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3. State incentives for specific industries

3.4. Other specific industries

3.4.1. Mining

3.4.1.1. Aid for risk prevention and mining safety

The regulations governing aid to the mining sector in the area of risk prevention and mining safety are currently set out in Order TED/1079/2020, of November 11, 2020, establishing the specifications in the context of native and sustainable mining.

The aim of the subsidies regulated in this Order is to encourage the development of projects related to mining safety (from the standpoint of investment and training) carried out by interested non-profit enterprises and entities, for the purpose of helping to reduce mining accidents in Spain, thereby effectively fostering, by extension, both the ecological transition process and the process of combating the demographic challenge.

The call for aid applications for projects and actions under the aforesaid Order for the year 2021 was made in the Decision of December 29, 2020 of the Secretariat of State for Energy.

Accordingly, and without limitation, suffice it to say that this most recent call for aid applications deems projects carried out in Spain in the area of mining and targeted at the areas of (i) significant investments in mining safety, including projects aimed at improving health and safety in mining sties, benefit mines and tunnels or galleries in the excavation and shoring phase and (ii); training programs in mining safety, to be eligible for financing.

Potential beneficiaries of this aid include SMEs that hold the title to the mining public domain to which the project relates or the authorization from the mining authority for the execution project for tunnels or galleries in the excavation and shoring phase, provided that they are not affected by Council Decision of 10 December 2010 on State aid to facilitate the closure of uncompetitive mines (Decision No 2010/787/EU). Non-profit institutions can also be beneficiaries of this aid, in which case they will not have to hold the title to the mining public domain, it being sufficient for them to provide evidence that they have a lawful interest relating to the mining activity and that they meet the requirements laid down by the Order.

The aid granted under a competitive procedure and its amount will consist of a percentage of the approved eligible investment and varies according to the following scheme:

  • Aid for significant investments in mining safety: Only SMEs can qualify for this aid, and the intensity of the aid cannot exceed 20% of the eligible costs in the case of small enterprises and micro enterprises, and 10% in the case of medium-sized enterprises, subject to a minimum amount of €12,000 for the aid granted.
  • Mining safety training projects: Only non-profit institutions can apply for this aid. The intensity of the aid may be up to 100% of the cost of the approved eligible investment, tied to hours of instruction evidenced and to the performance of complete courses presented in the project. In any event, the maximum amount granted to a project of this kind is €65,000 per application, whereas its minimum amount is set at €4,000. As limits on this line, it should be noted (i) that the maximum number of eligible hours is 8 hours per course, with a mandatory minimum of 3 hours; and (ii) the maximum permissible cost per worker and hour, and the total cost per worker set in each annual call for aid applications may not exceed €350 under any circumstances.

The above-mentioned Decision of December 29, 2020 which approved the call for aid applications for 2021 has set the total amount of the subsidy to be granted as a result of the submitted applications at €1,580,000.

3.4.1.2. Action Framework for Coal Mining

The series of measures in support of this industry is set out in the Framework Agreement for a Fair Transition in Coal Mining and the Sustainable Development of Mining Areas for 2019-2027 (Framework Agreement), executed with the Ministry of Ecological Transition.

This Framework Agreement, which has been in force since December 31, 2018, bears in mind the current situation in the industry following the end of the aid granted to cover losses in the mines pursuant to EU requirements and in line with the current energy transition process.

Thus, the main objectives of this Framework Agreement are as follows:

  1. To reactivate economic growth and encourage alternative development in mining areas in order to achieve their structural transformation, economic recovery and social welfare.
  2. To increase the flexibility of the conditions laid down for businesses that wish to continue to extract coal as from 2019 and that have to return the aid received in accordance with the above-mentioned Council Decision 2010/787/EU on State aid aimed at facilitating the closure of uncompetitive coal mines.
  3. To maintain lines of aid to encourage the creation of business projects aimed at generating employment and providing support for the creation of related infrastructures that enable workers that have become unemployed due to the closure of the mine to regain employment.
  4. To design specific measures to train workers in the coal mining industry and maintain aid that helps to cover the exceptional costs linked to closure set forth in EU legislation.

