ASSISTANCE TO SMALL AND MEDIUM-SIZED UNDERTAKINGS REGULATIONS

SUBSIDIARY LEGISLATION 463.03

ASSISTANCE TO SMALL AND MEDIUM-SIZED

UNDERTAKINGS REGULATIONS

1st January, 2008 *

LEGAL NOTICE 69 of 2008, as amended by Legal Notices 59 of 2009,

102 of 2013, 212, 237 and 412 of 2015 and 260 of 2016.

The title of these regulations is the Assistance to Small and

Medium-Sized Undertakings Regulations.

In these regulations, unless the context otherwise requires

"the Act" means the Malta Enterprise Act;

"the Corporation" means Malta Enterprise established under the

Act;

"Guidelines" means such guidelines as may be published by the

Corporation from time to time in terms of the Act;

"intangible assets" means the transfer of technology by the

acquisition of patent rights, licences, know-how or unpatented

technical knowledge;

"organisational innovation" means the implementation of a new

organisational method in the business practices, workplace

organisation or external relations of an undertaking;

"large undertaking", "medium-sized undertaking", "small

undertaking" and "micro undertaking" shall have the meaning

attributed to them by Annex 1 of Commission Regulation (EC) No

800/2008 of 6 August 2008 declaring certain categories of aid

compatible with the common market in application of Articles 87

and 88 of the Treaty (General block exemption Regulation)

Provided that as from the 1st July 2014, the definition of

" l a rg e u n d e r t a k i n g " , " m e d i u m - s i z e d u n d e r t a k i n g " , " s m a l l

undertaking" and "micro undertaking" shall have the meaning

attributed to them by Annex I of Commission Regulation (EU) No

651/2014 of 17 June 2014 declaring certain categories of aid

compatible with the internal market in application of Articles 107

and 108 of the Treaty (General block exemption Regulation);

"process innovation" means the implementation of a new or

significantly improved production or delivery method (including

significant changes in techniques, equipment and, or software);

"qualifying expenditure" means that expenditure that may

q u a l i f y f o r a s s i s t a n c e i n t e r m s o f t h e s e r e g u l a t i o n s an d i n

accordance with the Guidelines;

"start-up undertaking" means an undertaking which has been in

operation for a period of less than five years;

*see regulation 1(2) of these Regulations, as originally promulgated.

"tangible assets" means fixed physical assets in relation to the

creation of an undertaking, or extension of an existing undertaking,

or engagement in activity involving fundamental product or

production process change;

"technological product innovation" means the implementation or

commercialisation of a product with improved performance

characteristics such as to deliver objectively new or improved

services to the consumer;

"undertaking" means any individual or body of persons, whether

registered or not and whether having distinct personality or not,

who or which carries on a qualifying activity and includes any

association or other body of persons which promotes or supports

the goals or objectives of such undertakings.

(1) A qualifying activity in terms of these regulations shall

be an economic activity carried on or intended to be carried out by

an undertaking in Malta which consists solely of -

(a)

(i)

the production, manufacture, improvement,

assembly, preservation, processing of any goods,

materials, commodities, equipment, plant

machinery;

(ii) the rendering of any industrial services

analogous to the activities mentioned in sub-

paragraph (i); or

(iii) the repair, overhaul or maintenance of pleasure

crafts, yachts not having more than thirty berths,

aircraft, engines or equipment incorporated or

used in such vessels or aircraft;

(b) I.C.T. developmental activities, software development,

IT enabled business services including call centres and

IT business solutions as may be prescribed in the

Guidelines, but excluding telecommunications service

providers;

(c) research and development, and innovative start-up

projects as may be prescribed in the Guidelines;

(d) eco-innovations, waste treatment and environmental

solutions as may be prescribed in the Guidelines;

(e) biotechnology, comprising the production or

development of intellectual property or goods or the

rendering of services resulting from, or related to, the

study, research, discovery, application, modification or

development of living organisms or materials derived

from them;

(f)

the provision of facilities directly required in the

development and production of feature film, television

programmes or commercials as may be prescribed in

the Guidelines;

(g) the provision of science and technology private

tertiary education as may be prescribed in the

Guidelines;

