allowances may be claimed up to 70% of the tax decreased by the tax concession related to development projects. The tax benefit accounted for HUF 25.7 billion. This tax relief was introduced in No explicit time limit is attached to this subsidy Tax Concession for Performing Art Tax Concession for Performing Art The objective of this scheme is to stimulate performing art. The tax concession is provided for by Section 4. point 38. and Section 22 paragraphs (1) of Act LXXXI of 1996 on Corporate Tax and Dividend Tax. This subsidy is in the form of deduction from the corporate tax.

15 Taxpayers to promote performing art. 7. Subsidy per unit or the total amount Additional tax allowances may be claimed up to 70% of the tax decreased by the tax concession related to development projects. The tax benefit accounted for HUF 7 billion. This tax relief was introduced in No explicit time limit is attached to this subsidy. 2 RESEARCH AND TECHNOLOGICAL INNOVATION FUND 2011 Research and Technological Innovation Fund The Fund is intended to improve the competitiveness and innovation performance of the Hungarian economy. Its main objectives are: to increase and concentrate the innovation activity of the enterprises with the emphasis on utilisation of innovative, marketable and competitive products; to increase the regional innovation capacity; to increase the cooperation between the research and industrial production sphere by improving the conditions of innovation environment. Act XC. of on the Research and Technological Innovation Fund (hereinafter: Act). Act CXXXIV. of 2004 on Research, Development and Technological Innovation. Grant. Public and private research organisations, enterprises, SMEs, non-profit organisations and natural persons may receive subsidy. Common projects conducted by companies in consortia with other applicants may also receive subsidy. Support from the Fund may be received through open tender procedures for the purposes set in the Act.

16 Subsidy per unit or the total amount Payments under this programme amounted to HUF billion. No explicit time limit is attached to the programme. 3 BUDGETARY SCHEME EARMARKED FOR INVESTMENT PROMOTION 2011 Budgetary scheme earmarked for investment promotion The scheme is designed to assist the realization of strategic investment in manufacturing industry, creation of R+D investments, logistic centres and projects in touristic sector in compliance with Hungary's obligations under EU law and international agreements by promoting i.a.: enhancement of the international competitiveness, acceleration of industrial restructuring, development of technologies, foreign direct investments of strategic investors, creation of regional service centres, establishment of R+D investments, realization of investments in tourism sector, realisation of logistic centres and development of their services, realisation of logistic service centres and capacities in particular SMEs supporting logistic activities. Annual Act on state budget, Decree 8/2007 (I. 24.) of the Minister of Economy and Transport. The subsidy is to be provided in the form of grant. Domestic legal persons, economic corporations without legal personality, European companies, European cooperatives registered in Hungary. Subsidy is awarded on the basis of the Government decision. The upper limit of support is in accordance with the maximum aid intensity specified in 37/2011. (III. 22.) Government Decree. At least 25% of the project cost should be financed from own source. 7. Subsidy per unit or the total amount The total amount accounted for HUF 13.6 billion. No explicit time limit is attached to the programme.

17 BUDGETARY SCHEME EARMARKED FOR ECONOMIC DEVELOPMENT 2011, if relevant, or brief description or identification of the subsidy Budgetary scheme earmarked for economic development (before 2011 budgetary scheme earmarked for the development of small and medium sized enterprises).. The period to be covered by the notification should be the most recently completed calendar or fiscal year. In the latter case, the start and end dates of the fiscal year should be specified Policy objective and / or purpose of the subsidy The scheme is designed to help SMEs overcome disadvantages inherent in their size. The subsidy is provided for by the Act XXXIV of 2004 on the Small and Medium Sized Enterprises and on the Support of their Development, the acts on annual state budgets, the Decree 41/2011. (VIII. 9.) of the Minister for National Development on the detailed rules for the use of the budgetary scheme earmarked for economic development. According to the Act XXXIV of 2004 on the Small and Medium Sized Enterprises and on the Support of their Development the support may be provided for in the form of non-repayable subsidy, interest subsidy, factoring fee subsidy, leasing fee subsidy, guarantee fee subsidy, acquisition of ownership interest in venture capital funds. In 2011 according to the Decree 41/2011. (VIII. 9.) of the Minister for National Development the support was provided for in the form of interest subsidy and guarantee fee subsidy. According to the Act XXXIV of 2004 all kinds of subsidy are awarded through tender procedures, targeted directly or indirectly to micro, small or medium-sized enterprises (SMEs). Support may be granted for programmes whose purpose is i.a. to help SMEs managing liquidity and financing working capital, to explore potential loan opportunities, to attain entrepreneurial knowledge, to develop entrepreneurial culture and managerial qualities. 7. Subsidy per unit or the total amount The total amount accounted for HUF 2.8 billion

