ENTREPRENEUR S GUIDE TO THE OPERATIONAL PROGRAMME INDUSTRY AND ENTERPRISE

Transcription

1 ENTREPRENEUR S GUIDE TO THE OPERATIONAL PROGRAMME INDUSTRY AND ENTERPRISE OPERATIONAL PROGRAMME OF INDUSTRY AND ENTERPRISE

2 Ministry of Industry and Trade of the Czech Republic OPERATIONAL PROGRAMME OF INDUSTRY AND ENTERPRISE Entrepreneur's Guide to the Operational Programme Industry and Enterprise Motivation Invention Enterprise Prague April 2005

3 All rights reserved by the Ministry of Industry and Trade. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of the Ministry. The publication is the English translation of the revised edition in Czech Průvodce podnikatele Operačním programem Průmysl a podnikání published in November Editor: MIT CR - Section of Structural Funds Na Františku 32, Prague 1 Czech Republic Telephone: (420) Production: MINI MAX FILMS, s. r. o. Vojtěšská 11/240, Prague 1 Czech Republic Telephone: (420) Edited in March 2005 NOT FOR SALE

4 Contents CHAPTER 1 - EU STRUCTURAL FUNDS IN RELATION TO THE CR Regional Policy and EU Structural Funds Operational Programme Industry and Enterprise in Connection with the Implementation of Structural Policy 10 CHAPTER 2 SUPPORT PROGRAMMES General Terms and Conditions of Drawing Funds from OPIE ELIGIBILITY OF SUBMITTED PROJECTS ELIGIBILITY OF APPLICANTS FOR A GRANT OR LOAN ELIGIBILITY FOR THE MAXINUM AMOUNT OF A GRANT OR LOAN MONITORING THE ACHIEVMENTS OF THE PROGRAMME OBJECTIVES CLAUSE WHAT APPENDICES WILL EACH APPLICATION NEED? Description of Programmes of Support within OPIE PROSPERITY REALESTATES TRAINING CENTRES CLUSTERS START CREDIT DEVELOPMENT MARKETING INNOVATION ENERGY SAVINGS RENEWABLE ENERGY SOURCES 44 CHAPTER 3 SUPPLEMENTARY PROGRAMMES FOR ENTERPRISE SUPPORT IN THE COMPETENCE OF OTHER MINISTRIES JROP Measures for Enterprise Support Measures of the OP HRD Aimed at Human Resource Development in the Industry PROGRAMME OF PROFESSIONAL GROWTH OF EMPLOYEES - PROFESSION PROGRAMME STANDARD OF HUMAN RESOURCE DEVELOPMENT 48

5 CHAPTER 4 THE BASIC IMPLEMENTATION PROCEDURES Principles of Implementation of the OPIE Announcement of the Programmes Filing an application Assessment and Evaluation of an Application ECVALUATION OF AN APPLICATION SELECTION PROJECTS Course of a Project Realisation PAYMENT REVIEW AND CONTROL REPORTS ON PROJECT REALISATION 54 CHAPTER 5 SUMMARY What should an applicant for Structural Funds support be familiar with The most frequent mistakes and ambiguities in the application forms - what should an applicant for the OPIE support avoid THE MOST FREQUENT MISTAKES AND AMBIGUTIES AT THE TIME OF FILING AN APPLICATION THE MOST FREQUENT MISTAKES AND AMBIGUTIES OF THE CONTENT MISTAKES APPEARING IN THE APPLICATION FORM 61 ANNEXES 65 Annex 1 - List of the Contact Offices 65 A - OPIE MANAGING AUTHORITY 65 B - CZECHINVEST AGENCY AND ITS REGIONAL OFFICES 65 C - CMGDB (ČMZRB) ABD ITS REGIONAL CONTACT OFFICES 69 D - CZECHTRADE 70 E - CZECH ENERGY AGENCY 70 Annex 2 - List of Abbreviations 71

6 Dear readers, You have just opened a revised and updated issue of the Entrepreneur s Guide to the Operational Programme Industry and Enterprise that has been edited by the Ministry of Industry and Trade of the Czech Republic for applicants for aid from EU Structural Funds. The public, thus making it a remarkable success, has embraced the first issue of the brochure. A number of entrepreneurs welcomed the wide possibilities of benefiting from European funds through eleven OPIE programmes. The volume of projects submitted has surpassed expectation, and, compared to the initial stage, the projects have improved considerably in quality. The very fact that the Ministry of Industry and Trade did approve the first aid programmes as early as in November 2004 makes the Ministry the pacesetter among all the other ministries of the executive. That also manifests both the readiness of the entrepreneurial circles and the quality of preparations of the whole system for utilising the European funds through the Operational Programme Industry and Enterprise. Within a few months the programme has unquestionably become the leading programme of support for Czech enterprises. Consequently the national programmes that were originally dominant have lost their cardinal importance, and are now playing only a supplementary role. It is also quite obvious that in the near future the Structural Funds will be attractive to the entrepreneurial community, which explains its prominent place in this brochure. It guides you through the range of programmes, helps to identify the most suitable programme and the Terms and Conditions for receiving funds to finance your projects. Besides any unnecessary documentation, I believe that you will also find this issue helpful because it additionally contains a detailed description of the procedure starting with filling the application to the approval of a project, including all the steps throughout the process as well as the conclusion. The Structural Funds are a valuable instrument of the EU for serving the development of the entrepreneurial sector. I believe that together we will be able to utilise efficiently the funds allocated for the Czech Republic in Brussels. I wish you good luck. Milan Urban Minister of Industry and Trade

7 CHAPTER 1 - EU STRUCTURAL FUNDS IN RELATION TO THE CR 1.1 Regional Policy and EU Structural Funds Regional and Structural Policy is one of the leading segments in the overall framework of the EU Economic Policy. This policy (also called Economic and Social Cohesion Policy ESCP) originated as a result of a combination of regional, social and some agricultural policies. This consolidation was motivated by the need for better co-ordination of all the three mentioned areas. The Cohesion Policy is considered one of the most important EU policies. That is why the EU directs more than one third of its total budget to it. The EU Structural Policy is tailored to follow up on activities that seek to strengthen the economic and social cohesion of all EU member and candidate countries. It is an attempt aimed primarily at reducing gaps among the EU regions. This means that major assistance is targeted at the most structurally undeveloped regions, islands and rural areas of the member states. A European Council conference in Copenhagen from December 12-13, 2002 took the radical decision to grant membership to ten EU candidate countries with effect from May 1, This means that after its accession to the EU the Czech Republic has the right to funds allocated for purposes of economic and social cohesion. Nevertheless, the administrative and applicant criteria will remain strict condition for applicants or potential final recipients of funds. Objectives of the EU Regional policy for the period are defined as follows: Objective 1: Support for the development and structural adjustments of regions lagging-behind The regions, which fall under Objective 1, are those that meet level II of the Nomenclature of Territorial Statistical Units (NUTS) with a GDP per capita that is less than 75 % of the EU average (measured in purchasing power standards and calculated on the basis of the Community data for the immediate past three years). Overall this goal targets 22,2 % of the EU population. Objective 2: Support for the economic and social conversion of regions facing structural problems The regions, which fall under Objective 2, are those not covered by Objective 1 but face structural problems of social and economic conversion and ought to receive assistance. This includes regions in social and economic transition in particular. Objective 3: Support for the adjustment and modernisation of policies and systems in education, re-training and employment This objective will secure financial aid for those regions outside the coverage of 6

8 Objective 1 and will provide a framework of reference for all measures that support human resource development in any region of a member state without interfering with the specifics of the region. The objective covers regions experiencing major problems in the labour market. The goal is to help with the adaptation and modernisation of the systems of employment, education, vocational training, and other educational programmes. Regions eligible for aid from the Structural Funds and statistical territorial units For purposes of the Structural Policy, the EU uses a system of division into statistical territorial units - NUTS (from French Nomenclature des Unités Territoriales Statistiques). It came into force with Act No. 347/1997 Coll. on the establishment of higher territorial self-governing units and with the change of Constitutional Act No. 1/1993 Coll. The Constitution of the Czech Republic, approved by the Czech National Council, subdivided the territory of the Czech Republic into 14 regions, 77 districts (district administration units have been dissolved with effect from December 31, 2002), and the metropolitan area of Prague. A regional level is equal to a subdivision of the Czech Republic in accordance with NUTS III of the statistical territorial units. One to three units of NUTS III level comprise higher regional units of NUTS II level. They were established by Act No. 248/2000 Coll. as a result of the need for co-ordination and implementation of the economic and social cohesion policy. They are referred to as regions of cohesion on the basis of the support for regional development. The territory of the Czech Republic as a whole is in the range of NUTS I unit level. All regions, excluding the capital Prague, qualify for aid from the Structural Funds pursuant to Objective 1, while Prague qualifies for aid pursuant to Objectives 2 and 3. Classification NUTS NUTS I (1) NUTS II (8) region of cohesion NUTS III (14) region Prague Praha Central Bohemia Středočeský Northwest Ústecký Karlovarský Southwest Plzeňský Jihočeský The Czech republic Liberecký Northeast Královéhradecký Pardubický Southeast Vysočina Jihomoravský Central Moravia Olomoucký Zlínský Moravia-Silesia Moravskoslezský Source: Act No. 248/2000 Coll. on support of regional development 7

9 NUTS II - Regions of Cohesion Northwest Northeast Prague Moravia-Silesia Central Bohemia Central Moravia Southwest Southeast Extent of state aid Provision of state aid in the respective regions must comply with the Regional map of state aid intensity, which, in pursuance to the regulations of the European Commission, results from evaluation of the relevant statistical indices, and the per capita GDP and unemployment rate in particular. The Regional map of state aid intensity of the Czech Republic for the years approved by Resolution No. 1315/2001 of the Czech government, and which was adopted by the European Commission, offers the following maximum extent of the intensity of state aid that is permissible: Moravia-Silesia 50 %, Central Bohemia 50 %, Northwest 49 %, Central Moravia 49 %, Northeast 48 %, Southeast 48 %, Southwest 46 %, and Prague 20 %. State aid ceiling may be raised, pursuant to European Commission Guidelines on national regional aid (Official Journal C 74, March 10, 1998), by up to 15 % points of the investment expenditure permissible, provided that aid recipients are small and medium-sized enterprises (further referred to as SMEs). Structural Funds as the main instrument of the EU Regional Policy Currently the following four Structural Funds (further referred to as SF) are being used to finance projects that meet the above objectives: European Regional Development Fund (ERDF) Funds are assigned for investments in production that leads to the creation of new job opportunities, investments into infrastructure, education, public health, development of local potential, small and medium-sized enterprises, science and research, and investments in the environment. 8