(h) the provision of private health-care services through

the setting up of new projects carrying out an

investment of not less than 2.5 million euro in medical

equipment, excluding land or buildings

Provided that an undertaking carrying out the activities set

out in this sub-regulation shall only qualify for the benefits

provided by these regulations if the project is approved by the

Corporation, and, in giving its approval, the Corporation may

impose such conditions as it deems fit

Provided further that an undertaking shall not qualify for

any of the benefits provided by these regulations if -

(a) the undertaking sells by retail and, for this purpose, an

undertaking shall be deemed not to sell by retail if its

sales of goods or services are made to -

(i)

a person who carries on a trade and the goods or

services so sold to such person are either resold

by such person or are used by such person for

the purpose of his trade; or

(ii) a person, other than an individual, who uses

those goods or services for the purpose of trade

carried on by such person;

(iii) a person through e-commerce activities resulting

in online transactions effected through a secure

payment system;

(b) the undertaking’s trade or business includes any one of

the following activities

(i)

dividing, sorting, packaging, mixing without

changing the character of the good, drying,

labelling, or other similar processes or any

combination of such processes to goods which

are acquired in bulk merely to prepare those

goods for sale or distribution, excluding goods

in respect of which the said company carries on

any other activity referred to in sub-regulation

(1)(a)(i);

(ii) the assembly of any goods where -

1. the final assembled good is clearly

recognisable

from

the

individual

components or parts from which it is

assembled without regard being had to any

exterior casing of the good; and

2. the components and parts from which the

good is assembled are such that the good is

nearly complete and the assembly work

and the supervision of such assembly work

only require the employment of almost

exclusively unskilled workers, such that

the assembly operation is of a spurious

nature when considered in the light of

manufacturing activities;

ASSISTANCE TO SMALL

AND MEDIUM-SIZED UNDERTAKINGS

(iii) without prejudice to sub-regulation (1)(a)(i), the

repair, maintenance, preservation, improvement,

reconditioning, refurbishing or restoration of

any good or any combination of such activities

where such activities do not impose on such

goods a change in their character;

(iv) without prejudice to sub-regulation (1)(a)(ii),

the installation, commissioning or assembly of

goods on site, where the said goods have not

been manufactured by the undertaking which is

installing, commissioning or assembling the

goods on site

Provided that the provisions of this paragraph shall not

be applicable to an undertaking which carries on only

any one or more of the activities set out in sub-

regulation (1)(b) to (h);

(c) the trade or business of an undertaking includes the

preparation or production of "food in the course of

catering" including -

(i)

meals or snacks including -

1. hot and cold dishes including antipasto and

dessert;

2. sandwiches, toast, potato chips, sausage

rolls, pizza, pastizzi, qassatat and similar

snacks;

3. biscuits, cakes, confectionery and similar

items but excluding those sealed in a

package by the manufacturer and supplied

in that original sealed package, and those

items which individually weigh 500 grams

or more;

food supplied in restaurants, cafeterias,

canteens,

bars

and

other

similar

establishments;

food prepared or produced for parties,

functions, weddings and similar events;

food

prepared

or

produced

for

consumption by persons pertaining to a

particular location or organisation,

including patients in hospitals or homes,

residents of hotels or guest houses,

workers in a particular workplace and the

preparation or production of food in

similar circumstances;

(ii) milk, milkshake, tea, coffee and chocolate

supplied in liquid form, excluding milk and

milkshake supplied by the manufacturer thereof

in bottles and containers for distribution to retail

outlets but including any form of drink which is

merely produced by adding liquid to powder or

substance and where such drink is produced in

order that it may be served in a bar, restaurant,

canteen, cafeteria or other establishment or

place to individuals for consumption.

(2) A small or medium-sized undertaking not carrying on a

qualifying activity in terms of sub-regulation (1) may still qualify

for assistance in terms of these regulations if it carries out activities

or projects that lead to process, product or service innovations.

(3) A start-up undertaking not intending to carry out a

qualifying activity in terms of sub-regulation (1) may still qualify

for assistance in terms of these regulations if it intends to carry out

activities or projects that lead to process, product or service

innovations.

(4) A small or medium-sized undertaking not carrying on a

qualifying activity in terms of sub-regulation (1) may still qualify

for assistance in terms of regulations 6 and 10 provided that its

activities are compatible with the State Aid rules of the European

Union.