18 SUBSIDY FOR JOB-CREATION 2011 National Employment Fund Policy objective and / or purpose of the subsidy Promoting creation of new jobs through investments. The subsidy is provided for by 18. of the Act IV of 1991 on Job Assistance and Unemployment Benefits and the 18. of the Decree 6/1996. (VII. 16.) of the Minister for Employment on employment subsidies and subsidy for crisis management. Non-reimbursable subsidy. All kinds of subsidy are awarded through tender procedures. At least 25% of the expenditure of investment must be financed from own source. Support may be granted for those employers who create new jobs, connected to investment. Support may be granted for those employers who undertake to: and realize the investment in a year after its initiation, sustain and operate capacities and services produced by the investment continuously at least for 3 years in accordance of the original purpose. maintain the employee number indicated in the application at least 2 years after hiring them. The subsidy may not be in excess of 25-50% of the programme's total costs depending on the regional classification. This upper limit can be increased by 20% for small enterprises, and by 10% for medium sized enterprises. 7. Subsidy per unit or the total amount The total amount accounted for HUF 5.0 billion. No explicit time limit is attached to this program.

19 CO-FINANCED SUBSIDY PROGRAMMES Economic Development Operational Programme (EDOP) Economic Development Operational Programme Overall objectives: The main objective of the programme is to encourage the permanent growth of the Hungarian economy, by strengthening the competitiveness of the production sector and the permanent growth factors. To create a base for the growth of the Hungarian economy, the following four specific objectives have been defined: increase R & D and innovation capacity, activity, as well as cooperation; complex development of corporate capacities; development of the business environment; facilitate SMEs' access to financing resources. Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999. Government Decree 255/2006 (XII. 8.) on the basic rules of the use of the ERDF, ESF and CF subsidies and responsible institutions in the programming period. MEHVM-PM Ministerial Decree 16/2006 (XII. 28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. Government Decree 281/2006 (XII.23.) on rules concerning establishing systems of financial management and controls in relation with receiving support from the ERDF, the ESF and the CF in the programming period Government Decree 4/2011 (I.28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. The subsidy is in the form of repayable and non-repayable subsidy. Repayable subsidies are granted from credit, guarantee and venture capital SME programmes. Public and private enterprises with eligible development projects may receive support for the accomplishment of the project. The support schemes must be in line with the OP aims and the EU state aid rules. Non-repayable support may be received through open tender procedures. Majority of repayable schemes are provided through financial intermediate bodies. The typical subsidy may not be in excess of 37% of the total eligible costs. The average contribution of the Hungarian government was around 6%.

20 Hungarian government) The total amount paid was HUF 10.6 billion. These grant schemes may not be applied after the year Environment and Energy Operational Programme (EEOP) Environment and Energy Operational Programme The developments identified in the Environment and Energy Operational Programme are intended to mitigate the country's environmental problems, thus improving the quality of life of the society and promoting the adaptation of the economy to the environmental processes: Creation and maintenance of an environment suitable for living in Protection and conservation of our assets Prevention, economy, energy efficiency Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999. Government Decree 255/2006 (XII. 8.) on the basic rules of the use of the ERDF, ESF and CF subsidies and responsible institutions in the programming period. MEHVM-PM Ministerial Decree 16/2006 (XII. 28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. Government Decree 281/2006 (XII.23.) on rules concerning establishing systems of financial management and controls in relation with receiving support from the ERDF, the ESF and the CF in the programming period Government Decree 4/2011 (I.28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. The subsidy is granted from non-repayable support schemes. Public and private enterprises with eligible development projects may receive support for the accomplishment of the project. The support schemes must be in line with the OP aims and the EU state aid rules. Non-repayable support may be received through open tender procedures The typical subsidy may not be in excess of 56% of the total eligible costs. The average contribution of the Hungarian government was around 8%.