10 European Social Fund (ESF) ESF allowances should most of all assist the unemployed and long-term unemployed with re-integration into the labour market, faster integration of young people into the labour process, adaptation of work force to industrial changes, enforcement of equal opportunities in the labour market, stabilisation and growth of employment, support of human resources engaged in research and development (R&D), and further improvement of education and skills. European Agricultural Guidance and Guarantee Fund (EAGGF) Part of the allowances are targeted at supporting agriculture in mountain and submountainous areas, helping young farmers, establishing producer associations, refining the structure and quality of agricultural production, rural infrastructure development, etc. Financial Instrument for Fisheries Guidance (FIFG) Programmes of this particular fund are developed for structural reform of the fisheries sector. Other financial instruments Besides the Structural Funds, a Cohesion Fund was established in Fund allowances are targeted at those member countries with a GDP per capita that is less than 90 % of the EU average. The investments are transformed into large projects on infrastructure and the environment. Another financial instrument is the European Investment Bank (EIB), which provides or guarantees loans for the needs of industry, infrastructure, telecommunications, environmental protection, and energy. Although the member countries provided the initial capital, EIB earns most of its financial resources through commercial interest rates in the international capital markets. Community Initiatives Besides aid meant for initiatives of the member countries, there are also community initiatives that are subject to changes for each programming period. These initiatives should promote cross-border co-operation targeting harmonic and balanced planning and the development of multi-regional areas (Programme INTERREG), the development of rural areas with agriculture as the primary production (Programme LEADER), human resource development and the elimination of any discrimination in the labour market (Programme EQUAL), and economic and social regeneration of cities and declining urban areas (Programme URBAN). 9

11 Community Horizontal policies Participation of the economic entities in programmes supported by the Structural Funds (further referred to as SF) is conditioned by respecting and adhering to EU Horizontal Policies such as promotion of: sustainable development; environmental protection; equal opportunities for men and women; information society; human resource development. 1.2 Operational Programme Industry and Enterprise in Connection with the Implementation of Structural Policy The elementary condition for drawing on EU SF assistance is to work out the applicable programming documents as requested by the Commission for that purpose. A member country will draw up the National Development Plan (NDP) that further serves as the basis for allowing the Commission to shape its Community Support Framework (CSF), which, in fact, is an agreement between the Commission and the government of a particular member country. This agreement defines the targeted objectives and the financial participation of the EU. On the basis of an approved Community support framework, the member country submits the individual operational programmes for the diverse sectors of the national 10

12 economy. After approval of these documents by the Commission, the implementation of the particular projects may then commence. Support programmes allowing the submission of projects and drawing on funds are detailed in Programme supplements to the respective operational programmes. The Czech NDP specifies the six main priorities as: Strengthening the competitiveness of industry and entrepreneurial services, Development of transport infrastructure, Human resource development, Environmental protection and improvement, Rural development and multifunctional agriculture, and Promotion of tourism. The focus of the NDP aims at the first priority, which has been detailed in the Operational Programme Industry and Enterprise (further referred to as OPIE), and which lies within the competency of the Ministry of Industry and Trade (further referred to as MIT). The implementation of the five operational programmes achieves both the general and specific objectives of the NDP. The four operational programmes have sectoral coverage: Industry and Enterprise (MIT), Infrastructure (Ministry of Environment - MoE), Human Resource Development (Ministry of Labour and Social Affairs - MLSA), and Rural Development and Multifunctional Agriculture (Ministry of Agriculture - MoA). The regional coverage is a feature of the Joint Regional Operational Programme (Ministry for Regional Development - MRD). Other objectives of the economic and social cohesion are dealt with in the single programming documents (Objective 2 falls within the competence of MRD while Objective 3 falls within the competence of MLSA). Funds for financing regional activities pursuant to Objective 1 that are allocated for the Czech Republic as a whole shall be disbursed as follows: Joint Regional OP 31 %, OP Human Resource Development 22 %, OP Industry and Enterprise 18 %, OP Rural Development and Multifunctional Agriculture 12 %, and OP Infrastructure 17 %. Owing to the date of Czech accession to the EU on May 1, 2004, and not withstanding the fact that it came in the middle of the usual programming period, all documents submitted by the CR are elaborated for the period of

13 Operational Programme Industry and Enterprise The intention of the aid within the OP Industry and Enterprise is to maintain and further develop competitive and efficient industrial potential, contribute practically to increasing the economic efficiency of production, which constitutes the basis for the support of needed structural adjustments of industry, to enable the CR to be a more developed EU region at the end of the following programming period. In order to achieve the specified objectives, the assistance will target the development of small and medium-sized enterprises, the promotion of innovative actions in industry, and structural adjustments in production, technology, economy, and the establishment of enterprises, trades and sectors, including the elimination of obsolete burdens, so as to reach the positive synergetic effect in the fields of environment, equal opportunities and the creation of information based society. An inseparable condition to all of this is constant cost reduction through the efficient use of energy in the case of the CR. OP Industry and Enterprise has a single source of financing, which is provided by the European Regional Development Fund (ERDF). The main requirement for the implementation of the objectives subject to aid is compatibility with the rules of the EU single market, and a special emphasis on the positive impact on employment and technology improvement. Chart of OPIE priorities and measures Priority Measure Priority 1 Business Enviroment Development Measure 1.1 Infrastructure for industrial research, development and innovations Measure 1.2 Development of business infrastructure Measure 1.3 Infrastructure for development of human resources in the industry Indicative description Total 50 % OPIE resources Strengthening of linkage research - development - industrial application. Support to infrastructure for industrial research, technological progress, and innovations. Improvement of conditions for companies geared towards technology - knowledge society Stimulation of co-operation among the industry and educational a research institutions. Boost to investments into infrastructure in the sphere of communication and information technology. Development, regeneration Brownfields, construction and reconstruction of business facilities including related infrastructure, project documentation. Establishment or reconstruction of training centres and their equipment with training aids and programmes. Specific entrepreneurial bodies education programme will be financed by ESF. Assumed target group Institutions cooperating with the tertiary sector, universities, research centres, etc. Municipalities, developers, SME - assisted enterprise SME and other entrepreneurial bodies, in case of training centre for a particular field company or group 12

14 Priority Measure Measure 1.4 Development of information and consulting services Priority 2 - Development of Enterprise Competitiveness Measure 2.1 Establishment and development of SMEs Measure 2.2 Support to innovative products, technologies and services Measure 2.3 Reduction of energy consumption and higher use of renewable sources of energy Indicative description Support for grading expertise and capacity of consulting service providers that will ensure access to quality guidance for the entrepreneurial community and thereby achieve a higher level of competitiveness of the SME. Promotion of business administration methods - quality management. Development of clusters, mentoring/consulting programmes, etc. Non-physical infrastructure for enterprise including service providers. Institutional fabric. Entrepreneurial co-operation. Total 46 % OPIE sources Assistance to young enterprises and businesses with development potential. Advancement and growth of economically aggressive businesses, particularly SME, including investment support, globalisation, guidance, information technologies, and supplier-consumer relations. Accessibility of capital funds. Human resource development within businesses will be covered by ESF (see 1.3) Support for development of a technological base of businesses, innovations, use of accomplishments of research and development in production, acquisition of licences, patents, guidance, commerce, marketing, refinement of processes and implementation of information technologies. Human resource development within businesses will be covered by ESF (see 1.3) Increase in efficiency of energy use including renewable resources. Energy savings in industry. The measure is directed as follows: Reduction of energy demand (improvement in efficiency of use of energy sources, reduction of energy demand in production-related processes, transformation and transmission of energy, implementation of combined generation of electricity and heat - co-generation, loss reduction by process of primary sources of energy, etc. Increase in use of renewable sources of energy, reduction of energy demand, use of renewable and secondary sources of energy. of them. In cooperation with at least one entrepreneurial entity also educational institutions, higher education institutions, and territorial selfgoverning body. Municipalities, regions and consulting companies including private, public nonprofit organisations SME and starting small enterprises SME, other enterprises SME

15 Priority Measure Priority 3 Technical assistance Measure 3.1 Programme administration Measure 3.2 Other technical assistance Indicative description Total 4 % OPIE sources Operational costs, publicity Studies, pilot projects, information system Assumed target group MIT Monitoring Committee for the Operational Programme Industry and Enterprise The whole process of implementing the operational programme is subject to monitoring, which will be conducted by a Monitoring Committee (further referred to as MC) for the OPIE based on a principle of partnership pursuant to the European Council Regulation (EC) No. 1260/1999 as regard general provisions for structural funds in the period. The Monitoring Committee for OPIE has been established by the MIT Decree No. 14/2003. The statute of the Monitoring Committee for OPIE was issued as an annex to this provision. The job of the Committee dwells on the verification of efficiency and the quality of implementation of the operational programmes. In the field of economic and social cohesion the MC is the supreme authority with regard to the use of the Structural Funds. This means that the MC is responsible for monitoring the process of completing the policy of economic and social cohesion. The MC also has the power to approve Programme Complement and Annual Reports before they are submitted to the European Commission.

16 CHAPTER 2 - SUPPORT PROGRAMES 2.1 General Terms and Conditions of Drawing Funds from OPIE ELIGIBILITY OF SUBMITTED PROJECTS Each submitted project must meet the following criteria: Grants and loans can be drawn for projects that will be implemented on the territory of the CR with the exception of the region of Prague. The decisive factor is the place of implementation and not the residence or place of business of the applicant (with the exception of programme MARKETING for which the place of implementation must correspond to the place of business, and that is why companies based in Prague can not apply for grants or loans under this programme) Each project must clarify unambiguously the asset/legal relations with regard to the project in such a way that will ensure its completion in the entirety of the proposal submitted Grants and loans from OPIE are not intended for projects targeting the fields of primary agricultural production, fisheries, tourism, and the so-called sensitive sectors specified by the EU regulations governing state aid The applicant is bound to submit a business licence valid in the territory of the CR pursuant to a separate special law regarding the aim of the project for which the assistance is sought The applicant may submit any number of projects into a single measure or even into a number of measures. However, the related costs of the respective project-will be co-financed only once Each project must meet the eligibility criteria specified in the relevant text of the programme. The CzechInvest (CI) offices constitute the right authority responsible for verifying eligibility when applications are submitted (see Annex 1B). However, the Czech-Moravian Guarantee and Development Bank (further referred to as CMGDB) will conduct the review of loans from programmes under CREDIT and START (see Annex 1C) Projects must meet the criterion for consideration of the environment. 15