4. Where the Corporation is satisfied that a small or medium-

sized start-up undertaking carrying on or intending to carry out a

qualifying activity that may contribute to the economic

development of Malta, requires assistance for the development of a

new business, the Corporation may provide such an undertaking

with a cash grant for the acquisition of tangible or intangible assets

or for the procurement of services. This assistance shall not

exceed -

(a) 50% for small undertakings and 40% for medium-

sized undertakings of the qualifying expenditure in

tangible and intangible assets;

(b) 50% of the qualifying expenditure for the acquisition

of services

Provided that applications for assistance under this

regulation shall reach the Corporation by not later than the 30 th

June, 2014.

5. Where the Corporation is satisfied that a small sized start-

up undertaking carrying on or intending to carry out a qualifying

activity that may contribute to the economic development of Malta

requires assistance with respect to

(a) legal, advisory, consultancy and administrative costs

directly related to the setting-up of the undertaking;

(b) payment of interests on external finance required in

the acquisition of tangible or intangible assets;

(c) energy and water costs;

(d) depreciation of tangible or intangible assets;

(e) payments for leasing or renting of production facilities

and equipment; or

(f)

wage costs including compulsory national insurance

payments.

the Corporation may provide such an undertaking with a cash grant

that shall not exceed 35% of the qualifying expenditure incurred in

the first three years after the creation of the enterprise and 25% of

the qualifying expenditure in the two years thereafter

Provided that applications for assistance under this

regulation shall reach the Corporation by not later than the 31st

December, 2013.

6. Where the Corporation is satisfied that a small or medium-

sized undertaking carrying on or intending to carry out a qualifying

activity that may contribute to the economic development of Malta,

requires assistance to carry out technological, product or service

innovation, process innovation, eco-innovation or organisational

innovation, the Corporation may provide such an undertaking with

a cash grant that shall not exceed -

(a) 50% for small undertakings and 40% for medium-

sized undertakings of the qualifying expenditure in

tangible and intangible assets;

(b) 50% of the qualifying expenditure for the acquisition

of services

Provided that applications for assistance under this regulation

shall reach the Corporation by not later than the 31 st December, 2013.

Where the Corporation is satisfied that a small or medium-

sized undertaking carrying on or intending to carry out a qualifying

activity that may contribute to the economic development of Malta,

requires the ass istance of expe r ts in a par t i c ul a r fi e l d , t he

Corporation may provide such an undertaking with a cash grant

that shall not exceed 50% of the qualifying expenditure of the

services of such experts

Provided that such cash grant shall not be given in respect

of services which are of a continuous nature or are provided

periodically and relate to the undertaking’s usual operating

expenditure such as routine consultancy services or advertising

Provided also that applications for assistance under this

regulation shall reach the Corporation by not later than the 30th

June, 2014.

Where the Corporation is satisfied that a small or medium-

sized undertaking carrying on or intending to carry out a qualifying

activity that may contribute to the economic development of Malta,

requires the assistance to participate in fairs and exhibitions, the

Corporation may give such an undertaking a cash grant which shall

not exceed 50% of the qualifying expenditure for renting, setting

up and running the stand

Provided that such cash grant may only be provided in

respect of the first participation of an undertaking in a particular

fair or exhibition

Provided also that applications for assistance under this

regulation shall reach the Corporation by not later than the 30th

June, 2014.

Where the Corporation is satisfied that a small or medium-

sized undertaking carrying on or intending to carry out a qualifying

activity that may contribute to the economic development of Malta,

requires assistance in the preparation and submission of proposals

for participation in projects funded through initiatives promoted by

the European Union such as the Seventh Research Framework

Programme (FP7) or the Competitiveness and Innovation

Framework Programme (CIP), the Corporation may provide a cash

grant not exceeding 65% of the qualifying expenditure related to

personnel and other services required for the preparation and

submission of the proposal

Provided that applications for assistance under this

regulation shall reach the Corporation by not later than the 31st

August, 2013.

Where the Corporation is satisfied that a small or medium

size undertaking carrying on or intending to carry out a qualifying

activity that may contribute to the economic development of Malta

requires assistance to -

(a) achieve a recognised quality certification related to

processes, products or services;

(b) achieve a recognised environmental certification;

(c) adopt an operations manual or to acquire a franchise

licence;

(d) undertake a due diligence exercise leading to the

acquisition of a licence required for participation in a

value chain;

(e) acquire a quality mark,

the Corporation may, in accordance with the Guidelines, assist such

an undertaking with a tax deduction equivalent to one hundred and

fifty per cent (150%) of the eligible expenditure incurred up to a

maximum expenditure of twenty thousand euro (€20,000)

Provided that applications for assistance under this

regulation shall reach the Corporation by not later than the 31st

December, 2013.