21 Subsidy per unit or the total (the data contains only the contribution of the Hungarian government) The total amount paid was HUF 1.1 billion. These grant schemes may not be applied after the year Social Renewal Operational Programme (SROP) Social Renewal Operational Programme The overall objective of the SROP is to increase labour market participation. The SROP contributes to the achievement of the expansion of employment and the promotion of permanent growth (the overall objectives of the NHDP) primarily through the development of human resources and by measures aimed at the supply side of the labour market. The possibilities inherent in available labour supply cannot be exploited unless job-seeking increases, labour market and social discrimination decreases, the harmony between qualifications, skills sought and supplied improve, and the proportion of healthy labour force grows owing to the development of health culture. The road to enhanced employment leads through increasing activity. The above described objective is to be achieved with the improvement of the quality of the human resources primarily with the help of employment, education and training, the social field, health care, culture and general education, and anti-discrimination instruments. Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999. Government Decree 255/2006 (XII. 8.) on the basic rules of the use of the ERDF, ESF and CF subsidies and responsible institutions in the programming period. MEHVM-PM Ministerial Decree 16/2006 (XII. 28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. Government Decree 281/2006 (XII.23.) on rules concerning establishing systems of financial management and controls in relation with receiving support from the ERDF, the ESF and the CF in the programming period Government Decree 4/2011 (I.28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. The subsidy is in the form of non-repayable support schemes. Public and private enterprises with eligible development projects may receive support for the accomplishment of the project. The support schemes must be in line with the OP aims and the EU state aid rules.

22 Non-repayable support may be received through open tender procedures - and through the selection of key projects - for the purposes set in the application calls. Typically the subsidy may not be in excess of 97% of the project's total eligible costs. The average contribution of the Hungarian government was around 15%. Hungarian government) The total amount paid was HUF 1.2 billion. These grant schemes may not be applied after the year Social Infrastructure Operational Programme (SIOP) Social Infrastructure Operational Programme For the success of the interventions supporting the enhancement of labour market participation and the substantial improvement of the quality of human resources, it is necessary to perform coordinated development activities and the comprehensive reform of public services in the field of education, health care, employment and social services. This is the only way to ensure that the systems of public services operate in an efficient and sustainable manner on the one hand, and provide equal opportunities to all for accessing quality services, on the other. The substantial elements of the reform will be supported partly by the Social Renewal OP, and for the success of the implementation of these interventions and for reaching the best results, it is inevitable to ensure the physical infrastructural background linked to them. The SIOP, therefore, contributes to the achievement of the objectives of the New Hungary Development Plan through the modernisation and development of the infrastructure of the education and training system, including non-formal and informal learning, the health care system, the institutional system of employment and social services. Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999. Government Decree 255/2006 (XII. 8.) on the basic rules of the use of the ERDF, ESF and CF subsidies and responsible institutions in the programming period. MEHVM-PM Ministerial Decree 16/2006 (XII. 28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. Government Decree 281/2006 (XII.23.) on rules concerning establishing systems of financial management and controls in relation with receiving support from the ERDF, the ESF and the CF in the programming period

23 Government Decree 4/2011 (I.28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. The subsidy is in the form of non-repayable support schemes. Public and private enterprises with eligible development projects may receive support for the accomplishment of the project. The support schemes must be in line with the OP aims and the EU state aid rules. Non-repayable support may be received through open tender procedures - and through the selection of key projects - for the purposes set in the application calls. Typically the subsidy may not be in excess of 93% of the project's total eligible costs. The average contribution of the Hungarian government was around 14%. Hungarian government) The total amount paid was HUF 0.1 billion. These grant schemes may not be applied after the year Transport Operational Programme (TOP) Transport Operational Programme The comprehensive objective of transport developments is to improve accessibility with a view to increasing global and regional competitiveness and strengthening socio-economic and territorial cohesion. It is intended to improve the alternative accessibility of regions and the accessibility of economic and business centres by enabling the linking of the various modes of transport. In the field of transport development six priority axes have been determined to serve the above objectives: a) Improving the international road accessibility of the country and the regional centres. This priority involves the development, modernisation of the trans-european road transport corridors (TEN-T). b) Improving the international railway and waterway accessibility of the country and the regional centres. The aim of this priority is to develop the Hungarian railway lines that constitute part of the trans-european railway network (TEN). c) Improving regional accessibility This priority targets the development of the main road network (1-, 2- and 3-digit roads) improving the accessibility within the region.