The Framework Agreement instruments the following principal lines:

  1. Aid for exceptional costs incurred by coal businesses:

    This line of aid, envisaged for the period 2019-2025, is directed at mining companies included in the Plan for the Closure of Uncompetitive Coal Mines in the Kingdom of Spain in accordance with the aforesaid Decision 2010/787/EU.

    It includes two types of aid:

    1. Social aid for workers in coal production units.

      This aid has already been specifically implemented by Royal Decree-Law 25/2018, of December 21, 2018 on urgent measures for a fair transition of the coal mining industry and the sustainable development of coal mining areas and, where not expressly regulated in this law, by Royal Decree 676/2014, of August 1, 2014 establishing rules on aid due to employment costs aimed at covering exceptional costs related to plans for the closure of production units in coal mining businesses.

      In particular, Royal Decree 676/2014 sets forth the direct grant of aid to companies that are pursuing or have pursued an activity related to coal production, to enable them to cover certain costs incurred on termination of their workers’ employment contracts as a result of the closure of coal production units used for the generation of electricity included under the national Closure Plan.

      The purpose of this aid is to alleviate the social and regional consequences of the closure of mines and is projected to cover labor costs for older workers and compensated resignation.

      In addition, the Framework Agreement provides for other social aid aimed at workers affected who do not meet the requirements to access the above-mentioned aid.

    2. Aid of an exceptional nature aimed at covering the costs of closure of the production units and offsetting the environmental impact.

      The Framework Agreement implements this aid in order to cover the work or measures included in the restoration plans that have been authorized in advance by the competent mining authority. Eligible for this aid are mining companies that have requested authorization for, as applicable, the project to definitively abandon the facilities or the project for the definitive closure of the facilities, and which meet all other statutory requirements to be able to qualify for this aid.

    The Framework Agreement also includes the possibility of adopting measures in support of workers in the industry that continue mining after December 31, 2018 in the production units of the companies included in the Closure Plan of the Kingdom of Spain and which intend to close between 2019-2025.

    Other measures are also established for workers in the industry such as (i) the performance of restoration activities; (ii) inclusion in job vacancy services; (iii) or the grant of social aid for workers in processes of reviewable total disability.

  2. Measures to revive mining areas:

    Measures to revive coal-mining areas aimed at financing new business facilities and extending existing ones.

    Individuals who pursue the activities on which the grant of this aid is based in the areas affected by the restructuring and modernization of the coal mining industry qualify for this aid.

    Specifically, investment projects which generate employment in the area of economic activity that may receive aid, are eligible for finance, provided the following conditions are met:

    1. Business projects with an investment in excess of €100,000, which undertake to create 3 or more job positions and which also meet the other requirements of the Framework Agreement.
    2. Aid to small investment projects under the following conditions:
      • Minimum amount of €30,000 and a maximum of €500,000, with minimum undertakings to create employment.
      • Fall within any of the economic activities that are eligible for finance, provided that they are carried out in any of the municipalities included in the territory covered by the Closure Plan.
    3. Aid for alternative development in mining areas:

      Infrastructures located in the municipalities affected by closures of the coal mining industry are eligible for this aid.

      At present, aid aimed at boosting the development of mining areas is regulated by Royal Decree 675/2014, of August 1, 2014, regulating the direct grant of aid aimed at fostering the alternative development of coal mining areas, through the development of infrastructure projects and restoration projects in areas that have been degraded as a result of mining activities.

      Autonomous communities, municipal councils and other local entities included in the geographic area of the Royal Decree, in accordance with Annex I of same, are eligible for this aid.

      The timeframe envisaged for this aid is until 2023, although in accordance with the regulation of the Framework Agreement, the material execution of the actions that can be financed may be extended until 2027.

