Investment aid

Each small or medium-sized enterprise with an investment project whose objective is to promote the creation, the development, the diversification and the fundamental change of the production process, may be eligible for investment aid for SMEs.

Investments for the purpose of replacing existing machines and/or equipment are not eligible under this tool.

Who is concerned

Eligible businesses

This aid is intended for small and medium-sized enterprises (SME) holding a business permit granted by the General Directorate for Small and Medium-Sized Enterprises (Direction générale des Classes moyennes) and which are not active in any excluded activity in accordance with the general terms and conditions applying to aid for SMEs.

Eligible costs

Eligible costs under the present regime are considered to be investments in:

  •  investments in tangible and/or intangible assets such as:
    • the creation of a new business;
    • the expansion of an existing business;
    • the diversification of the production in an existing establishment in order to include new or additional products;
    • a fundamental transformation of an existing establishment's entire production process;
  • the acquisition of assets of another establishment when the following conditions are met:
    • the other establishment has gone out of business or would have gone out of business had such acquisition not taken place;
    • the assets purchased from a third party who is not connected to the buyer; and
    • the whole process is carried out in accordance with market conditions.
When a family member of the initial owner, or a salaried worker, purchases a small enterprise, the condition regarding the acquisition of assets from a third party not associated with the buyer is not required. The mere acquisition of shares in a business is not considered an investment. Investments for simple replacements are considered in the same way.

Prerequisites

In order to receive investment aid for SMEs, companies must observe and fulfil the general terms and conditions applicable to all aid for SMEs.

How to proceed

Submitting the application

A standard application form for aid for investment projects is provided by the Ministry of the Economy.

The completed application and accompanying documents must be dated and signed by a person authorised to sign on behalf of the company and must be submitted before work starts on the project, i.e.:

  • the beginning of construction works in relation with the investment;
  • or the first legally binding order of equipment or any other commitment making the investment irreversible, depending on whichever action is taken first.

The application file must be sent to the Ministry of the Economy by post or email. In the event of a submission by post, the following must be indicated on the envelope:

Ministère de l'Economie
Demande d'aides d'Etat
L-2937 LUXEMBOURG

Supporting documents

Applications for aid must include the following information and documents:

  • the name and size of the business (any document deemed necessary for the determination of the size of the business may be requested);
  • a description of the investment project, including its start and end dates;
  • a description of the operating conditions of the investment project and the economic potential;
  • the location of the investment project;
  • the total project cost;
  • a list of eligible costs of the investment project;
  • the operating costs and profits, if any;
  • a financing plan;
  • the form and the amount of financial aid required for the investment project;
  • any other relevant information which would help the ministers in charge to understand the qualities or the specific aspects of the investment project or programme and its incentive effect.

The business must grant the Minister of the Economy and the Minister of Finance the authority to verify with the Luxembourg Inland Revenue, the Registration Duties, Estates and VAT Authority and the Joint Social Security Centre that the business has not evaded its tax and social obligations. If not, the business must attach the certificates issued by these administrations providing proof that all tax and social charges have been duly paid.

Companies that have existed for less than 3 years must also provide a business plan.

The ministry can request any other useful information required to fully understand the project.

Maximum amount of financial aid

The amount of aid cannot exceed:

  • 20 % of eligible costs for small enterprises;
  • 10 % of eligible costs for medium-sized enterprises.

For any investment project, the amount of aid may not be less than EUR 1,000.

Payment of aid

The aid can take the following forms:

  • a subsidy;
  • a recoverable advance payment;
  • interest relief. The aid may be paid out by an intermediary, such as a credit institution or a financial establishment under public law.

Capital subsidies and recoverable advances are paid out after completion of the investment project. However, one or more advance payments may be made as the investments are made.

The business and the Minister of the Economy agree together, at the time the aid is granted, on the repayment terms of the recoverable advance payment if the project is successful.

Should the business have outstanding debts concerning social security and tax contributions, the granting of the aid may be subject to the full payment of the debts or to a repayment plan set up by the administrations concerned. The business concerned can opt for a repayment in full or in part of the debts by transferring the aid received to the administrations concerned.

The payment of financial aid must be requested, on pain of ineligibility, within a period of 5 years from the date of payment of the expense for which aid is requested. The beneficiary of the aid can apply for an extension of this deadline on written request to the Minister of the Economy.

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