24 d) Linking the modes of transport and improving the intermodality and the transport infrastructure of the economic centres. e) Improving urban and suburban public transport. f) Technical assistance. Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999. Government Decree 255/2006 (XII. 8.) on the basic rules of the use of the ERDF, ESF and CF subsidies and responsible institutions in the programming period. MEHVM-PM Ministerial Decree 16/2006 (XII. 28.) on the procedures of absorption of support from the ERDF, the ESF and the CF Government Decree 281/2006 (XII.23.) on rules concerning establishing systems of financial management and controls in relation with receiving support from the ERDF, the ESF and the CF in the programming period Government Decree 4/2011 (I.28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. The subsidy is in the form of non-repayable support schemes. Public and private enterprises with eligible development projects may receive support for the accomplishment of the project. The support schemes must be in line with the OP aims and the EU state aid rules. Non-repayable support may be received through open tender procedures for the purposes set in the application calls. Typically the subsidy may not be in excess of 99% of the project's total eligible costs. The average contribution of the Hungarian government was around 15%. 7. Subsidy per unit or the total amount(the data contains only the contribution of the Hungarian government) The total amount paid was HUF 22.4 billion. These grant schemes may not be applied after the year Electronic Public Administration Operational Programme (EPAOP) Electronic Public Administration Operational Programme

25 The overall strategic objective of the operational programme is to improve efficiency in public administration. By the reorganisation and simplification of the government processes and their subsequent support by means of info-communication it is intended to make the operation of the state more efficient, and provide the same amount of services with the use of less resource. The operational programme includes the modernisation of the procedures, processes and services of public administration and the judiciary system with the use of info-communication technology, as well as the interventions aimed at the identification of the clients as a common element of all public services provided by info-communication devices. Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999. Government Decree 255/2006 (XII. 8.) on the basic rules of the use of the ERDF, ESF and CF subsidies and responsible institutions in the programming period. MEHVM-PM Ministerial Decree 16/2006 (XII. 28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. Government Decree 281/2006 (XII.23.) on rules concerning establishing systems of financial management and controls in relation with receiving support from the ERDF, the ESF and the CF in the programming period Government Decree 4/2011 (I.28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. The subsidy is in the form of non-repayable support schemes. Central administrative bodies; Territorial agencies of the central administrative bodies; Territorial self-governments; Municipalities; Micro-regional associations; Companies in state ownership; NGOs fulfilling the tasks of the state; Court, Prosecution and Defence public bodies with eligible development projects may receive support for the accomplishment of the project. The support schemes must be in line with the OP aims and the EU state aid rules. Non-repayable support may be received through open tender procedures for the purposes set in the application calls. Typically the subsidy may not be in excess of 100% of the project's total eligible costs. The average contribution of the Hungarian government was around 15%. Hungarian government) The total amount paid was HUF 16,6 million. These grant schemes may not be applied after the year South Great Plain Operational Programme (SGPOP) South Great Plain Operational Programme.

26 The overall objective for the South Great Plain Region is to ensure sustainable growth and increased employment as well as to redress regional imbalances. Based on comparative territorial advantages, the specific objectives of the development programme are the following: Improving and increasing the competitiveness of the regional economy, promotion of change in economic structure based on innovation. Improvement of municipal and environmental conditions which determine living conditions for the population, in order to boost regional cohesion. Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999. Government Decree 255/2006 (XII. 8.) on the basic rules of the use of the ERDF, ESF and CF subsidies and responsible institutions in the programming period. MEHVM-PM Ministerial Decree 16/2006 (XII. 28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. Government Decree 281/2006 (XII.23.) on rules concerning establishing systems of financial management and controls in relation with receiving support from the ERDF, the ESF and the CF in the programming period Government Decree 4/2011 (I.28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. The subsidy is in the form of non-repayable support schemes, except for the Regional Capital Investment Fund Programme, which grants refundable equity contribution. Public and private enterprises with eligible development projects may receive support for the accomplishment of the project. Refundable subsidy is only eligible for the private sector. The support schemes must be in line with the OP aims and the EU state aid rules. Support may be received through open tender procedures for the purposes set in the application calls. The typical subsidy may not be in excess of 50% of the total eligible costs. The average contribution of the Hungarian government was around 8%. Hungarian government) The total amount paid was HUF 1.5 billion. These grant schemes may not be applied after the year 2015.