17 2.1.2 ELIGIBILITY OF APPLICANTS FOR A GRANT OR LOAN Each applicant must meet the following criteria: The applicant must be incorporated in the CR, i.e. must be incorporated, registered by the Licensing office or by some other juridical person provided that the applicant does not run a business on the basis of a licence issued by the Licensing office, or is a self-employed person on the basis of other separate special law The applicant must be a registered income tax payer by an appropriate taxation office in accordance with Section 33 (1) of Act No. 337/1992 Coll., on the administration of taxes and charges, as amended The applicant must present a business licence valid for the territory of the CR pursuant to a separate special law corresponding to the project purpose, for which the grant should be dispensed. On this basis the decision will be made according to whether the projects fall under the so-called sensitive sectors and whether it meets the eligibility criteria or not The applicant must not have any outstanding liabilities towards the Tax Office, Czech Social Security Administration, General Directorate of Customs, health insurance corporations, Land Fund, National Property Fund, and State Environment Fund. Any respite granted in the honouring of liabilities or any agreement on the settlement of liabilities shall be considered as settled liabilities No bankruptcy order has been made against the applicant s estate, settlement has not been permitted, no bankruptcy petition filed against the applicant s estate has been rejected due to insufficient assets, and the applicant is not in liquidation pursuant to Act No. 328/1991 Coll. on bankruptcy and settlement, as amended There has been no business restriction issued to the applicant Each applicant must pass a financial health test (rating) (except in programmes under START and CREDIT and loans under the programme INNOVATION which are subject to review on the basis of the internal guidelines of the CMGDB). The rating criteria are available on the MIT, CI, and CMGDB websites ELIGIBILITY FOR THE MAXIMUM AMOUNT OF A GRANT OR LOAN The maximum amount of a grant or loan is pursuant to Amsterdam Treaty, article 87; Council Regulation (EC) No. 1260/1999, Section 29, 4(b); and Governmental Resolution No. 1315/2001. The ceiling differs in accordance to the nature of the 16

18 applicant, i.e. whether the applying subject comes from the private or public sector. Grants are always dispensed retrospectively, after the invoices for eligible costs have been submitted. The eligible costs are considered as those costs incurred with effect from the day the application has been accepted. Any cost incurred prior to the acceptance of the application will not be considered. The exception to this rule is the sole cost of the energy audit, which falls under programmes of support to Measure 2.3. The starting date of costs is considered to be the date on which work started (the first entry into the project journal of construction works, the date of delivery record in the case of supply delivery). Another condition of cost eligibility is the adherence to the principle that the cost may never be repaid before the date of accepting the application. In other words, in the case of an application for a grant, an applicant will have to finance the whole project from its own sources. It is only after the project has been completed and after the eligibility criteria have been met that the agreed amount (grant) will be paid retrospectively. On the other hand, major projects may be realised in phases. When applying for a loan the applicant must follow the regulations and guidelines of the CMGDB. The maximum amount of a grant or loan within OPIE is relative to the programme and type of aid recipient. In the case of state aid (most of the projects of entrepreneurial entities) the maximum amount of support is 46 %. Projects that are not subject to the rules of state aid (most of all the projects within Priority 1, provided that the recipient is a municipality, an alliance of municipalities or a region, or public or non-profit institutions), the amount of support may reach 75 %. Support within the programme REAL ESTATES may be as high as 100 % in some cases MONITORING THE ACHIEVEMENTS OF THE PROGRAMME OBJECTIVES CLAUSE The applicant is bound to provide true information on regular basis to the aid provider or the appropriate agency in order to assess the benefit of the project. This information shall be consistently submitted from the beginning of the project through to three years after its completion. Definition of Small and Medium-sized Enterprises To become eligible for most of the OPIE programmes the applicant must meet the criteria of small and medium-sized enterprise. These criteria are in accordance with the Commission Regulation (EC) No. 364/2004 (Annex 1), which changed the Commission Regulation (EC) No. 70/2001, and Act No. 47/2002 Coll. on the support of small and medium-sized enterprises, as amended. The new definition has been in force with effect from January 1, Find the full text presented below: 17

19 Definition of the term minor, small and medium-sized enterprises, and procedures for classifying enterprises into individual categories Clause 1 Minor, Small and Medium-Sized Enterprises 1. A minor, small or medium-sized enterprise shall be considered any enterprise which: a) employs fewer than 250 employees, b) its assets, stated in the balance sheet, do not exceed the equivalent in Czech crowns of EUR 43 million, or its net turnover during the last complete accounting period does not exceed the equivalent in Czech crowns of EUR 50 million. 2. A small enterprise shall be considered any enterprise which: a) employs fewer than 50 employees, b) its assets, stated in the balance sheet, or its net turnover during the last complete accounting period do not exceed the equivalent in Czech crowns of EUR 10 million. 3. A minor enterprise shall be considered any enterprise which: a) employs fewer than 10 employees, b) its assets, stated in the balance sheet, or its net turnover during the last complete accounting period do not exceed the equivalent in Czech crowns of EUR 2 million. 4. A small or medium-sized enterprise which enters into business, shall appoint the values specified in paragraph 2 or 3 by means of its own qualified estimate, such being for the first accounting period in which business activities are operated for the whole accounting period. Clause 2 Types of Enterprises Considered when Setting the Number of Employees and Financial Amounts 1. Any enterprise which is not classified as a partner enterprise as set forth in paragraph 2 or as an associated enterprise as set forth in paragraph 3 shall be considered an 'independent' enterprise. 2. 'Partner' enterprises are all enterprises which are not classified as associated enterprises as set forth in paragraph 3 and between which is the following relationship: the enterprise, either exclusively or together with one or more associated enterprises as set forth in paragraph 3, holds 2% or more of the capital or voting rights in another enterprise. However, an enterprise may be considered to be independent, and therefore free of any partners, even this 25% threshold is achieved or exceeded by the following investors, provided that these investors are not associated as set forth in paragraph 3, such being either individually or together with the enterprise in question: 18

20 a) public investment companies, risk capital companies, individuals or groups of individuals engaged in ordinary activities in the field of risk capital investments who invest into the equity of unlisted enterprises ('trade angels'), provided that the total investment made by these trade angels into the same enterprise is less than EUR 1,250,000; b)universities or non-profit research centres (entities whose object of business is research and which are non-profit); c) institutional investors, including regional development funds; d)independent self-governing authorities with an annual budget of less than EUR 10 million and fewer than 5,000 inhabitants. 3. Enterprises are 'associated' if any of the following relations exist between them: a) an enterprise has a majority of voting rights of shareholders or members in another enterprise; b) an enterprise has the right to appoint or recall a majority of the members of the statutory, managing, or supervisory authority of another enterprise; c) an enterprise has the right to exercise a dominant influence over another enterprise in accordance with a contract concluded with this enterprise or in accordance with the provisions of this enterprise's founder's deed or founders agreement; d) an enterprise which is the holder of shares in or a member of another enterprise controls, by agreement with other shareholders or members of this enterprise, a majority of shareholder or member voting rights in the enterprise. It is expected that no dominant influence exists in cases where the investors specified in the second subparagraph of paragraph 2 are involved directly or indirectly in the management of the enterprise in question, without affecting their rights as shareholders. Enterprises which have any of the relationships specified under paragraphs a) to d) by means of one or more other enterprises or by means of any of the investors specified in paragraph 2 shall be considered to be associated. 19

21 Enterprises which have one or more such relations via a natural person or group of natural persons acting in concert shall also be considered to be associated if they operate their activities or part of their activities on the same relevant market or on neighbouring markets. A 'neighbouring market' shall be considered a market for a product or service situated directly above or below the relevant market. 4. With the exception of cases appointed in the second subparagraph of paragraph 2, an enterprise cannot be considered to be a small or medium-sized enterprise if 25% or more of the capital or voting rights are controlled, directly or otherwise, jointly or individually, by one or more state administration authorities or a region or a municipality. 5 Enterprises can make declarations on their status as an independent enterprise, a partner, or an associated enterprise, including information regarding the restrictions stipulated in Clause 2. Declarations may also be made even if the capital is distributed in such a manner that it is not possible to determine precisely who owns this capital, in which case an enterprise may declare in good faith that it assumes that it is not owned 25% or more by a single enterprise or jointly by associated enterprises. Clause 3 Information Used to Set the Number of Employees, Financial Indicators, and Referential Period 1. Information which is to be used to set the number of employees and financial indicators is information related to the last complete accounting period and is calculated every year. This information is taken into account as of the date of approval of the financial statements or the submission of a tax return. The amount of turnover is set exclusive of value added tax (VAT) and other indirect taxes. 2. If, on the date of approval of the financial statements or submission of the tax return, the enterprise discovers that, for the given year, the figures exceed or fall short of the set number of employees or financial restrictions specified in Clause 1, there shall be no loss or acquisition of the status of a medium-sized, small, or minor enterprise if such restrictions are not exceeded or fulfilled in two consecutive accounting or tax periods. If, in two consecutive complete accounting/tax periods, set limits are fulfilled in one period and exceeded in another, the decisive factor in determining whether an enterprise is or is not a small or medium-sized enterprise is information from a third concluded accounting/tax period preceding the year in which the application for support is filed. 4. Should an enterprise have two or fewer accounting/tax periods, the decisive factor in setting whether the enterprise meets the definition of a small or mediumsized enterprise shall be information for the last complete accounting/tax period. 20

22 Clause 4 Number of Employees The number of employees corresponds to the number of annual work units, i.e. the number of persons employed full-time by the enterprise in question throughout the whole of the assessed referential year. The work of persons who have not worked for the full year, the work of those who have worked part-time regardless of the duration of such work, and the work of seasonal workers is calculated as fractional values of annual work units. Employees comprise: a) employees; b) persons who work for an enterprise, are subordinate to the enterprise, and who are considered employees; a) owners - managerial employees; d) partners involved in the everyday activities of the enterprise and draw financial benefits from the enterprise. Apprentices or students working in professional training under an apprentice agreement or specialist training agreement are not considered employees. The duration of maternal or parental leave is not counted. Clause 5 Appointing Information about Enterprises 1. In the case of an independent enterprise, information, including the number of employees, is set exclusively on the basis of figures related to this enterprise. 2. In the case of enterprises which cannot be considered to be independent, the following information is added to the information regarding the enterprise in question: a) information about each partner of the enterprise in question owning the enterprise in question or owned by the enterprise in question. The added indicator is proportional to the percentage share in the capital or voting rights (whichever is higher). In the case of the mutual ownership of enterprises in the form of the possession of shares of two or more companies, the highest percentage shall apply. Before making the proportionate recalculation, information about all associated enterprises is added to the information on the partner of the enterprise, b) information about each enterprise which is directly or indirectly connected with the enterprise in question, such being in full. Information about a partner is added proportionately to the information on an associated enterprise. 3. If an enterprise prepares consolidated financial statements, the information included in the consolidated results is fully or proportionately excluded, depending on the status of the enterprise which the consolidation relates to. 21