    The Framework Agreement establishes, in addition to the aid to revive mining areas referred to above, that mining areas may qualify for other additional measures defined in the Plan for Urgent Action in Fair Transition, which must be agreed upon between the autonomous communities, local entities and social players.

With the aim of achieving the objectives proposed and implementing the measures established in the Framework Agreement, the following Orders were published on December 31, 2020:

  1. Order TED/1293/2020, approving the specifications for the grant of aid aimed at small investment projects that create or maintain jobs, fostering the alternative development of mining areas, for the 2020-2023 period.

    The aim of this aid is to encourage individuals and entities to locate small business investment projects in areas affected by the restructuring of coal mining and their surroundings, thereby generating alternative economic activities to coal mining.

    Private individuals or legal entities, as well as the groupings of which they form part, tenancies in common and self-employed workers that are going to undertake small business investment projects that create jobs and are located in the municipalities recognized in the Order may be beneficiaries of this aid, which will be granted under a competitive procedure.

    The aid regulated under this Order is supplemental to and compatible with other state aid provided that the maximum amount of all the aid does not exceed the projected cost of the investment. In the event of an accumulation of aid received by a project, the overall amount that is considered “de minimis” may not exceed the maximum limit of €200,000 during any period of 3 fiscal years or the period that is stipulated in each call for aid applications.

    Projects that apply for aid must meet the following requirements:

    • They must have been able to start the investment 1 year before the date of the call for aid applications.
    • They must have a minimum amount of €30,000 and a maximum of €500,000 for the eligible investment. Also, 50% of the investment must be executed and at least €30,000 must be invested.
    • They must create at least 1 job or maintain workforces equal to or greater than 3 jobs.
    • The execution period stipulated by the relevant call for aid applications must be complied with.

    Their amount may not exceed the maximum limit of €200,000 if the aid is granted to a single enterprise. To determine the amount, the following criteria will be applied:

    • Projects in municipalities hard hit by the coal mining company closure process (Group 1) may receive a subsidy of up to 100% of the maximum intensity limit or of the maximum amount applicable to the municipality in question.
    • Projects in the other municipalities affected by the coal mining company closure process (Group 2), however, may only receive a subsidy of up to 50%.
  2. Order TED/1294/2020, approving the specifications for the grant of aid aimed at job creating business projects that promote the alternative development of mining areas for the 2020-2023 period.

    The aim and the scope of application of the aid regulated under this Order are the same as those established by Order TED/1293/2020 described in the preceding section, with the difference that the projects are not required to be small in scale.

    Job creating business investment projects belonging to all of the economic activities that qualify to receive aid in accordance with the applicable Spanish and EU legislation, except for the steel, coal, transportation, etc. industries, are eligible for the aid.

    In the case of aid requested by large companies, it can only be granted for initial investments that attract new activities to the above-mentioned areas or for the diversification of existing establishments into new products or new innovative processes.

    The requirements applicable to the projects are similar to those laid down in Order TED 1293/2020, with the following differences:

    • The work that implements the investment must not have started before the application for aid was submitted.
    • The minimum planned investment eligible for a subsidy must be €100,000. Also, at least 50% of the planned investment be executed, guaranteeing at all times a minimum investment of €100,000.
    • Projects covered by the aid must create 3 jobs.
    • Prior to the 6 months following the date of notification of the final decision approving the aid requested for the project, 10% of the investment considered eligible must have been executed and paid.
    • For financing purposes, (i) at least 25% of the total of the eligible costs must be financed by the beneficiary with equity or external financing, free from any type of public aid; and (ii) the enterprise or beneficiary must evidence a financial contribution, via equity or external financing, entailing at least 5% of the eligible investment.
    • The execution period stipulated by the relevant call for aid applications must be complied with.

    To determine the amount of the aid, the same criteria defined in Order TED 1293/2020 will be applied.