Where the Corporation is satisfied that a small or medium-

sized undertaking carrying on or intending to carry out a qualifying

activity that may contribute to the economic development of Malta,

requires assistance in developing and enhancing its business

activities through the use of ICT and e-business, or through the

development of ICT products or services, the Corporation may

provide a cash grant not exceeding -

(a) 50% for small undertakings and 40% for medium-

sized undertakings of the qualifying expenditure in

tangible and intangible assets;

(b) 50% of the qualifying expenditure for the acquisition of

services,

related to the ICT and e-business project

Provided that applications for assistance under this

regulation shall reach the Corporation by not later than the 31st

December, 2013.

Where the Corporation is satisfied that a small start-up

undertaking having a viable business concept which is in its early

stage of development and that is economically viable as may be

prescribed in the Guidelines, and that such a small start-up

undertaking requires assistance, the Corporation may provide such

an undertaking with a cash grant that shall not exceed the amount

of twenty five thousand euro (€25,000) in accordance with the

terms and conditions set out in the Guidelines.

Provided that for the purposes of this regulation, a ''small

start-up undertaking'' shall have the meaning attributed to it in the

Guidelines

Provided also that a qualifying activity in terms of this

regulation shall be an economic activity carried on or intended to

be carried out by a small start-up undertaking as may be prescribed

in the Guidelines

Provided further that applications for assistance under this

regulation shall reach the Corporation by not later the 30th

October, 2020.

(1) Where the Corporation is satisfied that a small start-up

undertaking in its setting-up and initial growth phases as may be

prescribed in the Guidelines, requires assistance, the Corporation

may provide such an undertaking with a repayable cash grant that

shall not exceed

(a) the amount of two hundred thousand euro (€200,000)

which amount shall be linked to private equity in

accordance with the terms and conditions set out in the

Guidelines; or

(b) the amount of five hundred thousand euro (€500,000)

for the acquisition of tangible assets in accordance

with the terms and conditions set out in the Guidelines

Provided that in order to be eligible for this assistance,

the small start-up undertaking must be an innovative

undertaking or a knowledge based technology

undertaking;

(c) the amount of one hundred thousand euro (€100,000)

which amount shall be linked to funding sought

through crowd funding platforms in accordance with

the terms and conditions set out in the Guidelines.

(2)

For the purposes of this regulation

(a) an ''innovative

undertaking''

shall

mean

an

undertaking

(i)

that can demonstrate, by means of an evaluation

carried out by an external expert, that it will in

the foreseeable future develop products, services

or processes which are new or substantially

improved compared to the state of the art in its

industry, and which carry a risk of technological

or industrial failure; or

(ii) the research and development costs of which

represent at least 10% of its total operating costs

in at least one of the three years preceding the

granting of the aid or, in the case of a start-up

undertaking without any financial history, in the

audit of its current fiscal period, as certified by

an external auditor;

(b) a ''knowledge based technology undertaking'', a ''small

start-up undertaking'' and ''tangible assets'' shall have

the meaning attributed to them in the Guidelines;

(c) a ''qualifying activity'' shall be an economic activity

carried on or intended to be carried out by a small

start-up undertaking as may be prescribed in the

Guidelines;

(d) an ''undertaking'' shall mean a limited liability

company constituted under the Companies Act.

(3)

Assistance under this regulation shall be linked to either

(a) co-investment linked to private equity; or

(b) the procurement of tangible assets; or

(c) crowd funding campaigns.

(4)

(a) Assistance that may be provided under this regulation

shall be repaid over a period of ten years and an

interest will be charged on any value outstanding at the

end of each calendar year in accordance with the terms

and conditions set out in the Guidelines.

(b) The repayment period may be extended in line with the

performance of the supported undertaking as may be

prescribed in the Guidelines.

(5) Applications for assistance under this regulation shall reach

the Corporation by not later than the 31st October, 2016.

A small or medium-sized undertaking to be eligible for any

of the benefits under these regulations, shall not claim or may not

subsequently claim any other benefits with respect to the same

costs under any other legislation such that the total aid would result

in an aid intensity exceeding that fixed by these regulations.