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STATE AID AND INVESTMENT INCENTIVES IN THE CZECH REPUBLIC WITHIN THE FRAMEWORK OF COMPETITION

I. Bazantova

Abstract

European countries support their national economies and entrepreneurs in various ways. Goals include GDP growth, employment growth, and the development of public services. The article focuses on the various types of state aid. The states are limited by the regulations of the European Union: under Article 107 (1) TFEU, state aid is incompatible with the internal market and is therefore generally prohibited. An exemption from the prohibition may be granted on the basis of block exemptions or the decision of the European Commission. Block exemptions are regulated by the General Block Exemption Regulation, which prescribes aid categories and the conditions under which state aid may be granted without an assessment by the European Commission. Under the General Block Exemption Regulation, state aid may be granted as regional aid, support for small and medium-sized enterprises, environmental protection, or support for research, development, and innovation. State aid must be compatible with the functioning of the internal market and must not distort competition or provide any advantage to businesses or industries. The article provides examples of lawful and unlawful state aid. In the Czech Republic de minimis aid is widely used mainly due to its easy application without the need to request approval from the European Commission for the granting of de minimis aid. Since the accession of the Czech Republic to the EU, the competence to assess the compatibility of state aid with the common market has been held by the European Commission. The institution that plays the main role in regulation in the Czech Republic is the Office for the Protection of Competition. Act No 215/2004 Coll. to regulate certain relations in the area of state aid and to change the act on support of research and development modifies the role of the Office in the area of state aid, the rights and duties of providers and beneficiaries of state aid towards the Office, and some other relations in connection with provision of state aid. The Act does not apply to the agriculture and fisheries sectors. The objective of the state aid rules is to stimulate the economic growth and competitiveness of the EU internal market. The article also focuses on investment incentives provided in the Czech Republic, on Act No. 72/2000 Coll., on Investment Incentives effective as of May 1, 2015, and on the areas that may be eligible for support.

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DOI resolver: doi.org/10.5593/SGEMSOCIAL2017/HB11/S02.058

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