23

24 Clause 6 Crown Equivalent The crown equivalent is set by multiplying amounts stated in EUR by the exchange rate announced by the European Central Bank for the relationship between the EUR and CZK as at 31 December of the year preceding the year in which the application for support is submitted, or for the last working day preceding this date if 31 December falls on a Saturday, Sunday, or public holiday. Clause 7 Other Provisions 1. The source of information regarding the number of employees is the information on the number of employees submitted to the Czech Social Security Authority. 2. The net turnover/revenues means the amount acquired from the sale of products and from the provision of services following the deduction of sales discounts and vale added tax, and other taxes directly related to turnover. 3. The source of information for the verification of information on the net turnover is, for entities managing accounts, the income statement of the business entity. The source of income for the verification of information on the amount of revenues is, for entities maintaining tax records, information about revenues and expenditures in the tax records in accordance with Section 7b of Act No 586/1992 Coll., on income tax, as amended. 4. The source of information for verifying information about the amount of assets is, for entities managing accounts, the balance sheet of the business entity. In the case of entities maintaining tax records, this is assets ascertained from information in the tax records pursuant to Section 7b of Act No 586/1992 Coll., on income tax, as amended. 5. The source of information on relations between partner enterprises and associated enterprises is, for example, contracts concluded with a given enterprise, and provisions stipulated in he Memorandum of Association or Articles of Association. 6. Figures are rounded up and down in accordance with mathematical rules. 23

25 2.1.5 WHAT APPENDICES WILL EACH APPLICATION NEED? An application for support shall be accompanied by the needed documents (appendices) that satisfy the requirements of eligibility as specified by each programme (full text of OPIE programmes of support are available at General appendices: Project content based on the set outline; Financing plan of the project; Written proof of secured sources for co-financing the project; Trade certificate, trade licence, certificate of incorporation not more than three months old or other business authorisation (see terms and conditions under , , ). Documents on ownership of the place of business - rent agreement, statement from the property register, contract of sale along with certificate of application to the property register (see ); Statement from the building authority a building permit or notification of construction work, a contract for work, the construction budget if it is part of the project (see ); Documents on income return approved by the competent revenue authority for the period of the last two years of the applicant s business, unless stated otherwise (see ); Other specific appendices relevant to a particular programme. 24

26 An application shall include at least the following affirmations: Affirmation of the applicant: That, on the date on which the application is submitted, the applicant has no arrears in respect of the Tax Office, health insurance companies, Czech Social Security Administration, General Directorate of Customs, Land Fund, National Property Fund, and state funds. (The documents at the date of submitting the application must not be older than two months. A deferment granted for the payment of arrears or an agreement on the payment of arrears shall be considered as duly settled arrears.). That no bankruptcy order has been made against the applicant s estate, settlement has not been permitted, no bankruptcy petition filed against the applicant s estate has been rejected due to insufficient assets, no court has issued a resolution ordering the enforcement of a decision against the applicant, and that the applicant is not in liquidation (see ). If the applicant is a municipality, associations of municipalities, or region, the application must be completed by a report on the management of budgetary sources in the two years previous to the year of application, and the budgetary plan for the year of application, as well as for the two following years. 25

27 2.2 Description of programmes for support within OPIE There are eleven programmes within the OPIE that are subject to financial support. The following table presents their brief overview: Measure Programmes Form of support 1.1 Infrastructure for industrial research, 1. PROSPERITY Grant development and innovation 1.2 Development of business 2. REAL ESTATES Grant infrastructure 1.3 Infrastructure for the development 3. TRAINING CENTRES Grant of human resources in the industry 1.4 Development of information and 4. CLUSTERS Grant consulting services 2.1 Establishing and development of SME 5. START Loan 6. CREDIT Loan 7. DEVELOPMENT Suspended on Sept. 14, MARKETING Grant 2.2 Support of innovation of products, 9. INNOVATION Grant technologies and services Enterprises may apply for support on the basis of compliance with the conditions of the programmes. If an enterprise meets all the eligibility requirements, the application is formally acceptable and when the requested appendices have been submitted, the project will be submitted to the Evaluation Committee along with the application for the grant or the combination of grant and loan. The granting of all forms of loans shall be decided by CMGDB PROSPERITY Form of support Grant. Loan Grant/Loan 2.3 Reducing energy consumption and 10. ENERGY SAVINGS Grant higher use of renewable sources of energy 11. RENEWABLE Grant ENERGY SOURCES Potential aid recipients The programme targets enterprises - legal entities that have proof of co-operation with a tertiary educational institution (TEI), research centre, etc. For the public sector the programme targets e.g. municipalities, associations of municipalities, regions, tertiary educational institutions, and research centres. 26

28 Description The objective of the programme shall be the support of infrastructure for industrial development, particularly science and technology parks, business incubators and centres for technology transfer. Support will be granted to start and develop such facilities, establish their activities, and provide preferential price services and rentals to small and medium-sized innovative enterprises. Type of projects An applicant will build or reconstruct facilities to establish an business incubator, science and technology park that will further be let out at preferential prices to innovative companies; Types of supported activities: - identifying and evaluation of projects developed by companies applying for entry into an incubator, - the protection of intellectual property, e.g. cost of patenting process including international level, - identifying partners for co-operation, e.g. holding conferences. Purchase of necessary equipment and devices, primarily information technology, etc.; Purchase of an estate and related development of it necessary for the implementation of the project (of up to 10 % eligible costs); Building technical and transport infrastructure. Specific eligibility criteria A project must be operative for a minimum of five years starting from the date of meeting the eligibility criteria for granting assistance; A project must be environmentally friendly; Regarding projects of science and technology parks, business incubators and centres for technology transfer an applicant must demonstrate the relation to the relevant educational, research, and development establishments. Amounts of financial support In the case a project involves construction work, the minimum amount of support is CZK 3 million, and the maximum CZK 150 million. For projects not involving construction work, the minimum amount of support is CZK , and the maximum CZK 30 million. The support shall be granted to the tune of 75 % of eligible costs. Specific appendices to an application Business plan; Feasibility study; 27

29 Statement of a tertiary educational institution (co-operation will be evidenced by e.g. an agreement on co-operation, or a statement of adhesion to the programme and further co-operation signed by a statutory body of the institution concerned); In the case of construction investment operation - a decision of the territorial planning authority REAL ESTATES Form of support Grant. Potential aid recipients Potential aid recipients are communities, cimmmunity units, regions, development companies that intend to construct or reconstruct a business facilities for lease (and will let it out), and supported companies. Only the last one mentioned must be SME. Description The objective of the programme shall be to support up-to-date production facilities by means of needed infrastructure development or by regeneration of the socalled brownfields and the diminutive so called greenfields. Type of projects Business facilities or real estates for the purpose of rent to production companies. In this case a developer may also include the costs related to unused portion of land intended for rent; An enterprise (supported company) that improves infrastructure of its own production facility, e.g. land readjustment, fence, access road; An enterprise (supported company) that reconstructs buildings needed for production (assistance may also be used for the purposes of engineering installation in the buildings); Connection of production companies with the infrastructure (roads, fence, sewage, railways, waterworks, powerline, etc.); Project preparation and project documentation of the business real estate project; Removal of environmental burdens or unused structures. 28

30 Specific eligibility criteria The land affected by the implementation of the project must be in accordance with the valid documentation on territorial planning designated for industrial production, commerce or services; The minimum area affected by implementation of the project must be 2 ha; The minimum extent of land needed for entrepreneurial purposes must be 250 mā. Amount of financial support Provided that an applicant is a community, communite unit or a region the maximum amount of support shall be: - equal to the amount of the cost gap 1) for projects of work intended for transfer of ownership or rent, - 75 % of eligible costs for the project not intended for further transfer of ownership or rent. In the case of a property development company the volume of support shall be: - equal to the amount of cost gap for projects of work intended for transfer of ownership or rent, - and a grant with a maximum amount of 80 % market rental price for vacant areas in a rental capacity for a period of three years after completing the project. In the case of a supported enterprise (SME): - equal to the amount of cost gap of up to the maximum CZK 10 million for projects of work intended for transfer of ownership or rent, - 46 % of eligible costs for projects not intended for further transfer of ownership or rent. For projects that are meant for clearing environmental burdens or unused structures the volume of support may reach up to 100 % for all types of applicants. However the eligible costs shall be considered minus the valorisation of a property. Specific appendices to an application Business plan; Balance sheet; Income-tax return; Proof of co-financing of the project; Proof of incorporation in the Business register. 1) For purpose of this publication cost gap means eligible costs of implementation of a project minus valorisation of a property that results from the implementation of the project. 29

31 2.2.3 TRAINING CENTRES Form of support Grant. Potential aid recipients The programme is intended for enterprises carrying out business that are compatible with the Sectoral Classification of Economic Activities (further referred to as SCEA) in the following SCEA sectors: processing industry, production and distribution of electricity, gas and heat, construction, warehousing (logistics), business in the field of computer technology, engineering services and related technical consulting, and technical testing and analysis. An enterprise can take part in the programme either independently, or as a member of a legal entity that has been established by its merger with other entrepreneurial or non-productive bodies (territorial self-government, institutions of entrepreneurial administration, or educational institutions) in order to implement a project. Description The objective of the programme is to enhance the conditions of human resource development in the individual regions through the establishment of the infrastructure needed for training and upgrading the skills of employees at various levels of company management. This will help in acquiring essential new skills. Type of projects Purchase, construction or reconstruction of a training centre; Eligible costs can be: - purchase price of an estate, project development documentation, and land development, - construction or reconstruction of a training centre, - technical equipment and furnishings, - construction of all technical and transport infrastructure related to project realisation. Purchase of training aids and programmes. 30

32 Specific eligibility criteria In the case of constructing a new trade facility serving more enterprises the condition is absence or insufficient capacity of a similar facility in the given region. Observance of the facility original purpose for a period of at least five years as of the date the decision on assistance was issued. Drafting of a business plan in the requisite formal structure as long as the amount requested in assistance does not exceed CZK 2,500,000. In the case of an application for assistance exceeding CZK 2,500,000 the applicant shall submit only feasibility study in the requisite formal structure. Amount of financial support The minimum amount of support for one complete project is CZK 300,000, and the maximum is CZK 30 million. The support is provided at the rate of up to 46 % eligible costs. Specific appendices to an application In the case of a training centre serving more enterprises, the applicant shall submit an analysis of the demand for such a regional training centre in relation to the region concerned including its educational needs (i.e. how such a training centre will cover the actual needs of the region, what capacity and what variety and structure of educational offer will be relevant); In the case of a foundation and the construction of a new trade training centre serving more enterprises, an applicant shall submit an attestation of the absence or insufficient capacity of a similar facility in the given region in order 31

33 32 to eliminate duplicity. (Applicant will seek the attestation at the appropriate regional administration authority - Krajský úřad.); When submitting the application for support, the applicant shall submit the attestation issued by a municipality/city stating that the given business plan is in accordance with the territorial planning of the municipality/city concerned. If the municipality/city does not have any territorial plans available, the applicant shall submit a letter of approval issued by the municipality/city; An enterprise, contributory and non-profit organisations submit financial statements for the previous two complete accounting periods (balance sheet, income statement, contributory organisations submit appendices) in the written form. A relevant financial form, which shall be submitted both in written and electronic versions, can be downloaded from MIT website (Applicant shall state outlook for the coming period depending on the duration of the project. The minimum shall be the calendar year in which the application is submitted and for the following calendar year.); Municipality/region submits both in written and electronic form selected data from financial statements for the previous two complete accounting periods (budget, income statement, and balance sheet), and outlook for the duration of the project, at least two calendar years. A relevant financial form can be downloaded from MIT website Should the nature of a project require it, also further supporting documentation: - in a case that subject of support is purchase of an estate (including land), an applicant shall submit agreement on the future agreement on property sale (including land), - regarding the estates where a project will materialise, an applicant must submit a copy of record from the property register (not older than three months) and a relevant picture from cadastral map, - in a case that the submitted project will materialise on/in a rented property, an applicant shall submit a rental agreement for certain period of time not shorter than the duration for which is the support recipient bound to maintain educational purpose of the facility. The agreement must state a clause stipulating the transfer of rights and obligations to a new owner should a change of ownership occur, - certificates evidencing the professional qualifications of an applicant.