3.4.2 Industrial Investment

The process of adapting certain traditional industrial sectors to new forms of production, against a backdrop of processes to rationalize and modernize the business segment, has caused severe losses in the productive fabric and a significant elimination of jobs.

In an effort to mitigate and, to the greatest extent possible, avoid such noxious effects on the industrial fabric as a whole and, in particular, on the areas most affected by the aforesaid adaptation process, the Ministry of Industry, Trade and Tourism has been launching support initiatives with a view to promoting, regenerating or creating the industrial fabric.

The current initiative is Order ICT/1100/2018 of October 18, 2018, setting forth the specifications for the grant of financial aid for industrial investment in the context of the public policy on reindustrialization and strengthening industrial competitiveness, which regulates the grant of aid for initiatives in strategic industrial sectors under the aforesaid policy (REINDUS Program), which was subsequently amended by Order ICT/768/2019, of July 11, 2019, with respect to, inter alia, the requirements imposed on applicants, assessment criteria and grounds for repayment.

The specifications bring the criteria of former Reindustrialization Programs into line with that of Programs for the Development of Strategic Industrial Sectors, placing special interest in enterprises which incorporate advanced technologies in their processes and products, create qualified jobs with the greatest possible contribution of added value and, in short, contribute to increasing the country’s export base.

The last call for applications for the entire national territory in the context of the above-mentioned Order ICT/1100/2018 was the one for 2019 via the Order of September 19 of that year, issued by the Secretariat-General of Industry and of the SME.

Although this last-mentioned Order focused, as noted above, on reindustrialization projects carried out throughout Spain, it ended up including, following the resolutions adopted by the Industry and SME Sectorial Conference held on March 25, 2019, a group of municipalities classed as “priority areas”, in which the execution of projects entails the grant of more points.

Based on the most recent call for applications, the main parameters to be borne in mind are described below.

The financial support that these projects could receive, in general, is instrumented through long-term loans, with the following types of actions eligible for financing:

  • Creation of industrial establishments, in the sense of stating up a new production activity anywhere in Spain.
  • Relocation, understood as changing the location of a prior production activity to anywhere else in Spain.
  • Improvements and/or modifications of production lines, that is, investing in equipment that enables the modernization of existing production lines or which generates the implementation of new production lines, in industrial establishments that are already in production at the time of the application.
  • Productive implementation of Connected Industry 4.0 technologies, or in other words, investing in the acquisition of fixed tangible assets in industrial establishments that are already in production at the time of the application, in order to:
    • Implement hybrid solutions of the physical and digital world (intelligent systems, low-end and embedded systems, sensors, wearables, e-tags, virtual reality and 3D printing, robotics and unmanned vehicles in the industrial establishment) in production processes that generate at least one full production line.
    • Manufacture the systems defined in the above point.
    • Implement physical network infrastructures for digital connectivity of production processes that move towards the «Internet of Things».

Merely replacing the machinery and/or part of the components or auxiliary production elements, as well as repairs and maintenance are excluded from these definitions.

In this regard, the specifications in question clarify that industrial investments arising from any of the above typologies have to be technically viable according to current state or situation of the technology at industrial scale.

Potential beneficiaries of the aid will be any company with separate legal personality, duly incorporated in Spain and not belonging to the public sector, which pursues or is planning to pursue a productive industrial activity and has been selected in accordance with a competitive procedure.

The following are eligible expenses:

  • Investments for the creation and relocation of industrial establishments, both expenses from civil works (tangible investments in development and piping, expressly excluding land) and building expenses (materials for building industrial buildings) and production device and equipment (fixed tangible assets directly linked to production).

The sum of the civil works and building items may not exceed 70% of the total eligible budget.

  • For investments in relation to improvements and/or modifications of production lines, both the civil works and building expenses and the production device and equipment expenses and production process engineering expenses (own staff and external collaborations required to design and/or redesign processes).