27 South Transdanubia Operational Programme (STDOP) South Transdanubia Operational Programme The overall long term objective of the South Transdanubia Operational Programme (until 2020) is the South Transdanubia region's convergence to the country's more developed areas. Accordingly, the strategic objective of this programme (until 2013) is to stop the South Transdanubia region's falling behind, i.e. to keep the region on the nation's growth path for the sake of a convergence process to be launched subsequently. Three specific objectives were determined for the sake of accomplishing the strategic objective: Protection of the natural and built environment in the Region, Competitive economy based on local characteristics, To stop the increase of social differences within the region. Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999. Government Decree 255/2006 (XII. 8.) on the basic rules of the use of the ERDF, ESF and CF subsidies and responsible institutions in the programming period. MEHVM-PM Ministerial Decree 16/2006 (XII. 28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. Government Decree 281/2006 (XII.23.) on rules concerning establishing systems of financial management and controls in relation with receiving support from the ERDF, the ESF and the CF in the programming period Government Decree 4/2011 (I.28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. The subsidy is in the form of non-repayable support schemes, except for the Regional Capital Investment Fund Programme, which grants refundable equity contribution. Public and private enterprises with eligible development projects may receive support for the accomplishment of the project. Refundable subsidy is only eligible for the private sector. The support schemes must be in line with the OP aims and the EU state aid rules. Support may be received through open tender procedures for the purposes set in the application calls. The typical subsidy may not be in excess of 54% of the total eligible costs. The average contribution of the Hungarian government was around 8%. Hungarian government) The total amount paid was HUF 1.3 billion.

28 These grant schemes may not be applied after the year North Great Plain Operational Programme (NGPOP) North Great Plain Operational Programme The NOGPOP sets the following long-term overall objective: Based on the natural and social heritage and the characteristics of the settlement network of the North Great Plain Region, to strengthen regional competitiveness and redress territorial imbalances within the region. Accordingly, the strategic objective of this programme is preventing the North Great Plain Region from falling behind; i.e. keeping the region on a national growth trajectory in order that a process of convergence may later begin. In order for the strategic objective to be achieved, the following objectives have been set: Strengthening the region's SME sector, Improving the income generating ability of tourism, Improving the population's mobility, Developing the region's human resources, Improving the environmental status of the built and natural environment. Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999. Government Decree 255/2006 (XII. 8.) on the basic rules of the use of the ERDF, ESF and CF subsidies and responsible institutions in the programming period. MEHVM-PM Ministerial Decree 16/2006 (XII. 28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. Government Decree 281/2006 (XII.23.) on rules concerning establishing systems of financial management and controls in relation with receiving support from the ERDF, the ESF and the CF in the programming period Government Decree 4/2011 (I.28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. The subsidy is in the form of non-repayable support schemes, except for the Regional Capital Investment Fund Programme, which grants refundable equity contribution.

29 Public and private enterprises with eligible development projects may receive support for the accomplishment of the project. Refundable subsidy is only eligible for the private sector. The support schemes must be in line with the OP aims and the EU state aid rules. Non-repayable support may be received through open tender procedures for the purposes set in the application calls. The typical subsidy may not be in excess of 51% of the total eligible costs. The average contribution of the Hungarian government was around 8%. Hungarian government) (the data contains only the contribution of the Hungarian government) The total amount paid was HUF 1.3 billion. These grant schemes may not be applied after the year North Hungary Operational Programme (NHOP) North Hungary Operational Programme The overall objective of the programme is: To improve the economic competitiveness of the region while decreasing territorial and socialeconomic differences within the region. The programme formulates the following specific objectives for the period : To improve competitiveness of the economy making use of local resources, cooperation; Improving the capacity of tourism to produce income; To enhance social cohesion and to develop an attracting economic and residential environment. Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999. Government Decree 255/2006 (XII. 8.) on the basic rules of the use of the ERDF, ESF and CF subsidies and responsible institutions in the programming period. MEHVM-PM Ministerial Decree 16/2006 (XII. 28.) on the procedures of absorption of support from the ERDF, the ESF and the CF. Government Decree 281/2006 (XII.23.) on rules concerning establishing systems of financial management and controls in relation with receiving support from the ERDF, the ESF and the CF in the programming period