34 2.2.4 CLUSTERS Form of support Grant. Potential aid recipients Potential aid recipients are regions or delegated companies, tertiary educational institutions, research institutions, and legal entities or associations of persons founded in order to carry out a cluster. Description Objective of this programme is to enhance economic growth and competitiveness of the economy through the promotion of sectoral aggregations - clusters. The two types of projects will be supported: search of companies suitable for clusters and foundation and development of clusters. Type of projects The applicant in the chosen region and sector will undertake the process of cluster identification. During this process workshops, meetings, interviews, data analysis, etc. will take place. The project will result in the cluster of members, action plan, cluster strategy, etc. Enterprises carrying out business in a specific sector in a particular region, their suppliers and final manufacturers, and a tertiary educational institution will establish a legal entity whose purpose is to achieve suitable environment for mutual co- 33

35 operation of companies, co-ordinate corporate research, development, production, and market. Such a legal entity can apply for a grant to cover costs of rent and furnishing of offices, managerial wages, other salaries, consulting services, marketing, competitive intelligence, and innovation within the individual clusters. Specific eligibility criteria Project of search of companies suitable for clustering: A minimum of ten companies and a tertiary educational institution or research institution or regions must express interest in search of companies suitable for clustering; A preliminary analysis of the economy in the given region proving potential for cluster in the given sector has to be undertaken. Project of establishment and development of clusters: The majority of the members (min. of 60 %) shall be SME and tertiary educational or research institutions; A cluster must involve 15 individual organisations and a min. of 75 % of the members of the cluster must be seated in the CR; Innovation and export must be stressed; A tertiary educational or research institution must take part in the cluster; Projects focused on the progress in the sectors of processing industry, construction, computer technology, and research and development are subject to support. Amount of financial support The minimum amount of grant is CZK 200,000 and the maximum CZK 1 million for projects of search for companies suitable for clustering. The minimum amount of grant is CZK 3 million and the maximum CZK 45 million for projects of the establishment and development of clusters The rate of support is up to 75 % of the eligible costs of projects in search for clustering purposes and 50 % eligible costs of cluster development. Specific appendices to an application Projects that search for companies suitable for clustering: Feasibility study in the required structure; An agreement expressing an interest by a minimum of ten companies and a tertiary educational institution, or research institution in such a study; An appendix stating the cost structure related to the implementation of a specific type of project; Other mandatory appendices specified by the programme. 34

36 Project of the establishment and development of clusters: A document proving the establishment of a cluster and its legal status. An agreement among companies and other organisations establishing a cluster in order to enhance their competitiveness and economic effectiveness of the cluster members, specifying their rights and obligations. The statutes of the cluster, memorandum of association, charter or agreement on the cluster. A feasibility study specifying organisational, expert and financial support of the project success. A certificate of incorporation, trade licence, or other business authorisation of the cluster members. Other mandatory appendices specified by the programme START Form of support Soft loan. Potential aid recipients The programme is intended to exclusively support small and start-up enterprises (excluding joint-stock companies) and enterprises - natural bodies. All applicants must be registered income taxpayers in the year of submitting the application or in the previous year. Description The general purpose of the programme is to facilitate the materialisation of business plans when starting an enterprise or when re-entering business after a long period (min. seven years). Type of projects Purchase of machinery and equipment to carry out business in rented space and the costs of initial supplies; Reconstruction of buildings and complementation of machinery and equipment, and costs of initial supplies; Purchase of office furnishings and costs of service related to the realisation of the project (energy, services, and materials). Specific eligibility criteria Each applicant must submit at least one certificate confirming successful completion of the training programme, Basics of business, that are being administrated by the Regional Advice and Information Centres (further referred to as RAIC) (for list of courses see - programme START); 35

37 The nature of the project must be compatible with the Sectoral Classification of Economic Activities (SCEA) within the scope of competence of MIT; Support to the programme must be recommended by RAIC; Within this programme only one loan may be approved per one recipient. Amount of financial support Support is provided in the form of an interest-free loan. The minimum amount of this loan is CZK 100,000, the maximum loan for a natural person - start-up company CZK 500,000, and CZK1 million for a commercial company with more than one member and for a co-operative. The repayment period set on provision of the loan is a maximum of six years. The loan is provided to finance up to 90% of the total estimated costs of project realisation. Specific appendices to an application Business plan; Certificates of completion of the training programme; The consent of the husband (wife) to use the assets and to take a loan for business, in the case of natural persons (if joint marital assets are not reduced); A document confirming registration as an income tax payer in accordance with Section 33 (1) Act No. 337/1992 Coll., on the administration of taxes and charges, as amended CREDIT Form of support Soft loan. Potential aid recipients Programme is intended for small enterprises solely (of up to 50 employees). Description The objective of the programme is to realise the potential of developing entrepreneurial projects of enterprises with a shorter track record (see details under the section on Amounts of financial support). Type of projects The purchase of a property requiring small constructional adjustments to suit the objective of an enterprise in a certain field (progression from a rental space into own property); The purchase of new machinery to replace obsolete ones or entry into a new production programme, usually accompanied by the replenishment of supplies 36

38 of materials and the cost of reconstruction; The reconstruction of the space for an enterprise and the purchase of new equipment; The purchase of licences, patents and related machinery, equipment and supplies. Specific eligibility criteria An entrepreneurial project must be of the nature that is compatible with the Sectoral Classification of Economic Activities (SCEA) within the competency of the MIT; Proof of ability to repay a loan. Amounts of financial support An applicant has one of the following three choices: Small loan - from CZK 200,000 to CZK 2 million with up to 90 % of eligible costs. The loan is intended solely for enterprises with a max. of five years duration. The interest rate is 4 % per year and the repayment period is based on a provision that the loan is for five years. For the approval of a loan the recommendation of the RAIC is necessary; Standard soft loan - from CZK 2 million to 5 million with up to 80 % of eligible costs. The loan is intended solely for enterprises with a min. of two years and a max. of five years duration. The interest rate is 4 % per year and the repayment period is based on a provision that the loan is for six years; Subordinated loan - from CZK 0,5 million to 7 million with up to 50 % of eligible costs. The loan is intended solely for enterprises with a min. of two years duration. The interest rate is 3 % per year, and the repayment period is based on a provision that the loan is for eight years with a maximum deferment period of five years. The amount of the loan must be smaller than the amount of a bank loan used to finance the same projects. Specific appendices to an application The consent of the husband (wife) to use assets for business, and for business purposes signed agreements with the CMGDB, that is in the case of natural persons (if joint marital assets are not reduced); A written evidence of supplier/customer coverage of the project; The recommendation of the RAIC confirming an applicant s ability to repay the loan (applies to Small loans). 37

39 2.2.7 DEVELOPMENT In September 2004 admission of applications to the programme DEVELOPMENT has been suspended. After programme adjustments the applications will be accepted as of May 1, The programme has been announced and starting March 30, 2005 is available on the MIT website at Form of support Grant. Potential aid recipients The programme is intended solely for small and medium-sized enterprises. Description The objective of the programme is to enable realisation of development business projects carried out by the SMEs in selected sectors of the Czech economy with considerable growth potential and contributing to enhanced participation of the Czech economy in the international commerce and by its performance stimulating the overall economic growth. Type of projects Purchase of the modern machinery, patents and licences needed for increase of labour productivity, production costs cuts, improvement in the quality of production, etc. Specific eligibility criteria An entrepreneurial project must be of the nature, which is compatible with the Sectoral Classification of Economic Activities (SCEA), as specified in an appendix of the programme with the exception of those products that fall under the provisions of the Common Agricultural Policy. The rules of activities linked to the production, processing or marketing those products are stipulated in Annex I to the EC Treaty. Amounts of financial support Support in the form of grant is up to 30 % of eligible costs. The minimum amount of support is CZK 1,500,000 and the maximum CZK6 million; In the case of projects realised in the regions specified by the Resolution No. 1005/2004 of the Czech government (stagnating and structurally affected regions) is support provided up to 40 % of eligible costs with minimum amount of support CZK 1,500,000 and the maximum CZK6 million. Specific appendices to an application A certified copy of income tax return including all annexes (balance sheet and income statement) and appendices submitted to the taxation office for the last three closed accounting periods; 38

40 The applicant must secure financing of the whole project including VAT from his own, outside or combined sources. A certified account statement and analysis of the project cash flow must evidence own financial sources. The outside co-financing must be faithfully sustained by at least binding assurance of a loan valid six months from filing the application MARKETING Form of support Grant. Potential aid recipients The programme is intended solely for small and medium-sized enterprises (of up to 250 employees) - legal entities. Description Generally, the objective of the programme is to enhance the competitiveness of Czech exporters to foreign markets. It is especially aimed at the improvement of exploiting export opportunities currently existing on the global market. Type of projects Market research: - the purchase and elaboration of all marketing studies and information on foreign markets. The promotion of goods and services, website: - the purchase of all publicity materials (catalogues, leaflets, brochures, etc.), - website including design, logo. Exhibitions and fairs: - Presence at foreign exhibitions, fairs, e.g. charges for setting up and running a stand.