The sum of the civil works and building items may not exceed the budget of devices and equipment linked to production. In addition, production process engineering expenses may not exceed the acquisition cost of the production devices and equipment. Own staff costs within this item will be limited to 15% of the budget for the acquisition of production devices and equipment.

  • For investments regarding the productive implementation of “Connected Industry 4.0”, both the civil works and building expenses and the production device and equipment expenses and production process engineering expenses.

The sum of the civil works and building items may not exceed the budget of devices and equipment linked to production. In addition, production process engineering expenses may not exceed the acquisition cost of the production devices and equipment. Own staff costs within this item will be limited to 15% of the budget for the acquisition of production devices and equipment.

The financed actions must be executed from January 1 of the year of the related call, up to the maximum time limit of 18 months from the date of the grant decision.

The minimum eligible budget for the investments is set in each call for aid applications (in 2019 it continued to be €100,000), the maximum amount of the funding to be granted will be 75% of the budget considered eligible.

Additionally, for enterprises without significant historic accounts (according to the definition given for such purpose in Schedule I of the Order), the loan in which the aid is materialized cannot exceed three times their demonstrable equity. In all other cases, the limit is set at five times the applicant’s equity (as shown in the accounts submitted for assessment), notwithstanding the fact that each call for aid applications can stipulate proportions lower than those indicated in both cases.

The maximum amount of the loan to be granted is subject to the risk exposure accumulated at the company with the Directorate-General of Industry and of the SME. In the case of companies without significant historic accounts, the maximum risk exposure may not exceed 3 times its last equity, and 5 times for all others.

The interest rate applicable to the loan granted was established for the 2019 call at 1%.

The repayment period of the loan will be, in general, 10 years, with a 3-year grace period, over which the loan is to be repaid in equal annual installments once the grace period ends.

Finally, the grant of the loan will require the creation of a guarantee, the amount of which will be equivalent to the loan percentage granted plus the same percentage of the total financial interest accrued and will be determined according to the classification obtained by the applicant according to the methodology described in Annex II of Order ICT/1100/2018, in accordance with the following table:

Classification categoryPercentage guarantee to be given on the loan granted plus the financial interest accrued
Excellent (AAA-A)
10%
Good (BBB)
41%
Satisfactory (BB)
70%

It should be noted that, for last year (i.e. 2020), the Ministry of Industry, Trade and Tourism adopted Order ICT/778/2020, of August 4, 2020, establishing the specifications and issuing the call for applications for 2020 for the grant of financial support to industrial investment in the context of the public policy on reindustrialization and the strengthening of industrial competitiveness in view of the exceptional circumstances stemming from the health crisis caused by COVID-19. This Order set out the specifications and established the call for applications for just one year, namely 2020, so it is no longer in force.

In any event, based on the information provided by the Ministry of Industry, Tourism and Trade, given that the consequences of the health crisis caused by COVID-19 continue to persist in 2021 as well, we cannot rule out the possibility of a new order being adopted in the coming months, adapted to the new context, which would replace Order ICT/778/2020 as the basis for the granting of aid.

3.4.3 Pharmaceutical Industry

In a Decision of May 11, 2017, the Government Delegate Committee for Economic Affairs approved the initiative to Boost Competitiveness in the Pharmaceutical Industry or PROFARMA 2017-2020 a joint initiative aimed at  boosting the competitiveness of the pharmaceutical industry in Spain by modernizing the industry and fostering activities that contribute more added value (such as investments in new industrial plants and in new technologies for production as well as through fostering research, development and innovation). In the initially projected time frame, the quantitative objectives set by the program went progressively from €46,000,000 to €52,000,000 in R&D investment and from €260,000,000 to €275,000,000 in investment and production.

After the term of this initiative concluded in 2020, the Ministry of Industry, Trade and Tourism is currently drawing up the PROFARMA 2021-2024 Program, which is expected to be published around next September.

