Abstract
1-Introduction
2-Methods
3-Theoretical Approaches
4-Results
5-Conclusion
Acknowledgements
References
Abstract
The aim of this paper is to compare the various forms of public support for the company, specifically European subsidies from structural funds and investment incentives in the Czech Republic. Both of these public financial instruments are supposed to support company’s investment but are these tools able to compansate costs that companies have to spend for them? In the research there are four types of investment costs defined: costs of completing application, investment costs, costs of subsidy management and sustainability costs. All of these costs are explained for each instrument with respect of application process. The presented results show that European subsidies are less expensive for the examinated company in spite of fact that application process is a heavy administrative burden. Appart from investment incetives that have easier application process, the investment costs are compansated by minority part of the investment incentives. The great item of investment incentives represents sustainability costs that might be covered by provided amount of tax relief. The investment incentives are certain risk that the invested costs may not be entirely covered by the investment incetives. At the end the paper compares costs of two companies defined as small and medium enterprises. Each company applied for one of the examinated financial instruments. The used methods for this paper are search inquiries, expert estimates, comparison and explanation. Theoretical approaches are examinated in a case study of two companies that have received EU subsidies and investment incentives in the Czech Republic. The results also rely on previous results of research project.
Introduction
Subsidies from European Structural and Investment Funds (ESIF) and investment incentives are an indispensable form of financial support for small, medium-sized and large companies in the market. Both forms of aid attempt to make it easier for companies to handle the tough competitive environment, to motivate companies to grow and to strengthen the region in which the company operates, or to which investment incentives have been trying to attract companies. The purpose of both forms of support from the provider is to bring about a positive effect on the region and companies. Nonetheless, the use of particular forms of support can also result in related costs for companies. A company’s costs may consist mainly of costs for preparation of applications for aid, realisation of investments and costs related to compliance with the provider’s set conditions until the aid provision period ends (in the case of incentives) or until the sustainability of the project ends (in the case of EU subsidies). If a company decides to apply for any of the specified types of financial support, the company must first prepare an application, including required accompanying documents. In this respect, the requirements for preparation for both types of support vary, depending on the scope of the application and the complexity of its processing. Differences can also be found in the likelihood of application approval. Based on a specific example, this Article will explain and outline how company’s costs for investment incentives and costs for subsidies from ESIF differ.