41 Specific eligibility criteria An entrepreneurial project must be of the nature that is compatible with the Sectoral Classification of Economic Activities (SCEA) as specified in an appendix of the programme at within the competency of the MIT. An applicant must have been an exporter for a minimum of the three previous years. The minimum amount of export per year must exceed CZK 5 million. Amounts of financial support The minimum amount of grant is CZK 100,000 and the maximum CZK1 million. However, it must not exceed 46 % of the ceiling for the support rate of the total eligible costs. Specific appendices to an application Proof of export activities INNOVATION Form of support Grant and Soft loan. Potential aid recipients The programme is intended for enterprises of all sizes. Description Generally, the objective of the program is to support the realisation of projects focused on the betterment of technical and consumer-oriented features of products and services or features enhancing efficiency in processes of production and services or to update managerial methods, restructuring or changes in strategic goals of an enterprise or some other non-technical innovations innovative projects, enhancing the long-term competitiveness and sustainable growth of enterprises. Type of projects Innovations of technical nature: This can include the innovation of a product and/or the innovation of a technological process. The general rule is to launch a new product or new technology on the market. Mere modernisation will not meet the requirements. An ideal project shall be focused on the phase between a prototype (semi-production) and serial production, e.g. production setout and completion of project design, implementation of a new technology to improve the product features. Projects for upgrading the quality of service are also within the scope of the programme; 40

42 - the purchase of any necessary technologies, licences and patents, production line, technical equipment, etc. must be exclusively related to the introduction of a new product on the market. Innovations of non-technical nature: The programme is focussed on the introduction of new managerial methods, e.g. in improvement of production process or supply logistics; - The purchase of hard- and software related to the introduction of new managerial methods. Specific eligibility criteria A project can include co-operation with research, development organisations, centres of strategic service, centres for technology and innovations, which results in innovation of products, technologies and services. Projects not meeting eligibility criteria: A project in the basic research; A project focussed solely on efficient use of energy generally or the energy savings of an applicant; A project of mere replacement of a product, technologies, machinery and equipment, or development engineering of work. Amounts of financial support Small or medium-sized enterprises can draw on grant or loan. A combination of grant and loan is also permissible. Large enterprises may apply only for grant. The maximum rate of grant is 46 % of the eligible costs. - in the case of innovations of a technical nature the minimum amount of grant is CZK 3 million, the maximum is CZK 50 million,

43 - in the case of innovations in services the minimum amount of grant is CZK 1 million, the maximum is CZK 25 million. The SMEs can draw on support in the form of a soft loan of up to 60 % of the eligible costs of a project, the repayment period based on a provision that the loan shall be up to nine years with a deferment possibility of a maximum period of four years when the fixed interest rate is 3 % per year. - in the case of innovations of a technical nature the minimum amount of the loan is CZK 3 million, the maximum is CZK 50 million, - in the case of innovations in service the minimum amount of loan is CZK 1 million, the maximum is CZK 25 million. Specific appendices to an application Feasibility study specifying organisational, expert and financial support of the project success, unless this has already been included in the project; A copy of record from the property register (not older than three months) and a relevant picture from the aerial photograph covering the property of project realisation. In a case that the submitted project will materialise in a rented property, a rental agreement must be valid for the duration of the project; A statement from the building authority a building permit or notification of construction work, a contract for work, the construction budget, if it is part of the project ENERGY SAVINGS Form of support Grant. Potential aid recipients The programme is intended solely for small and medium-sized enterprises -(of up to 250 employees) carrying out business in the processing industry. Description The programme objective is to contribute to energy savings in the Czech industry through financial support of energy-efficient investment projects. Type of projects Reduction of energy demandingness of processes related to production, transformation, and distribution of energy with the condition of reducing environmental impact in the regions of cohesion; The new technologies of processing raw materials for energy generation to achieve higher exploitation of their energy potential; 42

44 Introducing new energy and heat generating units of modern construction equipped with new technologies treating, dosing and burning fuel; Reducing loses by upgrading the existing equipment used to produce, distribute, and transform energy media; Use of waste heat and secondary energy sources, energy exploitation of wastes; Introducing combined generation of electricity and heat (co-generation); Introducing energy-saving technologies of production, and production equipment; Modernisation of energy economy; Improving processes in logistics, improving heat and energy properties of buildings, production and auxiliary operations and other facilities related to production by means of using energy-saving products and materials to reduce energy demandingness, and reducing environmental burden. Specific eligibility criteria The programme is not intended for the support of cultivation of energy plants and alternate fuels in transport. Financial health (rating)of the applicant; Reduction of CO2 emissions for the minimum of 40 tons per year; Approval of the project by the energy audit; Proof of ownership to real estate; Completeness and quality of the submitted project; Secured financing of the costs with own resources; The final recipient shall have long-term tangible and intangible assets subject to the support in its ownership for the period of five years from the date of completion of the project;

45 Realisation of the project on the territory of the CR except for the region of Prague; Consideration for the environment; Technical feasibility of the project; Secured material inputs and outputs; Reasonable time schedule of project realisation. The entire documentation must comply with the current standards and regulations. Amounts of financial support The minimum amount of grant is CZK 500,000; the maximum is CZK 30 million. However, it must not exceed 46 % of the ceiling of the support rate of the total eligible costs of the project. The costs of energy audit, which is the condition for filing an application, will be covered up to 46 % in accordance with the de minimis rule. Specific appendices to an application Business plan; Energy audit in accordance with the Decree No. 213/2001 Coll.; Proof of ownership or other title to real estate; Proof of incorporation in the Business register or other entitlement to carry out a business; Income tax returns for the last two closed accounting periods; Balance sheet and financial plan of the project Certificates of professional qualifications of an applicant; Completed ISPROFIN forms - participation of the state budgetary sources in the financing of reproduction of assets RENEWABLE SOURCES OF ENERGY Form of support Grant. Potential aid recipients The programme is intended for small and medium-sized enterprises -(up to 250 employees) carrying out businesses in the processing industry or with an interest in enterprises in the production of electricity or heat using renewable resources. Description The objective of the programme is to support projects on the production of electricity and heat using renewable energy sources (RES) as specified by the MIT Decree No. 214/2001 Coll. laying down the definition of energy sources that shall be judged as renewable. At the same time the programme aims at supporting verification of achievements of the new technologies and elements for RES use. 44

46 Type of projects Construction, renovation or reconstruction of a facility for the use of RES; Introducing production technologies and equipment with low energy intensity and minimum environmental impact using equipment for energy generation out of RES; Combined production of electricity and heat out of RES. Specific eligibility criteria The programme is not intended for the support of cultivation of energy plants and alternate fuels in transport. Financial health (rating)of the applicant; Reduction of CO2 emissions for the minimum of 40 tons per year; Approval of the project by the energy audit; Proof of ownership to real estate; Completeness and quality of the submitted project; Secured financing of the costs; The final recipient shall have long-term tangible and intangible assets subject to the support in its ownership for the period of five years from the date of completion of the project; Realisation of the project on the territory of the CR except for the region of Prague. Consideration for the environment; Secured material inputs and outputs; Reasonable time schedule of project realisation. Realisation The entire documentation must comply with the current standards and regulations. Amounts of financial support The minimum amount of grant is CZK 500,000; the maximum is CZK 30 million. However, it must not exceed 46 % of the ceiling of the support rate of the total eligible costs of the project. The costs of energy audit, which is the condition for filing an application, will be covered up to 46 % in accordance with the de minimis rule. Specific appendices to an application Business plan; Energy audit in accordance with the Decree No. 213/2001 Coll.; Proof of ownership to real estate; Proof of incorporation in the Business register or other entitlement to carry out a business; Income tax returns for the last two closed accounting periods; Balance sheet and financial plan of the project Certificates of professional qualifications of an applicant; Completed ISPROFIN forms - participation of the state budgetary sources in the financing of reproduction of assets. 45

47 CHAPTER 3 SUPPLEMENTARY PROGRAMMES FOR ENTERPRISE SUPPORT IN THE COMPETENCE OF OTHER MINISTRIES 3.1 JROP Measures for Enterprise Support Enterprise support in the Joint Regional OP In the Joint Regional Operational Programme (further referred to as JROP) for enterprise support (within the competency of the MRD) the enterprise is subject for support within the scope of the two priorities: firstly, it is support provided to small and medium-sized enterprises in the selected regions, secondly, the support aims at businesses active in tourism. Priority 1 - Regional support of enterprise This priority is complementary to the Operational Programme Industry and Enterprise. While the OPIE aims most of all at the promotion of the entrepreneurial environment and at enhancing the competitiveness of the Czech enterprises (by means of direct and indirect support of enterprises and improvement of the entrepreneurial environment), the JROP aims at supporting the small and medium-sized enterprises and services with emphasis on the creation of new jobs in the selected problem regions. Part of this priority is also the support of non-agricultural enterprises located in the rural areas. The enterprises active in tourism are subject for support in the scope of Priority 4. Priority 4 - Development of tourism This priority relates to the priority axis 6 of the Community Support Framework (CSF) - Development of tourism. The priority is complementary to the OP Human Resource Development (HRD), in which the training of human resources in tourism is also dealt with. A more detailed information of these programmes can be found in the Programme annex to the JROP on the MRD website Measures of the OP HRD Aimed at Human Resource Development in the Industry Human Resource Development in the industry is mostly subject for the support of the European Social Fund (ESF) through the Operational Programme Human Resource Development (further referred to as OP HRD) in the competency of the MLSA. The overall objective of the OP HRD is the achievement of a high and stable rate of employment based on a skilled and flexible work force as well as the competitiveness of businesses. 46

48 Furthermore the OPIE within Priority 1, Measure 1.3 Infrastructure for development of human resources in the industry and business services, which supports the formation of entrepreneurial infrastructure tailored for further education of employees. Through the interconnection of the OPIE and OP HRD measures the optimum synergy effects will be achieved. The executive bodies of the OPIE and OP HRD will closely co-operate in the field of employment of the human resources in industry On the part of human resources both programmes must be fully compatible with the Community legislation and rules, and the achievements resulting from the financial support are subject to evaluation PROGRAMME OF PROFESSIONAL GROWTH OF EMPLOYEES - PROFESSION This programme will be realised within OP HRD, Priority 4, Adaptability and enterprise, Measure 4.2 Specific training. The realisation of the programme lies within the competencies of the MIT, and the implementation agency is CzechInvest. The launch of the programme is the end of March 2005 Form of support Grant. Potential aid recipients The programme is intended for enterprises in the processing industry, industrial and environmental services, and other services directly related to the above sectors. The specific scope of the supported sectors (SCEA) is part of the programme texts and call for the applications for support. Description The objective of the programme is to support the professional growth of business employees needing expertise, special knowledge and skills for their work. The programme is aimed at the professional training of middle management and of other professions, such as technicians, production management, marketing, and commercial and customer services. Further support can be drawn for training of those employees who deal with management as well as the development of human resources. Courses on environmental protection and related technologies and processes also fall within the scope of the programme. Namely, the programme supports special training targeting the gain of professional knowledge and skills to deepen or upgrade the qualifications of individuals on specific positions in a given business. 47