Although the documentation relating to the new program is not yet publicly available, it is expected, based on the information provided by the Secretary-General of Industry and the SME, that the PROFARMA 2021-2024 Program will follow the general guidelines set by the version of the program in effect up to now and the various administrative decisions issued in its implementation and for carrying out the relevant calls for applications.

Against this backdrop, the key aspects to be borne in mind when it comes to the fostering of competitiveness in the pharmaceutical industry in Spain would be the following:

  • PROFARMA’s commitment to modernizing the industry, which entails:
    • For national enterprises, seeking wider markets through internationalization, incorporating the use of new technologies in their production processes and in research, development and innovation processes, and improving the focus of their lines of research.
    • For multinational enterprises, increasing their commitment to developing the industrial structure, boosting their investment effort not only in infrastructures and production activities, but also in R&D&I in Spain, and significantly improving the commercial balance.
  • The achievement of the above-mentioned general goal of modernizing the industry through a series of specific objectives such as:
    • Increasing the total investments made in Spain by enterprises participating in PROFARMA, placing special emphasis on increased investments in the assets used in production and in research and development.
    • Increasing R&D&I expenses.
    • Increasing jobs in activities related to R&D&I, as well as in production and quality control.
    • Reversing the balance of trade deficit of the enterprises included in PROFARMA.
    • Increasing current R&D&I expenses over sales to the National Health System.
  • The systematization of the procedure for participation in PROFARMA by companies, permitting the inclusion in PROFARMA of enterprises in the pharmaceutical industry, located in Spain, which manufacture or market medicinal products for human use and which pursue pharmaceutical R&D&I activities in Spain. In any event, enterprises will be required to submit to an assessment aimed at their subsequent classification and qualification by the Coordination Committee in charge of the program’s management, having regard to the enterprise’s efforts to achieve the general goal and specific objectives established, and in view of its industrial, economic, R&D&I and other resources and results.

    Accordingly, enterprises are classified in three Groups (A, B and C) depending on (i) whether or not they have their own pharmaceutical production plant and; (ii) on the significance (or lack thereof) of the research activity they pursue. Equally, the Coordination Committee assigns them a qualification (excellent, very good, good and acceptable) depending on the assessment and points obtained in accordance with the criteria stipulated in the regulations.

    The classification and qualification proposal of each of the pharmaceutical enterprises that opt to participate in the PROFARMA program is forwarded to the head of the Secretariat-General of Industry and the SME, for the final decision to be adopted.

    Although it is expected that these basic features of the PROFARMA Program will be maintained in the version of the program currently being drawn up for the 2021-2024 horizon, it will be necessary to see its final wording, in order to take into account its full confirmation or the addition of possible nuanced details, which – again according to the information provided by the Ministry – should mainly be aimed at achieving its synchronization with (i) the Pharmaceutical Strategy for Europe, approved by the European Commission on November 25, 2020; (ii) with possible aspects linked to the Spanish Science, Technology and Innovation Strategy, and (iii) with the “Spain Can” Recovery, Transformation and Resilience Plan, drawn up by the Spanish government and discussed in the relevant section of this chapter.Beyond the PROFARMA Program, which is the quintessential state incentive in the pharmaceutical field, it should be noted that the Ministry of Industry, Trade and Tourism is currently in the process of drawing up a State Pact for Science. Players from the pharmaceutical industry, such as FarmaIndustria, have participated in drawing up the draft of the Pact and, according to the information made public by the Ministry, its approval could give rise to the adoption of measures aimed at boosting pharmaceutical investments.

    Lastly, at the European level, on February 17, 2021, European bio-defense preparedness plan “HERA Incubator” against COVID-19 variants was approved as a mechanism with which, in the short term, to combat the new COVID-19 variants and, in the long term, to bolster the EU’s preparedness for health emergencies. The plan establishes measures to speed up the regulatory approval of vaccines, create new advance purchase agreements for medicines, and study the possible grant of aid for vaccine production, intermediary inputs and infrastructures.