49 Type of projects Realisation of training courses and other educational activities; Preparation for educational activities (teaching aids, training materials directly related to a particular educational activity) PROGRAMME STANDARD OF HUMAN RESOURCE DEVELOPMENT This programme will be realised within OP HRD, Priority 4 Adaptability and enterprise, Measure 4.1, Enhancement of the adaptability of employers and employees to the economic and technological changes, support of competitiveness. CzechInvest, which is responsible for the implementation of the programme, is also responsible for disbursing the support. The programme will be launched at the end of Form of support Grant. Potential aid recipients The programme is intended for enterprises in the processing industry, industrial and environmental services, and other services directly related to the sectors in question. A specific scope of the supported sectors (SCEA) will be part of the programme texts and call for the applications for support.. Description The objective of the programme is to enhance competitiveness and efficiency of business through the introduction of well-established systems of management and the development of human resources. The whole system of support intends that businesses accomplish certification on a high standard in management and the development of human resources. This standard will be relevant to the best practices in European enterprises. 48

50 Type of projects Analysis and the consequent solution of educational and training needs, system of human resource management and related processes in the businesses with a goal to achieving high efficiency in the field of development and management of human resources in a business. The accomplishment will be the award of a certificate of achievement of high standard of management and development of human resources for the particular business. Counselling, audits, training and purchase of relevant manuals, etc. constitute the supported activities. CHAPTER 4 THE BASIC IMPLEMENTATION PROCEDURES 4.1 Principles of Implementation of the OPIE Within the Operational Programme Industry and Enterprise there are two forms of support for accepted programmes - a grant or a Soft loan. CzechInvest (the Investment and Business Development Agency), respectively the regional offices have been delegated the responsibility for being the direct contact place for applicants and for collection of project applications (grants) and all types of applications within the programme INNOVATION. CzechInvest further administrates majority of grant programmes. The CMGDB has been delegated the responsibility for implementation of the loan programmes. Agencies CzechTrade and the Czech Energy Agency shall take part in the project selection, project management and control, authorisation of payments and monitoring of the projects within their competencies. Function of the individual entities in the implementation of the OPIE: Managing authority - Ministry of Industry and Trade of the Czech Republic, Department of the Structural Funds - overall responsibility for the implementation of the OPIE; CzechInvest (CI) - administration of majority of the programmes in OPIE; CzechInvest regional offices - collection of project applications for grant support, combined applications and applications for a loan for the programme INNOVATION, direct client service contact place; Czech Energy Agency (CEA) - administration of energy related projects; CzechTrade (CT) - administration of the programme MARKETING and projects in the scope of international trade; CMGDB - administration of soft loans; Paying authority - Ministry of Finance of the Czech Republic (MoF), Department of National Funds - overall responsibility for financial flows; Paying unit - Ministry of Industry and Trade of the Czech Republic, Budget and Finance Department- payments to final users (applicants). 49

51 4.2 Announcement of the programmes The MIT shall announce all programmes of support OPIE in the form of: A standard notice in the Commercial Bulletin A notice in the national press and other media; A notice along with all related information on the MIT website. The full information on the programme, texts of programmes of support including the application form for support, payment application form, form of regular reports on project implementation, annexes and guidelines for applicants are available on the MIT website, and websites of the appropriate agencies (see Annex 1). Programmes of support OPIE were announced in May Filing of an application The applicants shall submit the application to the locally applicable regional CzechInvest office. There are 13 regional CzechInvest offices, and their locations are specified in the programmes announced and in Annex 1B. Applicants can submit the applications for a loan in the regional CMGDB, RAIC or Business and Innovation Centre (BIC) offices as specified in the programmes announced. Combined applications for support (combination of a loan and a grant) and applications for a loan in the scope of the programme INNOVATION are to be submitted in a regional CzechInvest office. CzechInvest has located its offices in each main regional city: Praha, Karlovy Vary, Jihlava, Ústí nad Labem, Brno, Liberec, Zlín, Plzeň, Olomouc, České Budějovice, Ostrava, Hradec Králové, Pardubice. The programme has been announced for the period The programmes are being launched, until cancelled, with the condition that applications will be accepted until October 2006 and support can be released at the end of 2008 at the latest. The last payment application can be submitted in September During the entire time period the applications are accepted on a continuous basis. Applications are accepted from the beginning of July 1, If, within this period, the MIT decides to suspend intake of the applications or change the Terms and Conditions, such a decision will be announced in the Commercial Bulletin, press and on the websites of the MIT, CI, CT, CEA, and CMGDB. An application for a grant must be submitted both in a machine-readable form (CD or diskette), and in a printed form. Selected mandatory appendices are to be submitted either as an original or a certified copy. An appropriate CzechInvest regional office shall deal with possible inquiries regarding an application form or the organisation of project selection. Frequently asked questions (FAQ) are available on the CI website at 50

52 CzechInvest in co-operation with the MIT has introduced a toll-free telephone number for enquiries regarding access to the assistance from the structural funds for enterprises. 4.4 Assessment and Evaluation of an Application Prior to the evaluation of an application the appropriate regional CzechInvest (or CMGDB office for loan programmes) depending on the requirements of the respective programmes, shall review the conditions of acceptability of a project and the applicant as well as compliance with the following formalities: Whether the application was submitted in correct and complete form; Completeness of the content and appendices (i.e. all necessary data have been filed in, proper form, all signatures, all mandatory appendices and documentation, requested number of copies in the printed and electronic form); Whether the application does not contain obviously incorrect or untrue data identifiable upon the submission of an application. In the case of an incomplete or formally incorrect application the applicant will be invited to eliminate the errors or complete the application. One of the instruments applicable in the process of evaluating an application for support regarding the correctness and completeness of the data is a preliminary check on the physical implementation of the project on the site, performed in the form of financial control pursuant to the Act No. 320/2001 Coll. on financial control in public administration. By means of this preliminary audit the basic information can be verified in the applicant s place of business or on the site of the project realisation EVALUATION OF AN APPLICATION After the formal requirements and acceptability of an application has been reviewed, the financial and non-financial suitability of an applicant is screened. Each application for a grant within the respective programme will be assessed with the help of selection criteria specific for each given programme (available on the MIT website). A project manager of a respective agency will evaluate the application. In more complicated cases (or lack of expertise in a related field) the project manager can request an outside expert opinion. The agency concerned is responsible for the quality of the outside opinion. The outside opinion shall be the basis for a project manager to elaborate the overall project evaluation. The application for a loan is subject to evaluation in accordance with the rules of a programme and policies of CMGDB for approval of loans. 51

53 4.4.2 SELECTION OF PROJECTS The Evaluation Committee of experts shall conduct the selection of projects. The Evaluation Committee will judge a project from the point of view of the selection criteria using data prepared by the agencies and will recommend the amount of the grant for a project including the Terms and Conditions, which shall be an inseparable part of the decision. The Evaluation Committee can also send the project evaluation back to the agency for completion, request supplementary documentation, or suggest an applicant to revise the project, or recommend rejection of the project. In the case of grants the Evaluation Committee will compile a list of projects recommended for approval, which will be passed on to the MIT. The final decision on approval or rejection lies within the competencies of the MIT when MIT can approve only those projects recommended by the Evaluation Committee. In the next phase an applicant shall receive the Conditions of ratification. After the receipt of the signed Conditions by the applicant, the MIT as the Managing authority will issue the Grant Decision, inseparable part of which shall be the Conditions binding the applicant in order to draw on the grant. In the case of an application for the soft loan the decision lies within the competencies of CMGDB, which shall sign the loan agreement with an applicant. In the case of the programme INNOVATION (grant and soft loan) the loan agreement may be signed only if the Decision on granting the grant has been issued. 4.5 The Course of a Project Realisation PAYMENT Entitlement to a payment arises after an applicant has met the Terms and Conditions and covered the costs. A project can be realised as a whole or in phases with the exception of the programme MARKETING, which does not allow phasing of projects. The final recipient applies for the payment of grant always within the 30-day period after the completion of a project or a phase of a project. The recipient will submit the Payment application including accounting documents and mandatory appendices to a regional CzechInvest office. The Payment application - one copy in an electronic form (CD, diskette) and one copy in written form shall be delivered in person, by a courier service, or registered mail. The recipient will also submit an evidence of meeting the Terms and Conditions specified in the Grant Decision. Compliance with the Terms and Conditions shall be verified on the basis of the submitted documents and, in most cases, also on the basis of the checks on the physical implementation of projects. 52

54 The regional CzechInvest offices shall run a basic review of the Payment application and pass on formally suitable applications to the appropriate agency. The respective agencies shall review the payment applications regarding material verification, review of financial plan and the project budget, as well as invoices and payments. On the basis of these findings the agencies shall pass to the MIT suggestion to pay the whole requested sum, or a reduced sum because of ineligible costs, or to reject the Payment application entirely. The final decision on a full, partial payment or a rejection of an application lies within the authority of the MIT. The Payment application form and other forms are available on the website of the MIT at and on the websites of the implementation agencies. The loans are drawn on the basis of an application submitted by a loan recipient. Generally, the loans are object-oriented and are to be drawn on the basis of submitted invoices or other tax documents, which shall be delivered in person by a final recipient or can be mailed to a respective CMGDB branch REVIEW AND CONTROL The MIT and agencies shall run regular controls of compliance with the Terms and Conditions and checks on the physical implementation on the sites of project realisation. The checks on the physical implementation on the sites of project realisation shall be conducted in the form of financial control in public administration pursuant to the Act No. 320/2001 Coll. This form of control includes material and financial review of the respective projects and enables the individual agencies and the MIT to verify the compliance of a project with the Terms and Conditions signed by an applicant, which are an inseparable part of the Grant Decision and all the legal regulations in force. 53

55 In a case of a loan the CMGDB conducts the review of compliance with the Terms and Conditions of the Loan Agreement. Besides the MIT the following entities are authorised to perform reviews: CI, CT, CEA, or CMGDB, Ministry of Finance of the Czech Republic (MoF), Supreme Audit Office, European Anti-fraud Office (OLAF), European Court of Auditors (ECA), Directorate General of the European Commission for Regional Policy. A support recipient must follow the Regulations of a supplier s selection of orders co-financed from OPIE sources. In the case that the granted support includes the purchase of products or services, which fall under the rules valid for orders commissioned from public sources, the support recipient shall comply with the act on orders commissioned from public sources/public tenders. The agencies (or CMGDB) will oversee compliance with the Rules and the stipulations of this Act of Law. If a recipient's breach of the Rules has been consequently discovered, he has the obligation to repay granted finances through the local Revenue Office concerned. For the period of three years after the completion of a project random project checks/controls shall take place. The subject of these checks/controls is the compliance with the Terms and Conditions signed by the recipient and the verification of compliance of the information stated in the monitoring reports with the reality REPORTS ON PROJECT REALISATION A support recipient is bound to submit reports on the project realisation according to the instructions stated in the Terms and Conditions of the provisions of the support. These reports shall provide the information on the materialisation and financing of the project. The support provider can verify at anytime the plausibility of the reports. The support recipient is bound to inform the support provider on the achievements of the project. The following scheme realisation illustrates the whole cycle of a project: 54

56 Course of a project realisation Application receipt Monitoring Application verification Payment Start of realisation Check on the spot Project evaluation Application for payment Grant Decision issued Completion of project/phase CHAPTER 5 SUMMARY 5.1 What should an applicant for Structural funds support be familiar with When were the programmes announced? The Ministry of Industry and Trade announced the total of eleven programmes of the Operational Programme Industry and Enterprise in the form of invitation published in the Commercial Bulletin and selected periodicals on May 12, The full text of the programmes including the information on the structure of the individual form and documents is available on the websites of the MIT and the following agencies: CzechInvest, CzechTrade, the Czech Energy Agency, and the Czech- Moravian Guarantee and Development Bank. First applications to Operational Programme Industry and Enterprise have been accepted and their evaluation started on July 1, The programmes have been announced for a period until cancelled. Starting from the first day of the admission of the applications, the applicants can submit their projects (support applications). The last period for submission of applications is in October However, payment applications can be submitted up until September The Grant Decision on a payment or rejection of the project application will usually be issued to the applicant within 60 days from the date of receiving the application. 55

57 Where do I apply? The key contact places for the applicant for support are the CzechInvest regional offices. The soft loans can be applied for directly at CMGDB through its regional offices or at the appropriate Regional Advice and Information Centre for some types of loans (for contact information see the Annex 1) What kind of support can I receive? The support within programme OPIE is provided in the form of a grant or soft loan; the only programme that allows a combination of the two kinds of support is INNOVATION. In the programme PROSPERITY the support is provided in the form of grant of up to 75 % of eligible costs. The REAL ESTATES programme allows support in the form of grant. The support rate is variable but does usually not exceed 75 %. In the Training programme centres the support is provided in the form of a grant of up to 46 % of eligible costs. 56

58 Programme CLUSTERS enables the promotion of the search for clusters by a grant of up to 75 % and 50% of eligible costs for cluster development. The programmes START and CREDIT provide support in the form of soft loan, the programme CREDIT also allows for a subordinated loan. In the programme MARKETING the support is provided in the form of a grant of up to 46 % of eligible costs. The programme INNOVATION provides support in the form of a grant of up to 46 % of eligible costs, an SME can be granted also a soft loan of up to 60 % eligible costs. Energy related programmes allow for support in the form of a grant of up to 46 % of eligible costs. At present the MIT is drafting an amendment to the programmes so the calculation rules of the eligible costs will be relevant to the other OPIE programmes. What will I have to submit? Where will I find all the needed forms? Besides the application stating all the basic data on an applicant and a project, the applicant shall also submit the entrepreneurial plan. The forms including the application guide are available on the websites of the MIT and the agencies CzechInvest, CzechTrade, CEA and CMGDB. Are the companies based in Prague also eligible for the support? The place of project realisation is determinant. OPIE programmes must be realised out of Prague, which means that a business based in Prague can realise a supported project provided that the realisation takes place out of Prague. For projects within the territory of Prague there are other programmes of support in the scope of Objective 2 and Objective 3. Is it true that the support is payable only retroactively? What if I do not have sufficient funds to pre-finance a project? Entitlement to the grant arises as a result of approval in form of signed Grant Decision by the Managing authority - 57

59 MIT. The actual transfer of funds to the applicant for grant will take place only after the whole project has been completed. However, the projects (in particular those of a major or long-term extent) can be subdivided into phases. In such a case an applicant will be reimbursed for the costs incurred after the completion of the respective phases. The applicants must secure sufficient funds by their own means (e.g. from their own resources or loans taken from commercial banks offering the new types of loans for pre-financing of the projects subsidised by the EU). Is it possible that a business may submit more than one application? Can one project be financed from several sources? Each applicant can submit more applications, however, every single cost can be financed only once. One project cannot be co-financed from more than one programme.in some cases it may be advised that the project is divided into several individual projects The most frequent mistakes and ambiguities in the application forms - what should an applicant for the OPIE support avoid On the grounds of experience acquired by employees of CzechInvest who accept applications of entrepreneurs for support within the scope of the Operational Programme Industry and Enterprise, we have compiled a list of the most frequent mistakes and instructions on how to avoid them in the future. This information is important particularly for those prospective applicants who now plan to submit their applications in the future. Those entrepreneurs who submitted rather incomplete applications were, of course, invited to remedy them. This, however, means extra work for all involved, and the list is certainly a better way of avoiding all mistakes, most of which are of a formal nature THE MOST FREQUENT MISTAKES AND AMBIGUITIES AT THE TIME OF FILING AN APPLICATION The original/master copy and the copies are bound together and signed in a wrong manner The original/master copy must be bound end-to-end at the top left corner. The stitch must be covered with tape, sealed and signed by a member of a statutory body of a legal entity (according to the record in the business register) entitled to act on behalf of the company. In the case of a natural person the signature of the person is required. The number of pages of the application must be stated. A person entitled to act on behalf of a company must sign the application, and each page must be initialled. 58

60 The copy of the application must also be bound end-to-end in the top left corner. The stitch must be covered with a tape, sealed and signed, and the number of pages of the application must be stated. Make copies of the already signed and initialled original application. Appendices to an application are submitted in an unsuitable fashion Appendices must be submitted as original documents or certified copies (by a public notary or some other appropriate authority) bound end-to-end in the top left corner. The stitch must be covered with tape, sealed and signed, and the number of pages of the application must be stated. If it is not permissible to bind an appendix, it is necessary to initial each page of it. If the stated number of pages does not agree with the real count of pages due to one-side or two-sides copying, the actual number of sheets of the copy (not of the original) shall be stated with a short explanatory note. The aerial photograph is missing as an appendix although the programme requires it An application has been submitted with an incorrect number of copies, the complete bundle is indicated in a wrong manner An application must be submitted in one original and four copies (with the exception of the programme REAL ESTATES, which requires one original and one copy). The application form and selected appendices are to be submitted also in the electronic form on CD or diskette (not by ). All must be delivered in a sealed bundle bearing the following data: name of an applicant, address of an applicant, 59

61 name of the programme concerned (in the case of programme INNOVATION it must also be specified whether a grant, loan or combination of both is applied for) THE MOST FREQUENT MISTAKES AND AMBIGUITIES OF THE CONTENT Ambiguities related to co-financing In the appendix Proof of co-financing it is required to prove sources of co-financing without regard to a grant. The applicant - value added tax (VAT) payer - shall also prove sources of financing the whole costs including VAT, even if the applicant, VAT, will eventually not pay (e.g. purchase of foreign technologies). Co-financing shall be evidenced in the form of attestation; in case the financing is through a loan an assurance of a loan will serve (can be unsealed and must be submitted at the time of drafting the documentation for the Evaluation Committee). Obscurity of the term de minimis Support de minimis is the so-called support of small extent. The Commission Regulation (EC) No. 69/2001 specifies the amount of this support. As the amount of this type of support is so low that it cannot impact economic competition, less strict rules are rather applied in comparison to the case of usual state aid. Nevertheless, the following criteria must be met: The total amount of support de minimis granted to one business must not exceed an amount of EUR 100,000 in a period of three years. This ceiling relates to any support granted to one business without regard to a particular programme or measure in the scope of which the support was granted. The ceiling of EUR 100,000 includes the amounts of grants before direct taxation and also includes support of a non-monetary nature (in this case the amount of support is expressed in the gross equivalent). The support de minimis provider will inform the recipient that the granted support will be of de minimis nature. The business-recipient must submit the information on other support de minimis received in the last three years. A recipient of de minimis support can simultaneously apply for other types of state aid with an identical project 60

62 5.2.3 MISTAKES APPEARING IN THE APPLICATION FORM 1. Section V: Monitoring indicators Date of assessment, base values of indicators is missing. The new application form to programme INNOVATION: Title a) During the realisation of the project the co-operation with R&D or TEI will take place: b) During the realisation of the project it will be taking advantage of technology transfer, patents, industrial model or other means of the intellectual property protection. unit base value target value 2. The identification of an applicant is missing in the balance sheet; the data from the second leaf of the form Other information are often omitted. Identification information is also needed in this part of the form. It is necessary to pay attention when filling in the form. 3. The following boxes are not marked: Do you announce calls for bids in public tenders in accordance with the regulations for supplier selection? Have you been classified as SME pursuant to the Commission Regulation (EC) No. 70/2001? We recommend to your attention the brochure, Instruction for applicants for support in OPIE, and its annexes - Definition of small and medium-sized enterprise and rules for determining independence and Rules for supplier selection Do you announce calls for bids in public tenders in accordance with the act on public tenders? Do you announce calls for bids in public tenders in accordance with the regulations for supplier selection? Have you been classified as SME pursuant to the Commission Regulation EC No. 70/2001? 4. Sections IV and V: State the average adjusted number of employees pursuant to the Commission Regulation (EC) No. 70/ number of employees thereof in the science and research - women thereof Applicants often fill in only the number of women employed in science and research in this part of the form. The total number employed in a company must be stated. State the average adjusted number of employees pursuant to the Commission Regulation (EC) No. 70/2001 number of employees thereof in science and research women thereof Number Number Number 5. Applicants-VAT payers forget to include VAT into non-eligible costs, therefore they do not take it into account in the appendix co-financing the project as a whole - including VAT. The VAT payers must include VAT in the non-eligible costs of the project and take VAT into account when evidencing co-financing in the appendix. 61

63 6. The data is stated in a form not recognised by the system. Identification number and Tax identification number must be stated without spaces, parts of municipalities shall be omitted (not Ostrava-Poruba) but simply the name of a municipality shall be stated as (Ostrava). 7. Procedure of filling in the electronic form and unexpected error notices when entering the data. We suggest commencement with filling in the part Project budget. A number of other sections of the form are linked to this section, so some error reports could appear before completion of the application. 8. In the table 2.7 the phases of project process the number of a phase is not stated. In the table The phases of project process it is necessary, even in the case of undivided projects, to state the number of the single phase and mark it with the number Section VI - the date of signing is often missing in the electronic form, and it is filled in by hand on the date of signing. The date has to be entered when filling in the electronic application form Date Signature 10. Are more statutory representatives representing your company? In the older applications this question has often been answered yes even in cases of merely two representatives. More in this question means five and more. In the new applications the question has been spelled out, so the ambiguity should bee eliminated. 1.5 Are more statutory representatives representing your company? In the older applications this question has often been answered yes even in cases of merely two representatives. More in this question means five and more. 1.5 Are more than four statutory representatives representing your company? 62

64

65